MCN Insights: NFTs are a scam.

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By Andrea Ledesma, Digital Product Specialist, The Field Museum, Jeremy Munro, Database Administrator, Smithsonian National Museum of African Art, Erin Canning, Ontology Systems Analyst, LINCS, University of Guelph and MCN Board member, and Claire Blechman, former Digital Asset Manager, Peabody Essex Museum.

In recent weeks, the use of non-fungible tokens (NFTs) in the sale and distribution of art has become a hot topic and many are debating what this might mean for museums. Supporters claim that this is an opportunity for museums to capitalize on and contribute to an emerging market, one that brings new, unparalleled value to digital media and digitized collections. These hopes, however, are misplaced: NFTs are a speculative bubble built on destructive technology laden with ethical and financial liabilities. They do nothing for provenance, artists’ rights, or creative production that museums aren’t already doing more effectively, equitably, and sustainably. In brief, they’re a scam.

An NFT is a unique piece of data on a blockchain. Because of their unique identifiers, NFT are being used to secure digital certificates of ownership of artworks. It’s important to understand that an NFT is not:

  • An artwork—digital or otherwise
  • Rights—to copy, disseminate, or display the artwork
  • Exclusive versions of the JPG that serve as the digital surrogate for physical art 

Although it would be possible to use NFT as an artistic medium, this is not what is dominating the market. NFTS are at their core high-priced JSON wall labels. This means that when Vignesh Sundaresan bought an NFT of Beeple’s Everydays: The First 5,000 Days for $69.3 million, all he really purchased was a certified (yet non-exclusive) copy of, and information about, a now viral piece of digital media.

Obfuscating this distinction between what an NFT is and what it represents is how NFT startups claim that their product is revolutionary for the art world. On the contrary, NFTs are a tired pump and dump scam wrapped in high tech clothing. The more the market thinks NFTs are worth, the more people will speculate, and the more money purveyors of trumped up JSON files take in. The top and second highest bidders on that $69 million Beeple NFT? Both cryptocurrency founders. The publicity further fueled an NFT buying bubble. How long this bubble will last is anyone’s guess, but the market might already be crashing

NFTs aren’t worth much in the context of collections, either. For one, they don’t really solve the problem of proving ownership of born-digital artworks. Museums and auction houses have spent centuries building capacity to confer authenticity upon objects. This process is not without flaws (particularly colonial ones), but for better or for worse, we trust museums to keep accurate provenance (and to be transparent when this isn’t possible). NFT minters are under no such obligation. They don’t have to explain why they issued an authenticator for a piece of work (how we got the Rijksmuseum debacle). NFTs don’t democratize collections either. They monetize them for private profit and throw walls around space that otherwise circulated assets and access freely. Even the concept of “online NFT exhibitions” is nonsensical. To say that NFTs can revolutionize the online display of collections ignores decades of ingenuity in the sector as digital spaces like Rhizome set the standard with this work—without the liabilities of blockchain.  

No matter their original intent, it’s abundantly clear that in 2021 NFTs are not about supporting art or artists. NFT minting sites charge massive fees that often outstrip returns on the sale. No governing body exists to enforce resale commissions when an NFT changes hands. Little to no protections exist for buyers. Purchased NFTs still “live” in the purchaser’s “wallet” on the company’s server, and many have already disappeared without any recourse for the owners.

Even if NFTs were somehow benefitting artists or museums, there is no justifying the massive environmental impacts of minting a single NFT (or a blockchain itself) on an already urgent climate crisis. And before you think it, here’s the article to send to people when they ask if the environmental issues with cryptoart might soon be solved (spoiler: it won’t, with offsets or otherwise).

Continuing to talk about NFTs as a revolution or a remedy plays into the hands of the grifters. Lend your museum’s focus elsewhere. 

We should seek every opportunity to separate art from capitalism, not to merge it with the speculative markets that have destroyed millions of lives and pose a legitimate threat to the sustainability of human life. We need to make every effort to reduce the toll our work takes on the environment—including divesting from fossil fuels. We need to do more to make Earth a sustainable place for art and human life alike. It is a vacuous and nihilistic world that produces art only as an investment vehicle, and values human creativity only so far as the donor class can leverage it to turn a profit.  

There’s a lot of cool stuff going on in the digital art world, and has been for a long time! Museums are engaging in the cataloguing, conservation, and (re)presentation of digital art and time-based media. The open access movement is a shining beacon of democratization that allows quality digital surrogates of art to travel the world millions of times over. These are the innovations which deserve our time and attention—not NFTs.

Join us Friday, April 23, from 12–1pm ET on the MCN Slack general channel for an AMA follow up to this MCN Insights blog post! (Email us at [email protected] to be invited to MCN Slack.)

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