In the crypto scene, they have been considered groundbreaking technology for some time, and the classical art market is also listening: NFTs – “Non-Fungible Tokens” – aim to close the “value gap” due to lossless copyability of digital things. The players expect new payment options and fraud-free handling of digital collectibles. An NFT is an unadulterated certificate (a numeric sequence that confirms the origin of certain transactions) generated through a power-intensive encryption process. This seems innovative, but the bottom line is above all one thing: a penultimate attempt in digital capitalism to maintain the fiction of intellectual property.
Whether it’s an original or a copy – apart from the time of its creation, it’s the same with computer files. Both versions are identical. In principle, files can be copied without loss and infinitely often. If these copies are now distributed on the Internet, it is difficult to say who actually owns the original. For a moment, the utopia of a property-free space emerges: finally, everything is available, everything belongs to everyone, all artifacts – images, sound carriers, texts and so on – are no longer objects of speculation for financially strong potential buyers. But the look is deceptive, because in reality a few own a lot. Monopoly-like platforms like Spotify or YouTube have controlled the free exchange of data between users to their own advantage and even retain the majority of the revenue from the creative works offered. The authors rightly complain that their work is poorly paid or not at all.
With the help of NFTs, this digital value gap on the part of manufacturers must now be technically counteracted: the authors of “tokenized” works – including digital, but also subsequent digitized works – are issued a unique, non-copyable certificate, NFT. “Tokens” are something like postings in a digital cadastre, the so-called “blockchain”, which registers all trading activities, values and rights, encrypted, counterfeit-proof and distributed decentrally across several computers. Unlike “fungible tokens”, “non-fungible tokens” cannot be shared or replaced, they only exist once. NFTs are paid for with cryptocurrencies, especially “Ether”, the currency of the Ethereum network.
Copyright and user rights to the artistic work are not granted by NFT, but the work is only “represented” by NFT. The original associated with the NFT, such as a digital image, therefore does not belong to the NFT Buyer and is normally copied and distributed accordingly. Only the certificate itself, for example, is represented by a digital image that cannot be copied or exchanged. Their owners hope for social recognition in the NFT community, but above all a lucrative resale.
While NFTs are marketed as digital tokens for ownership of an original work of art, the bottom line is that they are just a form of ownership token – with no real property rights. An example: Strictly speaking, a newspaper page in printed form is always unique, even if there are thousands of copies of it. Thus, the copy that you, the other reader, may be holding in your hands right now is factually unique, even though the other copies may look, smell, and feel the same way. In principle, this paper page can become scarce if the current newspaper circulation is not sufficient. Suppose I wanted to symbolize my “own” newspaper page – after all, I hold in my hand a paper copy of the article I wrote myself, and who knows what the loyal audience will ultimately be willing to pay for this original – then could I make NFT that should represent exactly this newspaper page. I could then sell this digital certificate of authenticity without losing the copyright to my text and without the specific newspaper page changing hands in front of me.
Burning money (and electricity)
There are no limits to the imagination when it comes to things that are represented by NFT and are supposed to be artificially abbreviated to make money on their sales: digital photos, objects in video games, domain names, … you name it. For example, for the very first Twitter post, NFT brought in the equivalent of 2.5 million euros in the spring of 2021, and NFT for the first source code for the World Wide Web brought in more than 5 million euros. Above all, NFTs of digital works of art are auctioned at high prices, for example for the eerie monkey images of the “Bored Ape Yacht Club”, which are currently traded from a value of 52 ethers (about 200,000 euros).
The hype really took off in the spring of 2021, when digital artist Beeple, after selling many digital works at high prices, auctioned off a $ 69 million NFT for a collage of his work. The collage titled ‘Everydays’ can still be viewed online and saved as an image file, but the buyer of NFT is believed to be its sole owner. With NFT acquired, the buyer thus acquires ownership of the original Beeple collage, but without acquiring exclusive control over the work. This separation of ownership and disposal is new because so far the right of disposal is usually the meaning of property rights: it allows the owner to exclude others from accessing the object in question. However, NFT does not do this, it is a property right without any significant content.
The media hype surrounding Beeple’s “Everydays” and prominent trendsetters who encouraged participation in NFT markets triggered a veritable gold rush mood across the krypton networks. Hundreds of thousands of users have since invested tens of thousands of millions of dollars or euros in NFTs in the form of cryptocurrencies – hoping it would pay off later. But what is celebrated in the cryptocurrency scene as a decentralized investment is ultimately even more unfairly distributed than classic monetary assets: it is estimated that less than one-tenth of NFT owners own 80 percent of the assets earned with NFTs .
In addition, there is a huge energy consumption associated with auctioning NFTs. It is estimated that the creation of a single token takes about 140 kilowatt-hours – more than the average electricity consumption of a single-person household in a month. This is expensive on the one hand and leaves a fat carbon footprint on the other hand. In addition, the process wears out the necessary hardware components, especially graphics cards, within a few months until they fail. Under the current circumstances, this means that while many people do not know how to finance their electricity and gas bills this winter, affluent crypto fans happily let their graphics cards run hot.
Proud owners vs. stupid right-clickers
For the wealthy art and pop culture enthusiasts who have strayed into the NFT world, it’s about getting a little bit of the magic of an original work of art. To meet such longings, physical certificates, donations from the artists and other fan items have recently been added to the NFT purchase. In this respect, buying NFT is no different than offline art trading. Here, too, it is about uniqueness, authenticity, hoped-for assets and (degrading) looks in peers.
But there is resistance, though most unnoticed so far: the normal users, disparagingly called “right-clickers” in the NFT world, because they copy or save the digital files with a right-click with the computer mouse. In September 2021, after a post on social media where someone bragged about their NFT of a monkey cartoon image, a couple of NFT opponents banded together, saved the image, shared it and announced loudly that they now have the image too. “Right-clickers” like you and I are the villains of NFT disciples who just do not want to understand that having a digital copy on your computer is something completely different than having an NFT for the original file. The buyers of the NFTs are often not even aware that they do not own the thing that everyone else can indulge in by right-clicking, but only a non-copyable character string in a decentralized database.
financing of everyday life
Despite this madness, the discussion of NFTs is by no means trivial because it brings to light some important insights into general trends in capitalist society. On the one hand, they show that the financing of everyday life does not stop at digital things that can be copied without loss – until at some point all conceivable assets are wrapped up in financial instruments. NFTs are exemplary in showing that buying on speculation, regardless of the object of speculation, only works as long as the imagination about the value itself and about future value increases can be maintained.
Ultimately, NFTs also cannot solve the problem of fairer author remuneration. For example, since the NFT boom, there have been several instances where artists to their amazement find out that their artwork can be found in the NFT markets without their own fault. Last but not least, NFTs are proof that the privileged purchasers of digitally protected documents are primarily concerned with a really scarce commodity: social validity.
Marlen van den Ecker is a research fellow at the Collaborative Research Center “Structural Change in Property” at Friedrich Schiller University Jena. She is taking her doctorate in sociology on intellectual property in digital capitalism.