Barry Keldoulis: My NFT Journey, So Far

In Artist Profile 56, Barry Keldoulis offered a personal insight into the 'Wild West' landscape of NFT art.

Firstly, I must apologise. When I set out on this journey I envisioned by the end of this article I would be your hero, having sorted this NFT thing out, and laid it out simply for all to understand. I’m afraid I’m no hero, and given that this is a technology-based phenomenon, there may be no end to this journey.

Why are we talking about Non-Fungible Tokens? There’s 69 million reasons . . . I was giving a talk back in March, a week or so after the $69 million sale of an NFT at auction (note, it was not bought with dollars, but with 42,329.453 ETH, Ethererum, the world’s second-biggest digital coin, by a “cryptocurrency billionaire”), and was asked about them in the question period. I admitted that it was all Greek to me at that stage, but the scale of the acquisition seemingly out of the blue made me wary that a fad had broken onto the scene. So I set about learning about NFTs. It’s been like a game of snakes and ladders; a possibility of something new and exciting, of climbing to new aesthetic heights, followed by a slide back down to earth.

Like most things that seemingly come from nowhere, there is a longer history that’s not well known. I have been in discussions around the impact of blockchain technology on the art world for a decade or more, usually from people wanting to set up a project to invest in, and it usually centred around the technology’s immutability and openness as a record of provenance. The problem for me was always how the intangible blockchain identifier actually becomes attached to the object of the artwork. This is hard to get one’s head around when dealing with a physical object like a painting, but perhaps easier with digital works.

I had some initial suspicions.

Perhaps this $69m sale was the equivalent for this “new medium” of the $200,000 + sale of Tracey Moffatt’s, Something More, 1989, (which stopped the Australian press continually asking if photography was an art form) or the $84,000 sale of Shaun Gladwell’s Storm Sequence, 2000, (ditto for video art). Artworks that exist as a digital file had come of age!

The significance of NFTs to the “Fine Art” realm might be the capacity for digital art to be produced as unique-state works, like paintings, potentially increasing their value and doing away with the complications associated with protecting the integrity of editions. Photography and moving image were mediums used by artists long before the general public shed their wariness. Most of that suspicion centred on the image’s capacity to be produced many times, and perhaps the fact that “anyone can click a camera.” Both mediums have now largely moved to the digital realm. Could the phenomenon of Non-Fungible Tokens make them irreproducible?

Unfortunately, neither appears to be true. What does appear to be true is this is a legal minefield, a market driven game being played out on the boundaries between “real” money and the upstart cryptocurrencies, which seems to mostly have very little to do with the quality of the art around which the hype swirls.

NFTs are not a new medium, and although the language around them sometimes appears to suggest, they are not actually an artwork. Well, maybe not yet. This is an ever changing tech-world, or if you prefer something a bit more sinister, a landscape of ever shifting sands.

So what do you get if you buy an NFT? The simple answer is fourteen digits. Those numbers are a digital token that’s a type of cryptocurrency, much like Bitcoin. But unlike a standard coin in the Bitcoin blockchain, an NFT is unique and can’t be exchanged like-for-like (hence, is non-fungible).

What makes an NFT different to a crypto coin is that the file stores extra information. At this stage, that extra information doesn’t appear to be enough to store the digital file for a major artwork, like Shaun’s Storm Sequence, but it can be enough for a pixelated cartoon cat.

So what are we left with at this stage? Not a new medium of expression for artists, rather a twenty-first century Certificate of Authenticity, and, as the NFT is not the artwork but sold with the artwork, one still has to rely on the integrity of the artist and gallery (if they have one) for the integrity of the edition. There is nothing to stop the artist reproducing the work from the digital file over and over again, minting more NFTs of the same content, or for an image to be copied from the web and reproduced.

This brings us to one of the legal complications. When you buy a painting, you own the physical work but not the copyright in the image, which is also true of the work associated with an NFT. Nothing new there, but the contract is written into the metadata of the NFT by its creator, determining the rights that accompany it, including actions that must take place when the NFT is on-sold. It could be a resale royalty. Great. But anything can be written in, and if the contract proscribes, for example, any commercialisation, as the NFT is inviolable and not open to renegotiation, the only way to capitalise is through resale. It is striking that the hype is driven by marketeers, as new collectors must constantly be found and introduced to the cryptocurrency in order for prior ones to profit.

Basically, this is the Wild West, an emerging “digital asset class” that is at the moment ahead of a legal and regulatory framework that will govern issues such as money laundering and sanctions implications, cyber security concerns and state laws around virtual currencies, alongside the questions around intellectual property rights.

Enough of the legal minefield, let’s look at technical issues! So, you own an NFT, nothing can go wrong, right? (Remember when we were told CDs were so technically advanced that they would last forever?).

The NFT system is quite precarious, a collection of metadata that defines what you own in cyberspace, with gaps in the network that can fail, through which you can fall. NFTs use links to direct you to where the art and the details about it are being stored. Links can and do die. So your NFT can break down and point to nothing – an expensive 404 error! Traditional URLs can be a problem. The domain owner could redirect the URL to point to something else, or they could neglect to pay their hosting bill, and it all disappears.

As a way around this, some NFTs now use the twenty-third-century-sounding Interplanetary File System, but let us not go into that now.
We haven’t touched on some of the other worrying aspects of NFTs: the environmental cost (it’s estimated minting one NFT consumes the same amount of electricity as the average American household over two days), the continuing speculative nature of this market and of cryptocurrencies, still in their infancy – but some of these aspects are viewed by some as positives, and generate the excitement and volatility of the market. Anyway, I hate to be a Debbie Downer, so let’s look at some of the positive aspects of the NFT phenomenon.

There is a real sense of a digital community developing, and it’s helping collaboration across different fields of creativity. If, for example, a video artist works with a musician, the contract can split payments automatically, in perpetuity. Artists are making new friends and sharing ideas through NFT “clubhouses” that are popping up. Artists like that they are given the ability to track who owns their work. Some seem to like the decentralised, global nature of this new world, away from the existing gallery system.

NFTs authenticate and secure provenance; someone who buys an artwork with an NFT and then resells it can’t misrepresent what they own. A young gallerist I spoke with intends to only be selling works (paintings, installations, digital works) with NFTs by the end of this year, purely as a cost and time saving measure for his business. The gallery will no longer be responsible for maintaining provenance records for his artists’ works, and he won’t even be issuing invoices. The information contained in the NFT covers all that, and his contracts will give the artists and the gallery ongoing royalties.

We’re really at the birth of this new, intangible world, with everything happening at hyper-speed. Innovation and the exploration of the potential of NFTs will continue; it will be a long journey with many pathways and problems may be resolved. Most concerning for me is the way the NFT is currently intertwined with cryptocurrencies; the conflation of the value of the art with the (sometimes wildly) fluctuating value of a cryptocurrency. When asked if the value of some work she had sold had gone up, an artist said it had tripled in two months. But not because there was wider interest in her work from curators and collectors, and it had resold many times over, but because Ethererum had gone up. It may of course come crashing down.

The current hyped conversation reminds me of the videotape format war of the early 1980s. Buy an NFT now, in a few years you may feel like someone who invested in a Betamax video recorder instead of VHS. And I know, youngsters, you don’t know what I’m talking about, but that’s the point: who cares now?!

So if you like a bandwagon, hop on! Splash some cash. If you’re one of the world’s 10,000 cryptocurrency billionaires, who cares? (Actually, most “art” related NFTs go for less that $200). But if you’re not, two words that predate the digital world by a few thousand years and still have as much bite as when they were first uttered: Caveat Emptor.

This essay was originally published in Artist Profile, Issue 56, 2021.