Chapter 1: The Genesis of NFTs

The inception of non-fungible tokens (NFTs) was rooted in the desire to safeguard artists' rights and provide them with financial benefits. However, the initial vision has been overshadowed by opportunistic trends within the tech industry.

In May 2014, I collaborated with artist Kevin McCoy at the Seven on Seven event in New York City, which aimed to foster creativity by pairing artists with technologists. I was uncertain about my role, as McCoy and his wife, Jennifer, were already established figures in the digital art scene, and he possessed superior coding skills. My background involved consulting for auction houses and media firms, leading me to ponder the complexities of provenance, ownership, and control over artistic works.

Inspired by the tech-industry hackathon model, we endeavored to create a functional prototype overnight. This was during the height of Tumblr’s vibrant community, where countless artists shared their work without any credit or compensation. It was evident that some of the McCoys' creations were being circulated widely on the platform. McCoy had been contemplating how blockchain technology, which serves as a permanent record for digital transactions, could empower artists by enabling them to protect their creations.

By dawn, we had developed a preliminary version of a blockchain system to confirm ownership of original digital art. In a lighthearted moment, we dubbed our innovation "monetized graphics." Our first public demonstration at the New Museum of Contemporary Art elicited laughter from an audience skeptical of corporate influences in the arts. Using Namecoin, McCoy registered a video created by his wife, which I purchased for a mere four dollars.

Though we didn’t patent our concept, McCoy worked to promote it for a few years, albeit with limited success. Our pioneering demonstration seemed to be ahead of its time, as the concept of unique digital art is now at the forefront of the NFT market, valued in the billions. Recently, a technology columnist from The New York Times sold a digital image for $560,000, while McCoy listed the first NFT we created for a staggering $7 million.

Despite my lack of financial interest in these developments, I own the NFT purchased for $4 and have no intention of selling it. The NFT phenomenon took me by surprise, and I had nearly forgotten our project until it resurfaced in mainstream discourse.

The principle behind NFTs remains compelling: technology should enable artists to maintain control over their creations and facilitate sales while protecting against unauthorized use. McCoy and I aspired to create a system that would prevent exploitation of artists, but the reality has diverged drastically from our original vision. Instead of empowering creators, the NFT landscape has become rife with commercial exploitation.

If you admire a piece of art, would you genuinely pay more for it simply because it’s listed in a spreadsheet? I doubt it. However, when you distill the technical intricacies of NFTs, placing artworks on the blockchain resembles an auction catalog listing, offering certainty about the piece's legitimacy. Digital works are perfect copies, indistinguishable from the original, yet the ability to differentiate an artist's creation from mere replicas was groundbreaking in 2014.

Unfortunately, our NFT prototype had limitations. Storing the actual artwork on a blockchain proved infeasible due to size constraints, leading us to reference images via URLs or mathematical compressions. This decision has persisted through the years, and current NFT platforms still follow this model, meaning purchasers acquire links rather than the actual artwork. This raises questions about the long-term verification of the linked art, especially considering the volatility of start-ups.

Today’s NFT platforms reveal shared vulnerabilities, relying on the continued existence of one company to authenticate art. They echo the conventional internet, where artworks can vanish if a domain isn’t renewed. As software engineer Jonty Wareing aptly noted, "NFTs are built on an absolute house of cards constructed by the people selling them."

The situation is exacerbated by the blockchain's appeal as a refuge for wealth. Many wealthy individuals view it merely as an alternative to real estate investment, leveraging cryptocurrencies like Bitcoin and Ethereum as a means to grow their assets. Meanwhile, some investors are exploring blockchain applications as a way to avoid the dominance of major tech companies.

Yet, despite the theoretical benefits, blockchain technology has yet to offer practical solutions for average consumers. A decade after blockchain captured attention, no widely-used smartphone apps leverage this technology. The only exception lies in cryptocurrency trading apps, resulting in a self-contained economy where currencies exist solely for trading.

The NFT market has morphed into a playground for the wealthy, lacking accountability. Many buyers are unconcerned with artistic merit; they treat NFTs as a status symbol, akin to collecting arcade tickets after a day of gaming.

The environmental impact of NFTs is another pressing concern, as transactions consume substantial computing resources. While some proponents argue for the emergence of "green" NFTs, the blockchain community's track record on environmental responsibility is dubious at best. The transition to eco-friendly practices seems unlikely, as short-term profit often outweighs long-term sustainability.

Kevin McCoy, who has been pivotal in the NFT discourse, believes that environmentally friendly NFTs will prevail. I want to share in that optimism, but history cautions against such hopes. Short-term gains frequently take precedence over lasting responsibility, and while numerous artists are genuinely concerned about the environmental impact of their work, the broader crypto community appears less inclined to abandon the harmful technologies that facilitated their rise.

The current NFT market is inundated with opportunists and spammers. Artists' works are being tokenized without consent, prompting many to seek tools that allow them to block unwanted NFT spammers.

Mainstream brands are now attempting to capitalize on the NFT craze, introducing gimmicky promotions that are often incomprehensible to consumers.

Despite my disillusionment, I cling to the original, hopeful ideals surrounding NFTs. McCoy remains convinced that blockchain can empower artists, yet my experiences as a technologist have been marred by opportunism. Similar to early digital music and social media revolutions, the initial promise often gives way to corporate domination, leaving creators vulnerable in an unforgiving marketplace.

Our 2014 NFT demonstration garnered enough interest to invite us to present again at TechCrunch Disrupt NY. This time, the audience consisted of tech enthusiasts and corporate representatives, eager to identify the next big innovation. Our slightly refined presentation, including a humorous take on "monetized graphics," was met with silence; in the tech industry, monetization is taken seriously, revealing the stark reality behind the hype.

Chapter 2: The Current State of NFTs

In this insightful discussion, experts explore the real implications of NFTs within the art world, moving beyond the initial excitement to address the challenges artists face today.

This video delves into how NFTs are reshaping the art market, examining the balance between innovation and the potential pitfalls of this new technology.