Analogue photography is all I think about when I write on Analog.Cafe. I am only interested in computer technology when I scan film and work on apps and features for this website.
But despite my desire to back away from the tech hype that ran my life back in my Silicon Valley startup days, I continue to get swarmed by the news and tweets about NFTs — a new blockchain technology that allows selling visual art online.
I get it. Selling art is difficult, and having another revenue source is exciting. Better yet, NFTs enable artists to profit off their work being sold down the line through guaranteed royalties. I also can’t hide the fact that I enjoy many of the film scans and other artworks posted on NFT marketplaces and would love to support the people who make them.
And so, despite my initial reservations, I decided to spend some time researching this topic with the goal of figuring out the potential benefits and drawbacks of participating in the NFT marketplaces.
What do NFTs have to do with film photography?
NFTs are simply a way to sell digital artwork online, and film photography, once digitized, is just another commodity on NFT marketplaces. Some artists bundle prints along with their NFT sales, although doing that is no more special than selling a print in a conventional way.
Nevertheless, there’s plenty of interest (and disdain) towards this technology within the film photography community, and thus I feel it’s worth understanding.
A brief history of NFTs.
The technology at the core of NFTs, Bitcoin, Ethereum, and other tools is based on Hashcash, a process invented in 1997 meant to prevent email spam. Its principle is fairly simple: the system requires the sender’s computer to solve a computational puzzle in order to have their mail delivered.
The puzzles aren’t particularly difficult, each taking a small amount of time and energy to complete. However, a spammer attempting to hit a large number of mailboxes would face a much heavier toll, forced to solve thousands of puzzles for each dispatch.
Alas, this method comes with many drawbacks — such as the inability to distinguish between a spammer and a legitimate email list sender — and it isn’t implemented in any popular email systems.
In 2008, the above principle was implemented as a security mechanism in a new invention: blockchain. A blockchain is a list of records that can be appended but are practically impossible to change. Tools like Bitcoin (i.e. cryptocurrency) use blockchain to keep permanent records of financial transactions.
NFTs were proposed as a way to sell artwork online in 2014. They use blockchain to create records like cryptocurrency with one key difference: you can not exchange an NFT unit for another.
For example, you can legally exchange your weathered $100 bill for a crisp one at the bank. Worn or not, money is money. This is how cryptocurrency works as well. However, NFTs introduce the concept of non-exchangeable goods. Artwork and photography can be considered non-exchangeable; that is, I won’t be able to trade a print of my making for Ansel Adam’s. Both prints could be made using the same materials and have the same or similar subject, but Ansel’s is worth way more than mine.
NFTs simulate the concept of non-exchangeability digitally. This is exactly what the first part of the NFT acronym translates to non-fungible, a synonym for non-exchangeable. The last letter of the acronym, T, stands for “token,” which is a record of sale/ownership stored in a blockchain.
NFTs could be used to trade software licenses or records of physical asset sales; however, the technology became popular as a way to sell art. Most likely because it adds no usable value to the existing systems of contracts and licensing while art is easier to understand and speculate.
NFTs, unlike paper or static contracts, can have scripts embedded as part of the record that could potentially pass on royalties to the original maker upon resale. This feature is touted as a possible solution to a problem in the high-end art market, where art could become worth millions upon resale while the artist who made it would’ve received a single payment worth much, much less.
However, this functionality isn’t universally available, and it comes with its own drawbacks: another fee for another 3rd party to inflate the final sale price — not the artist, the service that runs the automatic royalty payouts.
Interestingly, computer viruses may also be passed and sold via NFTs because the system allows embedding scripts within the records.
When cryptocurrency was in its infancy, I had a friend explain its “incredible” potential. He hypothesized that it could enable cross-border banking for people that can’t afford it. Unfortunately, this could not be further from the truth since every transaction requires a lot of energy to complete; it’s not unusual to be required to pay hundreds of dollars per action.
The exact price to mint (create) an NFT and sell/buy can’t always easily be determined. There are a variety of platform charges that follow the gas fee — which is money for the energy expenditures per transaction. These prices do not necessarily stay constant either — they are currently highly volatile as the energy costs and market demand change rapidly.
Another aspect of these transactions is time. Buying and selling NFTs is not the same experience as buying and selling via credit cards — it could take hours for the transaction to complete. And while this is happening, the price for the transaction could change as well, which may or may not impact your bottom line — depending on where and how the action is complete.
Records, not assets.
Blockchain records are limited in their size since the amount of data stored is directly proportional to the energy required to complete a transaction. Because of this, NFTs almost never include the actual image being sold — just a link to the image that’s stored elsewhere. Sometimes it’s the marketplace’s storage solution. Wherever the image remains, the NFT’s integrity depends on the hard drive it lives on and whoever’s maintaining and paying for that service.
NFT transactions are technically impossible to alter or delete. This is an inherent property of blockchain technology, called immutability. So if you’ve made a mistake — it will remain on the blockchain for the duration of its lifetime. And in some cases, immutability leads to security risks and harassment that are virtually impossible to prevent.
You may also notice that NFT marketplaces do not do returns — unless they are trying to offset fraudulent activities or bugs.
Copyright and ownership.
It’s important to understand that an NFT is not equated to copyright transfer. It is simply a record stating that something happened — nothing else. Though copyright and other terms of the sale can be part of the NFT record, that is often not the case, and nothing is protecting the buyer/seller other than, perhaps, the marketplace that profits from and oversees the trade.
Fraud and volatility.
Cryptocurrency is a highly volatile, speculative market; it is always changing. Therefore, your investment in NFTs isn’t safe from vanishing — although some may swear to you by the potential for growth, which may be valid considering the general upward trend for the most stable marketplaces.
Bots and lazy art.
If you decide to enter the market by selling your photography as NFTs, you should prepare to compete with an army of bots. I’m not just talking about the bots manipulating the marketplace by creating fake transactions; I’m talking about the overwhelming prominence of art that looks like a machine made it.
You may have seen Bored Ape images that look exceptionally similar with only minor changes. They are the manifestation of the ecosystem that encourages the production and marketing of a long series of derivative artworks from a single successful piece. Though not entirely different than real-world low-effort art series, digital files are significantly easier to manipulate — an action that can be automated.
Last week, I reported on Webb’s, “one of New Zealand’s premier auction houses,” that sold an NFT of two historical glass plate photographs taken between 1910 and 1920 and encouraged the buyer to have the original masterpieces smashed to bits.
The concept of destroying the physical master copy to increase the digital asset’s value isn’t new. For example, some film photographers offer to burn their negatives in return for a print or a digital file purchase — I’m totally fine with that. However, destroying parts of human history in favour of dubious quality scans that may not last a year is a different story. What Webb’s tried to encourage is fucking ludicrous.
Thankfully, the plates remain intact.
NFTs and the environment.
A single transaction involving NFTs can produce about 48kg CO₂, which is about 14 times the amount expelled when shipping a print. This number is, of course, not always the same; depending on a variety of variables, it can range anywhere between 24kg CO₂ and 384kg CO₂.
For additional perspective, the high-end emission estimate per single NFT transaction is comparable to a cross-continental flight from Vancouver to Toronto. Other estimates equate a single NFT sale over Etherium to 325,382 VISA transactions by energy consumption.
“Clean” NFTs are an alternative technical solution to the defacto NFTs, which promises transactions that are 17,000 more efficient. However, these numbers reveal little information about the actual emissions and have no source backing them up.
The technology used to create “clean” NFTs — “proof of stake” — places a select few people in charge of controlling the security of the transactions. Unfortunately, this also adds the risk of a hostile takeover.
By switching to “clean” NFTs, you will also be limited to smaller marketplaces that have higher volatility, fewer options, greater potential for fraud, and a real risk of vanishing suddenly.
NFTs and cryptocurrency are practically synonymous with inefficiency. The market is volatile, plagued with fraud, and has no apparent improvement over existing commerce tools. It is not an easier or better way to make money on art.
I’m troubled by the consistent, one-directional response given by their proponents: “it’s the early days.” The phrase is meaningless and untrue; the principle that guides the entire ecosystem is 25 years old, with the first NFTs appearing eight years ago. If this is indeed early, the software and principles that power this ecosystem should have remained in private development.
Nevertheless, this is software, and thus it always has the potential to change (for better or for worse) — or disappear.