Are NFT artworks and collectibles worthy of all the hype?

Minting and exchanging NFTs consumes large amounts of energy, seemingly needlessly
Rather, we should use technology sensibly, to improve our lives and not rush blindly to embrace the latest meaningless trend

Dennis Lee

Published: 11:45am, 21 Aug 2022

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There is a saying that if one day you walk out the front door and everybody in the world seems crazy, perhaps you are the crazy one. That is how I have felt lately to some degree as people are bidding top dollar for digital collectibles and joining virtual memberships to buy ape icons. I wonder if I am missing out.

That was until Twitter co-founder Jack Dorsey’s first tweet went up for auction in April. After being bought by crypto entrepreneur Sina Estavi as an NTF (non-fungible token) for US$2.9 million last year, the highest bid was US$280, overpriced by any measure for something that carried no substance at all.

NFTs are an invention using blockchain technology to store data on a digital ledger so it can be exchanged online with credibility and a guarantee of scarcity. For a long time, digital data could easily be replicated and forged without authentication. Finally, the world found a way to move digital assets with security and proof of ownership.

Nowadays, if you are not talking about NFTs, it seems like you’re not at the forefront of technology and innovation. While we should catch up with the times and be open-minded about new ideas, we should also question the merits of innovation claims.

We do not want to be obsolete and fall behind on an epic paradigm shift in cultural and technological advancement. At the same time, we do not want to ride a bandwagon blindfolded without questioning the meaning of things.

The applications for NFTs do not apply just to art but to any digital information. The NFT art world exploded after the record-breaking sale of Beeple’s Everydays – The First 5000 Days for US$69.3 million in March 2021. While NFT platforms created markets beyond the traditional hammers of Sotheby’s and Christie’s, they also democratised art production where anybody could upload their creations.

05:15

SCMP Explains: What are NFTs?

A capitalist market is often volatile with unpredictable turns. When all players believe in a common platform, there are buyers, sellers and worthy commodities with resale values. The market will continue to grow and remain sustainable as long as there is demand.

For commodities that do not hold intrinsic value, they are saleable until the bubble bursts and nobody tenders competitive bids for them, as shown in the auction for Dorsey’s first tweet. Not only did it not meet the US$48 million asking price, the US$2.9 million paid by Estavi depreciated by 99.99 per cent almost instantaneously.

So are NFT artworks and collectibles worthy because of the prices in the marketplace, or because they carry significant artistic and cultural value we would like to preserve?

Economist Saifedean Ammous wrote about genuine art in The Bitcoin Standard, saying artists previously “spent years learning the intricate details and techniques of their work, perfecting it and excelling in developing it beyond the capabilities of others, to the astonishment of their patrons and the general public”.

Ammous criticised modern artists for their “pretentiousness, shock value, indignation and existential angst”, but arguably the trending NFT artwork is worse, as most of it does not bother to pretend to carry any meaning at all.

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JPG file by digital-only artist Beeple fetches nearly US$70 million at Christie’s auction

Physical artwork and memorabilia are non-fungible by default. However, genuine collectibles are valuable not because they are one of a kind but because they hold significant emotional and cultural value to their admirers and collectors.

Some other recently auctioned items include Andy Warhol’s Shot Sage Blue Marilyn, Diego Maradona’s “Hand of God” jersey and former New England Patriots quarterback Tom Brady’s last touchdown ball. Their value lies in their symbolism, significance and legendary presence suspended in time.

Collectors wanted to own the actual canvas Warhol painted in the wake of Monroe’s death, the shirt Maradona wore when he scored his infamous goal against England or the football Brady threw for his last career touchdown. The fact the sale of Brady’s football was voided after he returned to the game only weeks after “retirement” shows the importance of sentimental value. It went from being worth US$518,000 to just another ball when it lost intrinsic meaning.

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Whether Beeple’s Everydays is worth US$69.3 million is in the eye of the beholder, similar to the US$195 million for Blue Marilyn. While one can probably buy a Blue Marilyn replica in Dafen oil painting village – just north of the Hong Kong-mainland border – it’s not authentic because Warhol did not paint it. But, one can download Everydays for free and display it with the same number of pixels on a screen.

It appears that NFT technology is being misused, much like a good drug that can be harmful if abused in recreational ways. Remember that minting and exchanging NFTs consumes large amounts of electricity as blockchain authentication requires proof of work, which is an energy-intensive process. The video game industry is backing away from NFTs after swift, widespread backlash from players.

We should look for sensible uses of technology to improve our lives and only use energy when they are worth it. Otherwise, we not only needlessly increase our carbon footprint, we become like the people who praised the emperor’s new clothes – or, like Estavi, we end up wearing the new clothes ourselves.

Dennis Lee is a Hong Kong-born, America-licensed architect with 22 years of design experience in the US and China