NFT's Are Beautiful Because They Make No Sense
By Tim Leberecht
Non-Fungible Tokens (NFTs) are the latest craze of the crypto economy — but unlike previous hypes, e.g. Bitcoin, they appear to be moving into the mainstream much faster.
They are exciting, game-changing, empowering. They are the latest example of group-think, the new bragging rights of the wealthy.
They finally give creators and artists the chance to reap the fair financial benefits from their work. They are a new asset class virtually incomprehensible for the non-digerati-non-financerati, further widening social inequality.
They will help us find new ways of value creation that might make our economies more sustainable. They are fueling the climate disaster due to the heavy carbon footprint of blockchain technology.
They represent the dawn of a new age that may radically alter our definitions of value and open up new opportunities to create a more inclusive economy. They are the ultimate triumph of the market economy.
They are controversial and polarizing. And they are here to stay.
NFTs are fascinating because they are counter-intuitive.
NFTs are an odd one: they are exclusive and inclusive, and private and public at the same time. Since no one ever needs to actually see the original digital file but only its token, NFTs enable authentication while also preserving privacy and allowing the artwork or content asset to remain in the public domain. The famous Beeple artwork, for example, that sold for $69M, can be replicated infinitely, with everyone having access to it online, however, the one original file holds more value. You may consider this a form of democratic exclusivity that benefits creator, investor, and the public alike.
Amidst the loss of aura caused by infinite digital reproduction (to lean on Walter Benjamin), NFTs reinstitute the scarcity of a unique moment or artifact and make the aura — the relationship of a person to a digital artwork or piece of content — valuable and tradable.
And yet, as a former auctioneer at Christie’s, Charles Allsopp, comments, it makes “no sense” to buy NFTs:
“The idea of buying something which isn’t there is just strange.”
Indeed, NFTs ultimately grant the NFT owner — nothing; not IP and not even litigable ownership over the digital asset. The NFT owner only holds a token, a kind of certificate or title, of the original file. This file can be digitally replicated infinitely, but copies will never hold the same value as the original, even though they are exactly the same code. The difference in value lies in the context. The writer William Poundstone poignantly remarks:
“An NFT is the right to say ‘I own an NFT!’ and not be lying.”
Sixty-three years ago the artist Yves Klein (best known for his monochrome paintings), created his famous artwork, Zones of Immaterial Pictorial Sensibility, selling tokens (for pure gold!) for artwork containers that contained: nothing.
NFTs are his spiritual heir, this time with the tokens stored on a blockchain.
Art is beautiful because it doesn’t need to make sense. And, at face value, NFTs don’t make sense either. It’s a perfect marriage.
What about business though? Besides artistic work, trading cards, in-game assets, and sports clips, what are the work-cultural implications of NFTs?
Certainly, NFTs bring an unprecedented level of ambivalence. While they pinpoint and codify value, they also add some welcome fuzziness to business. And in any case, they open up a new space of meaning and value, a place of artificial scarcity that is both logical and absurd.
For one thing, they make invisible work visible by ascribing value to the original act or moment of creation. They say, ‘yes, it does matter (and we can prove)’ who had an idea for the first time. A Twitter user, for example, may now tokenize and sell an original tweet of theirs that led to a meme or further conversation, or perhaps even material change. The same applies to a team member who had an idea for a new product or service. While an NFT will not give them litigable IP, it may give them the recognition as the original creator, and, as some investor may consider this token a valuable collectible, the possibility of financial gain. At the very least, in this case an NFT constitutes a moral right, a reputational claim.
Moreover, what if an intention were an NFT? Imagine someone sets themselves a professional career goal, documents their intention in the form of a digital file, and stores it onto a blockchain. If this intention is in fact a smart contract (including one between employer and employee, or one with oneself), a contract that automates and self-executes its contractual obligations once mutual conditions are met, an NFT might become a token and steward of professional growth and transformation.
It all goes back to Klein’s concept of “immaterial art.” Business is typically biased towards the visible. But NFTs are appreciating the invisible. While value is attached to THAT one single (and yet replicable) file, context is everything. It is therefore not surprising that NFTs are fashionable among fashion brands. “Luxury is the business of building identity,” says Ian Rogers, the former chief digital officer of luxury giant LVMH: “You don’t buy a luxury handbag because of its incredible utility. You buy it because the brand has built culture, and that culture is something you want to be a part of.” It is ironic that while NFTs capture and authenticate identity, the identity that is actually valuable remains elusive.
With NFTs, all the value sits in the metadata, not in the asset itself. Apply that to business and imagine the metadata of a company — from its culture to different forms of social, emotional, and market intelligence, and not the least to reputation — having the same value as its actual product or service.
Wouldn’t that make business more beautiful?
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Tim Leberecht is the co-founder and co-CEO of the House of Beautiful Business, a global platform and community for making humans more human and business more beautiful.