NFTs and Value

Abstract

Depending on your perspective, Non-Fungible Token (NFT) artworks are inaugurating an exciting new chapter in the history of art, or a dangerous new chapter in the history of online market bubbles. NFTs index artworks, and are typically strings of characters stored on a blockchain such as Ethereum. NFTs are not exclusively used to index artworks, and have been used to index a range of collectibles, but it is the sale of NFTs associated with artworks that has launched the phenomenon into public consciousness. Perhaps the most famous example of this is the digital artist Beeple’s sale of an NFT for the equivalent of $69 million (Krastrenakes). For some, such staggering prices suggest NFTs are poised to become the next Beanie Babies—i.e., commodities without utility that sell at vastly inflated prices. Despite such cynicism, some argue that NFTs have revolutionary technical import, such that they could overturn many common and unequal practices within the contemporary art market (Rennie et al.). Chief among these is the supposed disposability of digital artworks, which are viewed as difficult to sell, resell, and protect from piracy. Such issues are thought to be ameliorated by NFTs, since they function as a token that is understood to stand as a “definitive indicator of ownership” of digital artworks (Mackenzie and Bērziņa 2). Or, as Rachel O’Dwyer has summarised, NFT art auctions like the Ethereal Summit held in New York in 2018 allow individuals to bid for the “ownership and provenance details of the works of art encrypted in the Ethereum blockchain and represented by a token” (O’Dwyer). Unlike a more conventional artwork, such as a painting, NFT artworks typically take the form of JPEGs or GIFs, and therefore circulate the Internet widely, regardless of who owns the token that designates ownership. While reproductions and printed documentations of traditional artworks are commonplace—e.g., art gallery giftshops will often sell relatively low-cost posters of masterpieces like Picasso’s Guernica, or coffee table books showcasing the masterworks of influential movements like post-impressionism—there are obvious material differences between the reproduction and the original. In the case of the typically digital NFT artworks, this distinction does not apply. Accordingly, the academic and popular discussions that surround NFT artworks have reignited theoretical questions around the ontological status of artworks, and the source of their economic value. For some, the NFT market is a financial bubble and the prices attracted by particular NFT-linked artworks have no underlying value (BBC News). For others, the value of NFTs can be explained through an appeal to the value subjectively attributed to the image or animation by the purchaser (Nguyen), while for others the value of NFTs should be understood in terms of digital scarcity and provenance (Rennie et al.; Joselit) or as a technological means for artists to maintain a greater share of their artwork’s value (Kugler). While the NFT market is novel, and is worthy of study in terms of its specific technological and economic forms, this article will argue that NFTs can be placed in a longer history of the emergence of what Luc Boltanski and Arnauld Esquerre have called the “enrichment economy”. In their Enrichment: A Critique of Commodities, Boltanski and Esquerre argue that, since at least the last quarter of the twentieth century, a new site of valorisation has emerged in post-industrial economies. According to Boltanski and Esquerre, globalisation and deindustrialisation provoked many economies to embrace tourism, luxury good production, and the commodification of heritage and culture as new sites of extraction. As the viability of the mass production of commodities has receded, the production of unique commodities and transient yet “unforgettable” experiences have become more economically significant. For Boltanski and Esquerre, enrichment refers both to the often-discursive refining and redefining of existing commodities—such that they fetch greater prices—and a greater emphasis on an economy for those with disposable income—such as tourists, art collectors, and the wealthy more generally (3-4). Often, Boltanski and Esquerre argue, the enrichment economies of art and luxury tend to mine and exploit the “underlying substratum that is purely and simply the past” (2). For this reason, the enrichment economy requires the production of new forms of authenticity, “aura”, and belief, such that the overlooked or taken-for-granted objects of the past can be reframed as unique and worthy of investment or consumption. The interesting question, then, is not necessarily that of why someone would pay a large sum of money to own a piece of code on a blockchain, but, instead, that of how a particular piece of contemporary art or an NFT comes to be “enriched” with authenticity and aura. While a thoroughgoing discussion of this topic would require a longer piece, this article will nevertheless attempt to open up connections between art history, debates around the production of artistic value during and after Modernism, and the newly emerging NFT art market. While many have declared that NFTs are “disrupting the art market” (Tripathi)—supposedly evinced by the staggering growth of the NFT market, and emerging institutional recognition, such as ArtReview’s decision to place an NFT at the top of their Power 100 List for 2021—this article seeks to locate the NFT explosion within a slightly longer timeframe, one in which NFTs would feature as a continuation—albeit a non-linear one—rather than a disruption of ongoing cultural and economic logics. Value and Void Despite the incredulity that commonly meets NFT artworks, the contemporary art market similarly flaunts conventional understandings of aesthetic and economic value. While many would surely agree with journalist Amy Castor’s claim that “it’s hard to justify that a Bored Ape NFT is worth $300,000 based on the art” (quoted in Artnet), almost identical criticisms have been raised around the contemporary artist Maurizio Cattelan’s 2019 work Comedian. Released in an edition of three, Comedian consisted of a banana duct-taped to a wall, with two of the three selling for $120,000 each. As Sara Callahan puts it, works like Comedian reignited debates around “what makes something a high-priced artwork when another, seemingly identical, object is not?” (Callahan). While NFTs are reawakening interest in the question of artistic value, the financialisation of cheaply made and mass-produced artworks has a much longer history. Indeed, by the 1960s, a booming secondary art market that traded in increasingly expensive, yet cheap-to-produce avant-garde works—often requiring relatively small amounts of time and inexpensive materials—raised suspicions that art was becoming indistinguishable from more traditional financial assets. In response, in 1968 the influential art critic Leo Steinberg argued that, “avant-garde art, lately Americanized, is for the first time associated with big money. … Another decade, and we shall have mutual funds based on securities in the form of pictures held in bank vaults” (quoted in Beech 300). As Dave Beech has shown, in the ensuing period, “art’s relationship to finance capital has outstripped Steinberg’s worst fears” (Beech 301). By the 1980s, banks allowed individuals to borrow large sums of money against the value of their art collections, and investment in artworks became a normal practice of portfolio diversification (Beech 299–300). When interest rates are low, investments in productive capital offer low levels of liquidity, and international markets appear vulnerable to shocks, artworks—whether physical or in the form of an NFT—offer a means of hedging against future losses. Furthermore, in both the contemporary art market and the NFT market, purchases of artworks at inflated prices often allow an individual to prevent “the bottom from falling out of a market they have already invested in” (O’Dwyer). The fact that artworks could hold a value well in excess of the cost of the materials or labour time required to produce them, was not solely recognised by art collectors and investors. Instead, this period saw a great number of artists explicitly playing with the aporia that had emerged around art’s economic value—insofar as ready-made artworks could now fetch prices typically reserved for laboriously produced and unique masterpieces. Take, for example, Yves Klein’s project Zones of Immaterial Pictorial Sensibility, which he developed over the late 1950s and early 1960s. In these works, Klein offered collectors the opportunity to purchase a void or “immaterial zone” for varying quantities of gold, with “20 grams (3/4 ounce) of pure gold for the Zones of series no. 1, the least expensive, to 1,280 grams (27/8 pounds) for those of series no. 7, the most expensive” (Cras 24). In exchange for the gold, the void-owner would receive a receipt as proof of purchase. However, for the work to be completed, Klein requested that the receipt be burned by the collector, and in response Klein would throw half of the received gold into the river Seine (Cras 24). By destroying the proof of purchase, and by releasing some of the gold into the river, the collector would receive “the full authentic immaterial value of the work” (Klein quoted in Cras 24). We see some resemblances here between Klein’s Zones and NFTs—and here Klein is no exception, since, as Cras has documented, the 1960s were replete with artists experimenting with the production of artworks as novel financial assets. For Cras, it was a time in which “the problem of attaching a price to works of art and offering them for sale, traditionally considered to be external to creation in this domain, was now incorporated in artistic practice” (Cras 3). If artists were increasingly embracing the artwork’s status as an asset, and if the price of artworks became divorced