Art history can help explain the hype around NFTs, the crypto collectibles that made Grimes millions

• Non-fungible tokens, or NFTs, have quickly become one of the fastest growing trends in the digital market, with sales totaling more than $250 million in 2020.
• The technology behind NFTs is often confusing, but viewing them in the context of the history of art helps explain how they create value and may impact artists and creators.
• Much like digital items, any number of photographic prints can be created from a single negative, but innovations like certificates of authenticity help establish value.

Right-click. Save Image As. On the internet, a few seconds and a couple of clicks are all it takes to download a digital file, from the latest meme to the Mona Lisa.

It may come as a surprise, then, to hear that someone recently paid nearly $600,000 in the cryptocurrency Ethereum for a gif of Nyan Cat. If anyone can easily download and share this meme, why would anyone pay so much?

The answer is the NFT, a much-hyped technology that could be part of another big bubble, or is about to completely revolutionize digital life as we know it, depending on who you listen to.

NFTs help authenticate certain items

NFT stands for "non-fungible token," and is a special kind of unique digital asset (a "token") that is recorded and stored on a blockchain (a distributed digital ledger). Unlike other tokens like Bitcoin where each token is exchangeable and equivalent to any other one - the same way a dollar bill is exactly the same as any other dollar bill - NFTs are unique or highly limited. This allows them to certify specific versions of digital items, like the nyan cat meme, and by creating scarcity and a sense of authentication, produce value.

Just knowing what an NFT is, however, doesn't help explain why people might spend millions for an image or video that anyone can replicate for free on the internet. Step back from the haze of hype surrounding Bitcoin and blockchain, however, and the reasoning becomes clearer. NFTs may use novel technologies, but they are an attempt at answering an old dilemma: how do you create and preserve value around an object that can be infinitely reproduced? Nowhere has this question been so carefully considered as in the field of art.

Throughout art history, different tools have been used in the same way NFTs are

Over a century ago, a new technology threatened to completely change the way art was bought, sold, and even understood: photography. While a painting or sculpture is typically unique, any number of identical prints could be created from a single negative, similar to the way that one can easily create an unlimited number of copies of a digital file.

As the philosopher Walter Benjamin wrote in his seminal 1935 essay "The Work of Art in the Age of Mechanical Reproduction," this put the very concept of originality and uniqueness - what he called the "aura" of the artwork - into question. To avoid these pitfalls, savvy artists and gallerists found new ways of restoring aura by limiting photographic prints into specific editions and issuing certificates of authenticity alongside the photographs, introducing scarcity and proving originality in the same way that an NFT does.

These concepts have spread beyond photography to fields such as conceptual art, where the work itself might simply be an idea or set of instructions. That's why, for example, Maurizio Cattelan's artwork Comedian could sell for six figures even though anyone can easily replicate it at home using a banana and a piece of duct tape.

The hype around NFTs is probably because of money

So, if NFTs are not as new as they seem, why are digital creators and artists so excited about them? The most obvious answer is money. NFTs offer creators, ranging from the musician and artist Grimes, who recently made millions by dropping NFTs, to more established contemporary artists like Neïl Beloufa, the ability to quickly make a lot of money by hopping on a new trend. Call it selling out if you like, but since the vast majority of artists don't make a living from their artwork alone, any opportunity to remedy that is undeniably important and impactful.

It's questionable, however, whether these eye-popping sums will remain sustainable. Seen in the context of other other buzzy investments like meme stocks, NFTs may simply be a short-lived method of cashing in on the current appetite for lucrative and unusual financial vehicles.

Even so, NFTs also offer creators the possibility to achieve sustainable income through the use of Smart Contracts: digitally encoded contracts that self-execute when conditions are met. This could offer artists the ability to profit off the resale of their artworks (typically referred to as Secondary Market sales), something long sought-after by artists. The Artist's Reserved Rights Transfer Agreement, for example, was created in 1971 by the art dealer Seth Siegelaub and the lawyer Robert Projansky in order to make this possible, but it has only ever been used a handful of times by a handful of artists and is generally seen to be legally unenforceable. With a Smart Contract, however, this would be encoded into the NFT itself and not possible to bystep.

NFTs don't come without downsides

Despite the many new possibilities they present, artists and creators should be wary of fully embracing the hype around NFTs. NFTs may be marketed as fully digital and distributed, but art has long operated in a similar decentralized manner - more than a decade ago, art was already declared to be an international currency by the mega-collector Don Rubell. Unquestioningly embracing the technology in this manner opens an incredible number of pitfalls for artists. Blockchains may be digital, for example, but they do have a real world toll: current blockchain technologies use an incredibly unsustainable amount of power, making NFTs a highly inefficient and ecologically damaging way of establishing ownership.

Additionally, simply minting an NFT does not guarantee legal control and copyright over the item associated with it, meaning that they provide less protection to creators than is commonly assumed. Some nascent NFT platforms like CXIP aim to remedy this, but at present, many NFTs are little more than high-tech versions of a certificate saying that a star is named after you - hardly reassuring for artists scrambling to establish ownership of their work.

Perhaps the biggest myth of NFTs is that since they are decentralized, they are fundamentally liberatory and will free creators from the tyranny of traditional gatekeepers. Despite this emancipatory rhetoric, the NFT market currently requires just as much intervention by institutions, and many NFTs are hosted and sold through platforms that are invite-only, bringing to mind the way that art galleries choose which artists to represent and work with. It's hardly surprising, then, that one of the most high-profile NFT sales is being conducted by the auction house Christie's.

Instead of instantly freeing artists, NFTs in fact extend the reach of the market beyond its previous boundaries. This is not necessarily a bad thing, but it can also exacerbate pressure for artists to produce specifically for the market and make work that captures people's limited attention, stifling creativity. The artist Erin Jane Nelson described in a recent essay how

the artist Lucien Smith would print out hundreds of images of popular artworks and then emulate those to make work that sold well - hardly an exciting vision of what it means to make art.

There's a lot of uncertainty at the moment about the role NFTs will play in the art world, but there is one thing we can say for sure: these are still the early days of the NFT and the technology will surely develop as it matures. NFTs could end up being little more than a short-lived bubble, they could help artists establish aesthetic and economic independence, or they could exacerbate existing inequalities. Technological development is never purely driven by chance or nature - it is actively shaped by all those involved. Before one can know what direction to take, however, it is essential to historicize the technology through the lens of photography and art, see clearly the new possibilities and perils that NFTs present. They may not be the beginning of a revolution, but they surely open new opportunities for artists, creators, and collectors to change the way the art market functions.