“I’m going to Disney World,” said Mike Winkelmann earlier this month, after bidding closed on his digital collage work auctioned at Christie’s New York.
Sold for $69 million (£49.5 million), Everydays: The First 5000 Days has earned its creator – who goes online by the name Beeple – more than a few trips to the Magic Kingdom.
Winkelmann’s recent sale has set the record for the growing market of non-fungible token (NFTs) art sales. How long The First 5000 Days will remain in the top spot is unknown. If soaring auction prices and record-breaking sell out sales are anything to go by, it could soon be eclipsed by another piece.
But what are NFTs, and should designers be paying attention to what is going on in the crypto art market?
What is an NFT?
Crypto art refers to digital art pieces that are published directly onto a blockchain in the form of a non-fungible token (NFT). A blockchain is a kind of digital ledger that keeps track of transactions, while an NFT is a type of digital file.
The world of crypto-anything can be hard to figure out for the uninitiated, but non-fungible essentially refers to the fact the digital file is unique and can’t be replaced with something else.
Common examples to explain the idea properly are autographs or one-of-a-kind trading cards. If you tried to trade one celebrity autograph for another, you’d end up with a different signature than the one you set out with. But if you wanted to trade one bitcoin for another, you’d end up with the same thing in the end, because bitcoins are fungible.
Most NFTs are part of the Ethereum blockchain. Ethereum is a kind of cryptocurrency – akin to bitcoin or Litecoin – but its specific blockchain also supports NFTs, which can be anything from music to videogame files or art.
Why are NFTs so big right now?
Many people – especially those willing to drop millions on jpegs – think of NFTs and crypto art as a modern extension of traditional art collecting. While you’re able to right-click-and-save-as as much as you want, with NFTs, only one person gets to truly own any given artwork.
NFTs work like any other speculative asset, where collectors buy things and hope they appreciate in value. An increasing number of speculative buyers in the early months of 2021 has served to bring crypto art to our collective online consciousness.
NFTs can mean big money for designers. And after the challenges of the pandemic, people like UK-based graphic designer and artist Brendan Dawes think it is something we should be celebrating.
Dawes got involved in the NFT market back in July 2020. His first NFT – a fiery abstract piece that used AI to visualise the final fight scene in Kill Bill Vol. One called Black Mamba’s Revenge – sold within an hour.
What’s so good about NFTs?
According to Dawes, selling his work as NFTs has allowed him to profit from his creativity in a new way. While he has many good and longstanding relationships with his clients, making crypto art is different, he says.
“No one is telling you to do anything, and being able to make money from your own creativity and direction is a really good feeling,” he says.
After releasing his first NFT back in the summer, Dawes’ following collections have all sold out. He has also been approached by Nifty Gateway, an exclusive marketplace for crypto artwork, to release two “drops” – timed collections of pieces that sell out quickly.
“My first drop sold out in 60 seconds, and the second sold out in five minutes,” he says. He is currently preparing for his third drop, which will be released in May. “They get dropped around midnight in the UK, and each time my wife and I have stayed up late with our laptop in bed, thinking: ‘here we go!’”
Additionally, Dawes says working with NFTs has introduced him to people he wouldn’t otherwise have been able to meet. A series of interesting collaborations, he says, are in the pipeline.
What’s wrong with them?
With all this said, NFT’s have still swiftly divided the design world. The main counterpoint is that they’re incredibly resource-intensive and therefore bad for the environment. Jon Cockley, co-founder of Handsome Frank illustration agency, says his stance, and that of his agency, is that the cost of NFTs “is just too high”.
“We’ve been talking for a number of years about how Handsome Frank can become a more ethical and environmental business and what decisions we can take to lessen our impact,” he says. “As a result, there are certain sectors or projects that we choose not to work on and our artists have always been supportive of that and NFTs are something that for now, we’ve added to that list.”
NFTs run on the Ethereum blockchain, which is mined, like Bitcoin. Both Ethereum and Bitcoin use proof of work algorithms to reward computers which have solved cryptographic problems. With so many computers working on these puzzles, energy consumption is high and heat is a by-product. Ethereum is working on transitioning to a proof of stake blockchain, which instead rewards people who make a monetary payment. This would make a dramatic difference.
One of the most high-profile examples against NFTs comes from French artist Joanie Lemercier, who has spoken about the environmental cost of his first ever NFT drop, involving six pieces of crypto art. Lemercier’s collection sold out in 10 seconds, and for thousands of dollars, but it also consumed 8.7 megawatt-hours of energy. This figure was the equivalent to two years of energy use in his studio. And as the pieces have since been resold again, that has cost another year’s worth of energy.
Lemercier was able to glean these statistics from a website called cryptoart.wtf – a platform built to measure the emissions created by a piece of crypto art. Last week the site was taken offline. According to its founder, this was because the information found on the site was being used to bully and harass creatives working in the crypto art space.
Cockley says it’s easy to see why so many artists, illustrators and designers have their reservations with crypto art.
“I think our sector has always been, on the whole, a very progressive and morally upstanding community,” he says. “Many artists care deeply about the environmental and social issues that the world faces, so when this super lucrative ‘pot of gold’ scenario is dangled in front of them, it makes people feel incredibly conflicted.”
Is there a solution?
Cockley says if the environmental issues could be tackled, then NFTs have an “interesting potential” for the future of creativity. Brendan McGill, co-founder of offsetting platform Offsetra, believes there’s a solution already.
Recently the company partnered with digital artist Sven Eberwein to release a collection of “carbon negative” NFTs. This involved Eberwein using some of the profits from his drop to then put into carbon offsetting programmes. McGill says the partnership was able to offset 1,000 tonnes in total and that this system could easily be replicated across the crypto art market.
“So much money changes hands in these markets and not nearly enough of it is then used for offsetting but we could change that with more awareness,” he says. Hopefully this change is already on its way – McGill says Offsetra has been getting more and more attention from the crypto community in recent weeks.
Simply boycotting crypto art will not stop the environmental impact of other crypto functions like currency and mining, McGill says. NFTs are a comparatively small part of the wider community, and the backlash against creatives is disproportionate.
“If instead we could ask every artist to set aside some of the profits from their sales for carbon offsetting, thereby producing carbon neutral or even carbon negative pieces, this is a better use of our time,” he says.
There is also a broader argument to be made that if the energy grid was greener at source, the impact of NFTs would be mitigated, but that doesn’t change what is happening today.
What should designers do?
Cockley says any conversation around crypto art should have the nuance to see both sides of the argument and not shame those choosing to work in the field.
“We’re talking about a group of people who are often underpaid at the best of economic times,” he says. “Now we find ourselves rooted in a global pandemic and with all of the financial repercussions that brings, like many people, lots of artists are struggling.”
McGill adds: “Creatives should decide for themselves if they’re okay with associating their work with such an energy intensive network and act accordingly if they want to offset it.”
For Dawes, it’s a question of pushing the boundaries. Having first got into web design in 1996, he says this has been a way for him to “forget the old ways and embrace something new”.
“I think it’s good to let go of some of these ideas sometimes – if they were alive today, I think the likes of Picasso and Warhol would be doing the same,” he says.