Of all the abstract artists your kid might be able to counterfeit, probably none are more (in)famous than Jackson Pollock, whose paintings consist of multicolored splatters across canvas and sell for tens of millions of dollars. One, simply called Number 19, went for a colossal $58.4 million in 2013.
And I think that buyer is a real chump, because guess what? Not only could my kid probably paint the same thing, but she doesn’t even have to – I just got it from Google Images for free →
…ok, obviously I’m kidding. We all know that pasting a digital copy of a painting into an email is not the same as owning the original.
But behind this joke is a genuine question: is the difference really that valuable? Especially if the value of the original is itself controversial? Pollock’s Number 19 is a brilliant piece of postmodern art to some, but many others just see a splattered canvas.
Does it make sense to put a dollar value on something so subjective? If you think the answer is yes, then you should know about NFTs.
Even if you don’t, you should probably know anyway, because they may soon revolutionize our relationship with wealth and property. Or ruin it, depending on your perspective.
An offshoot of the blockchain technology that fuels cryptocurrencies, NFTs are nonetheless very different from crypto. Both are digital assets; but while the latter are exchangeable (or “fungible”), the former are not. At least, not in the same way.
For example, any two bitcoins are both worth $43,137.30 (as of this writing). But no two NFTs are the same, nor do they have the same fixed value. Each is stamped with a unique, irreproducible code, making ownership of it 100% exclusive.
It’s like how only one person can own the exact piece of canvas that Jackson Pollock splattered with paint to make Number 19. The hype around Pollock’s work makes it fetch a high price, and so it’s coveted even by some who think it’s bad art.
Similarly, an NFT’s value is based purely on market sentiment, not its utility or material worth. To see my point, just look at the buzziest type of NFT on the market right now: cartoon monkeys.
There are 10,000 digital portraits like these in circulation right now, all unique variations on the so-called “bored ape.” Their prices vary wildly, but start at over $250k. Not quite as hot as an original Pollock, but getting there.
But it’s not auction houses or millionaire dilettantes driving this demand. The thing about NFTs is that they’re just digital files, whether an image, an audio clip or a weapon in a video game. That means they’re much easier to store, transport and even produce than physical items – like paintings or sports cars – could ever be.
And that allows NFTs to serve not just as valuable collectors items, but as a kind of currency themselves. They’re “tokens” that can be exchanged for money, linked to ownership of physical goods, or grant access to exclusive places or events. Or you can just hold onto them and enjoy the bragging rights, I guess.
So, twenty years from now, will we all be paying our utility bills with digital art and bits of cat videos? Eh, I don’t know about that.
But the rise of NFTs (along with other phenomena like meme stocks) indicates a growing attitude toward wealth and investment based more on popular opinion than on the traditional “fundamentals.” It’s not necessarily a new attitude… but it’s more popular than ever, and worth keeping an eye on.