Non-fungible tokens are making their way into galleries, as bricks and mortar are touching the intangible
In 2021, the growing interrelationship between the digital and physical worlds took an unexpected turn with the arrival of “non-fungible token (NFT) galleries” everywhere. These galleries are physical spaces displaying digital works in order to legitimize their presence, increase their reach and increase perceived value during online auctions.
The NFT took hold of the Web in 2021 to make commercializing digital works easier by resorting to blockchains. Whether works are visual, musical or animated, the NFT operates as a unique digital property certificate that provides its owner the inalienable rights to an intangible good.
Canada is one of the prominent countries in the commercialization and popularization of NFTs. Toronto-based artist Krista Kim was the first artist in the world to sell a virtual residence. Her “Mars House” sold for the modest sum of US$500,000.
The number of Web platforms enabling NFT transactions has soared over the last two years, from selective platforms, such as SuperRare, to extremely vibrant ones, such as OpenSea and Binance NFT—the “artistic” wing of the cryptocurrency exchange platform Binance.
It might appear odd that NFTs, a purely virtual tool, have made their way into physical spaces across Canada and around the world, whether in a permanent format, for instance the Montreal-based 0x Society art gallery, or in short-lived formats as pop-up presentations in renowned institutions in Toronto and Vancouver in 2021.
NFT in all its diversity
Some people are questioning the usefulness of NFTs and the relevance of investing actual money to acquire digital works; others still are questioning the creation of physical spaces to make them more “real.” In early 2022, indie game store Itch.io even said that NFTs were nothing more than a “scam.”
Nevertheless, a number of factors are at play in the NFT progression. Though the sociotechnical plan underpinning its appearance in the media world is fairly new, the economic principles explaining the phenomenon are not.
The NFT is a value creation and funding tool for an intangible work, just like a label or private investor holding rights to a music album or film without owning all the existing copies.
Even though some people might see NFTs as capitalism gone too far, they could theoretically serve entirely noble purposes, such as funding works. For example, an NFT could resort to an operating method similar to equity crowdfunding. Each buyer could partially contribute to funding a work, receive a predetermined NFT portion, and collect some of the revenue in the event that the work is commercialized.
“The Merge,” by artist PAK, was the most expensive work sold this way. The work was bought by nearly 30,000 individual buyers who collectively invested more than US$90 million.
Not all NFTs are alike in their makeup or legal effects. Becoming familiar with the fine print that comes with commercializing NFT digital works is relevant. David B. Hoppe, a lawyer specialized in digital property law, rightly reminds us that NFTs cover a number of rules that may vary from one jurisdiction to the next and may even be subject to different interpretations by different parties.
For example, could an NFT be resold? Could rights and royalties be claimed when NFTs are used by a third party? Does the creator have a say if the NFT holder authorizes its use for advertising purposes in a business? Could the work be modified and resold with a different NFT? Could an NFT be divided into shares and sold again for a total value higher than that of the single token? There is also the question of collective works such as films, television series and animated works: Did the rights-holders authorize the creation of NFTs and did they receive their fair share of net revenue when works were sold?
So many questions in the physical and virtual practice of NFTs that will yield unexpected answers.
NFTs: Key to making digital creation discoverable
There is no question that a token system used for the value creation of intangible works is relevant. Adding physical spaces to the equation may make selling and buying digital rights more tangible and customizable.
Like traditional gallery owners, NFT gallery owners work hard to find the most appealing works, have a role in setting a just price, and help artists, collectors and investors agree on terms through exhibitions.
Gallery owners get paid for this type of work, of course. This work is added to a variety of issuance, sale offering and commission costs that are mostly kept by digital platform operators. It will be interesting to see how “NFT gallery” owners co-evolve with digital platforms or even whether they come together to increase the discoverability and funding of local and national digital art.
Whether people are amateurs, investors or collectors, bringing digital art and physical spaces together makes art easier to understand for some and could expand the circle of enthusiasts.
Art galleries are paving the way to celebrating digital creations more formally, as these creations are slowly but surely finding their place among the national heritage in countries such as Canada. Production and location are essential, from permanent collections to corporate exhibitions to the actions of citizens developing an appreciation of these new forms of creation.