What is it you own when you own an NFT?

I have been thinking a lot about NFTs lately and I am really interested by what is happening on this arena, so I’m writing down some of these thoughts because I’m getting tired of going back and forth with myself inside my head and perhaps by putting these out there I can get some of you talking back to me.

Be aware I am doing this with the express intention of starting a conversation. I am no expert on the matter and I reached these conclusions mostly on my own and even as I write this I am not completely sure everything I’m saying is right, but aren’t we all pretty much in the same situation? So here it goes.

For the past couple of months I have been trying to have conversations about NFTs with everyone I encounter. Most of them have no idea what I’m talking about, while others may have heard something about some guy selling one for a lot of money or just think it is somehow related to Bitcoin and the current cryptocraze. Anyway most if not all of them dismiss them as being just another prank of the modern art world, so it is on me to try to pique their curiosity. The following is how I usually start this conversation.

Quite a few years ago artist Francisco Toledo started a now famous project in which he made paper kites with his designs. The images were made using screen printing which allowed him to produce multiple identical copies of each design at a very low cost. These kites were sold at the Institute for Graphic Arts of Oaxaca (IAGO) store and there were two main categories: signed kites and unsigned kites.

As you might have figured out already the signed ones were priced higher than the unsigned ones. I don’t know the prices at the time, but for the sake of the argument lets say the unsigned ones were selling for something like the equivalent of 100 US dollars while the signed ones for 200 US dollars.

I have never encountered anyone who argues against the fact that a signed kite should be worth more than an unsigned kite.

Since the only difference between an unsigned and a signed kite is the signature, we could actually say that the value of the artist’s signature in this example was 100 dollars.

This is the point where I think we should make a pause and start asking ourselves many many questions:
First and most important: WHY?!
What are you getting for those extra 100 dollars?
Does the signature make the kite prettier increasing its aesthetic value?
Are you paying for the fraction of a second the artist spent making it?
Is it the extra micrograms of new graphite from the tip of a pencil that adds material value to it?

A good answer would be that the signature certifies the kite is an original artwork by the artist thus differentiating it from the rest. But signatures are prone to falsification and as such they are a primitive and unreliable method of authenticating something so I don’t think that’s the main factor that explains the difference in pricing.

I think the main reason we are willing to pay an extra for that otherwise worthless scribble we call a signature is the knowledge that the artist touched the artwork, infusing it with some magic that somehow makes it unique and special to us.

This might sound crazy, but it is more common than you think and it is not exclusive to the art world.

How much do you think someone would pay if you were to auction on eBay some of these items:
- The original New York City t-shirt worn by John Lennon
- The ball that Maradona touched with his hand to make the final goal of the 1986 world cup
- A pair of panties worn once by one of Victoria’s Secret models
- The burned butt of the cigar Churchill was smoking when he realized they had won the war

These are all common objects that wouldn’t be worth much if it wasn’t for the fact that we know that these people owned them or touched them sometimes in very specific points in time.

If someone were to give you one of these objects, let’s say Churchill’s burned cigar butt, without convincing you that it was really Churchill’s you would probably wouldn’t even want to touch it. On the other hand if someone gave you a random burned cigar butt and convinced you it was Churchill’s you might want to use gloves in order to handle it.

This is just an idea, it exists only in our minds.

This is were it gets esoteric.
What if we could separate that which gives the extra value to these items?
What if we could separate the idea from the object?
What it we could separate the signature from the artwork?

Lets suppose we could do that, then I might ask:
Would that have any value?
Would someone be willing to pay for it?
What would the person buying this receive in exchange for his payment?
Can someone own an idea?

I think this is exactly what we are exploring through NFT’s and NFT art and that is what makes them so interesting to me.

This is a very complex idea but it is not new at all, it actually predates the internet and art has turned out to be very well suited to explore this subject. Let me try and explain how I think we got to where we are now.

In antiquity when we didn’t have any methods for making copies, a work of art was a unique piece made by an artist. A painting had to be painted by someone and it was really hard (not to say impossible) to make exact copies of it. Falsification is as old as art so humans developed ways to certify that an artwork was made by the artist through signatures, seals and other methods.

Then we discovered printing, enabling someone to make several identical copies of an image. I’m obviously speculating here but I’m pretty sure art collectors of the past must have been shocked when someone tried to pass a print as an original artwork since it wasn’t unique anymore. But they got used to that after a while.

Fast forward to more recent times when photography was born it allowed anyone to create a picture with the click of a button, you didn’t even have to draw anymore. This again forced everyone to rethink what art was and wasn’t and there were some heated arguments about this at the time but we eventually figured that out too.

The twentieth century came and with it the rise of conceptual art, a new artform where the idea is the centerpiece and the object is secondary or doesn’t even exist. I believe this is the inflection point where we stop having a physical object that embodies the work of art, this forced artists and collectors to seriously question whether the work of art is an object, an idea, some mix of both, or even neither of them.

In 2019 artist Maurizio Cattelan made headlines by showing a piece consisting of a banana duct-taped to the wall at Art Basel Miami Beach. Aptly titled “Comedian” the piece drew both praise and critique from around the world, and had to be removed from the art fair because of the large crowds of selfie-seekers it attracted.

According to The Art Newspaper this edition of 3 sold for 120,000 dollars each. From the article:

The work has a certificate of authenticity that includes exact instructions for installation, confirming that the work is by Cattelan. “Without a certificate, a conceptual art work is nothing more than its material representation” the gallery says.

The way I understand it, the NFT is just the next part in this quest to find better ways to prove that something was created or touched by some special person making it unique, scarce and maybe valuable.

Digital artists have struggled with this problem I think more than anyone else, because it is really hard to convince someone that something is unique when anyone can make a million exact copies with just a few clicks, and that is the precise reason they were some of the first to adopt it.

So what do I own when I own an NFT?

In short non-technical terms NFT’s are a reliable way to prove the ownership of something without the need of a third party, like a notary for example. In many ways they work like a digital signature that nobody can falsify by keeping a public record of every owner since its creation using a technology called blockchain which I’m not even going to try to explain because I’m not qualified for that.

The part I want to emphasize is in italics: something.

If you look for some NFT’s on the internet on a website like OpenSea, Rarible or my personal favorite Hicetnunc you will probably see some image or videoloop with the name of its creator and its selling price in some cryptocurrency.

What you are seeing here is not the NFT, it is the representation of the contents of an NFT in some interface. The actual NFT is really just a record in the blockchain, with some instructions on how to do things (a program) and usually but not necessarily, a link to an address where you can download a file.

That makes most people think that when you own an NFT you are the owner of a computer file and whatever it contains, making you the only one with access to the file which could be pretty much anything: an image, a song, a video, a computer program.

Well, that’s not it. You are not the sole owner of the file because anyone has access to the file in the NFT without owning it.

The file is not the NFT in the same way that a burned cigar butt is not Churchill’s burned cigar butt and it is worthless unless you can prove it was really Churchill’s.

Ok, so if you don’t own the file then perhaps you own the rights to whatever the file has. This is wrong again since being the owner of the NFT doesn’t allow you to make a profit by selling the rights. You are not the owner of the rights unless the creator specifically expresses that I guess, which so far I haven’t seen.

If you thought you were going to find an answer at the end of this post, I’m sorry to disappoint you.

My current understanding is that the owner of an NFT can prove that his address received an NFT from some other address and we can track those changes in ownership all the way to the address that created it, but that still doesn’t explain what exactly it is that you own.

There are also some additional challenges that need to be tackled because currently NFTs do not solve the problem of how to prove that the address that created the NFT is the real creator of the art resulting in some bad faith actors minting NFTs with art that doesn’t belong to them. This is known in the NFT world as copyminting and it’s a major issue.

Whatever the answer is, I think we are just starting to explore the possibilities of what digital art can be and NFTs are a great tool that will encourage young artists to develop new ideas, expand our horizons while hopefully making a living out of it.

As has been the case throughout art history, with this new movement will also come a lot of shitty art, scammers, rent-seekers, fakes and bubbles, but again maybe that just makes it more exciting. Let’s wait and see.