Read the full article published on page 10 in the London Art Week Summer 2021 catalogue, here.
NFTs: Fad, Fashion, or the Future?
The much-publicised sale of Beeple’s digital collage The First 5,000 Days certainly put non-fungible tokens (NFTs) on the map: but are they just another hype or here to stay? With many traditional bricks-and-mortar galleries only just re-emerging from Covid-related lockdowns around the world, NFTs appeared to capture the spirit of the moment: able to be bought online, directly from artists and supporting them in hard times, and offering seemingly unquestionable provenance and transactional security in a blockchain.
However, NFTs give rise to a myriad of unresolved legal and ethical issues: to start off with, any blockchain transaction is only as secure as the company and platform hosting it; will that company and platform still be around tomorrow? Quite what you buy also tends to vary from platform to platform but buying an NFT will not generally transfer ownership and does not give the buyer exclusive rights in the image. Authenticity and copyright concerns are also emerging, with some NFTs being minted fraudulently without the knowledge or consent of the artist who produced the underlying work and in which he or she owns copyright and moral rights. Not much thought appears as yet to have been given either to the data protection and anti-money laundering compliance implications of transacting in NFTs using cryptocurrency. When things do go wrong for the buyer, do not necessarily expect any contractual protections or easy and effective remedies. And then there are the tax implications; for example, a liability for capital gains tax may well arise at the point when an NFT is paid for by cryptocurrency. The environmental burden of all that computing power required to keep the crypto world turning and churning is only just beginning to make it into the environmental conscience of its supporters.
Many will remember the last crypto bubble bursting a few years ago and there are some warning signs that history may well be repeating itself: at least for now, therefore, it appears prudent only to invest real world (fiat) money in NFTs if you are not only hoping for investment gains but can equally afford to lose your investment and are prepared to live with the legal uncertainties. NFTs may or may not turn out to be more than just the emperor’s proverbial new clothes but, as matters stand, my money would go into good old-fashioned art that I can put on the wall, enjoy as tangible cultural heritage, and eventually pass on to the next generation, safe in the knowledge that it will never become technologically obsolete.