Can we Build a Better NFT Ecosystem?

Before the pandemic, the physical and the virtual often seemed at odds. But Covid has accelerated the adoption of new digital solutions: VR gaming experiences, digital fashion collections, as well as NFT art and collectibles. As a result, digital culture is no longer an addition to reality, it’s become one of its layers. 

While blockchain technology is often lauded for its potential to revolutionize a wide range of industries, the energy consumption required by proof-of-work (PoW) blockchains like Bitcoin or Ethereum has led many to question the sustainability of the technology. Yet, new proof-of-stake (PoS) protocols such as Tezos and Algorand, as well as projects like Arweave (which uses a novel “proof-of-access” consensus mechanism), consume far less energy and therefore offer alternative futures. To address these possible futures, as well as core issues of digital creativity and ownership, I convened a group of artists, curators, and thinkers at Central Saint Martins — part of the University of the Arts London — to survey the current NFT landscape.

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Mimi Nguyen: The vast majority of all NFTs are minted on Ethereum. Last year, its ERC-721 “standard” came top of the ArtReview Power 100. I’d like to address the sustainability problem of proof-of-work consensus mechanisms that were devised to solve collective trust issues like the “Byzantine generals problem.” Arthur, as the co-founder of Tezos, I would love you to explain why proof of stake augurs a greener blockchain future.

Arthur Breitman: When you’re trying to build a blockchain, essentially, you’re trying to build a shared data structure that anyone can write to, and anyone can read. And you want to make it open and permissionless, so that anyone can come in and validate the content and participate in maintaining it. The difficulty you alluded to with the Byzantine generals problem is that if anyone can participate in maintaining it, someone could try to destroy it; some people could try to delete or invalidate information. So in general, in this system, you need some sort of honest majority. But in a decentralized setting, when you don’t have a concept of identity, what is the majority? You can’t say it’s the majority of people because, in an algorithm, you don’t have the concept of a person, you only have bits. So in a world of bits, what is an honest majority? 

A solution introduced by Bitcoin, also used by Ethereum, is to say, “Well, if you burn electricity, you actually have a way of proving [...] you’ve done something costly.” So the door is open, anyone can participate if they spend energy, but it’s not wide open, in a sense that a single party cannot come in and claim half of the power in the network. So you can think of it as a way of rationing participation in a network. 

The idea of proof of stake is that you want to use the currency itself for determining participation in the consensus, in the network. So if you want to validate and secure the network, you need to have some tokens. And the nice thing about it is that you don’t have to spend any energy. Now, of course, there’s a little bit of energy that’s being spent because you’re still running a server. But that’s a very small fraction. In fact, it’s one ten millionth of the amount of energy spent on a proof-of-work network. So it has a lot of benefits in terms of security, energy consumption, and speed, and it has found a lot of popularity with artists minting NFTs.

‍Simon Denny: I made my own Tezos-based NFT work where I collaborated with a bunch of scholars to select an object that they thought epitomized technology and organization. I made an image of each scholar’s selected object — which in the case of Wendy Hui Kyong Chun and Gillian Russell was an “executive decision maker” robot from the 1980s — put that image on the Tezos blockchain and gifted the NFT back to the authors as a kind of alternative currency for their labor. 

I’m now working on another NFT release based on a fascination I’ve long had for a website called “Fucked Company,” which documented companies that closed during the 2001 dot-com crash. As we head toward Web3, I’ve been looking back at screens of death from those failed Web1 businesses. I approached the artist, Guile Twardowski, who produced the illustrations for the CryptoKitties project, and asked him to reimagine logos for a selection of these Web1 companies based on some machine-learning outputs from Cosmographia’s text-to-image CLIP Guided Diffusion models. I was inspired by a quote of Marc Andreessen, who said: “Almost every dot-com idea from 1999 that failed will succeed.” I was thinking about what it would mean to bring back dead companies in a Web3 seance of Web1 spirits, but with no candles, only (ETH) gas — reviving these companies as a group of NFTs. 

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MN: Speaking of the dot-com bubble, many claim that NFTs are a bubble as well. What happens to the value of NFTs if the price of ETH plummets? 

AB: The value of the art has nothing to do with the value of the currency you purchase it with. If I buy a piece of art from a Venezuelan artist and the bolívar crashes, it doesn’t mean the work is less valuable. [...] The value of the piece is the value of the piece. That being said, broadly, cryptocurrency markets and NFT markets went up a lot last year. [...] But I don’t think the art is more expensive because the underlying currency you price it in has appreciated against some other currency.

MN: What is the role of institutions that used to value, curate or even teach art, like a university? If NFTs are all about connecting the artist directly with the collector, are we going to lose our jobs now?

Carolina Mostert: I really hope that curators and institutions, in their curatorial capacity, are more than simply intermediaries or middlemen. For something to be curated means that there is a layer of value which wouldn’t be there if it wasn’t for that curation. And so the logic of blockchain technology serves two important purposes. Number one, it can remove the filters and middlemen, which act as obstacles, but in the process it helps us to realize the actual value that curators can bring. I see education as a key function of the curatorial world, which need not be thought of as a lofty entity trickling down knowledge. Rather, It might be the community itself which, following that blockchain logic, takes the feedback of its participants in order to realize its creative potential.

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MN: Do we want community feedback? Tezos has community-driven governance. To change anything, you have to garner 80% of the votes, which returns us to the problem of populism. How do we overcome such issues through community-driven governance?

AB: It just depends on the type of decision you want to make. The decision about the technology you use as your base layer, your foundation technology, needs to be extremely conservative because you don’t want to be changing willy nilly. You need to make very slow, well-thought-out, well-deliberated changes — you want to have a very large majority in favor before doing anything. But different types of organizations with different goals are going to have a different form of governance. If what pays off is taking risks and exploring new ideas and doing new things, then in that case you wouldn’t want a very conservative form of governance, you would want something radical. So, I don’t think there’s a one-size-fits-all form of governance; it’s highly topic-dependent and mission-dependent.

Annka Kultys: I’d like to come back to the question of curation, which I think is crucial for NFT artists. NFT art needs contextualization within art history as well as an expansion of collectorship. Today, there is very little writing about the content of NFT works. We know about the price of Beeple’s Everydays: The First 5000 Days (2021). But who has really looked at this properly? Last June, there was a brilliant exhibition, the first of its kind, curated by Jesse Damiani, about the history of digital and NFT art at the Francisco Carolinum Museum in Linz called “Proof of Art.” 

In my experience, there is very little overlap between NFT collectors and gallery collectors. So what happens to NFT collectors? They collect the artworks online, they store them in crypto wallets, they don’t go to galleries, and they have little knowledge about how galleries operate. On the other hand, traditional collectors have little knowledge of the marketplaces where NFTs are sold. So I think it’s important for galleries and auction houses to start showcasing this art. 

SD: As an artist, I’ve made a lot of work about technology as well as business people and their promises to the world. And I’ve pulled on a few different aesthetics — from trade booths to empty vitrines to postage stamps — which can be seen as material containers for ideology. For my Sotheby’s auction I collaborated with a friend of mine, Billy Rennekamp, in order to mint an NFT back in time. He helped me to find a now-defunct project from 2018 whose NFT was available. And so I swapped out the image of the existing token, whose original collection on OpenSea now includes a couple of objects that look rather different from the others.

My recent show at Kunstverein Hamburg, “Proof of Stake” — named after the blockchain consensus mechanism — addressed the relationship between ownership and technology. The installation, which Robert Alice was part of, also included an artwork by the artist Timur Si-Qin which consisted of empty vitrines that had been thrown out by Hamburg’s museum for Cultures and Arts of the World (formerly the Museum of Ethnology), that used to display indigenous North American cultural artifacts. His gesture in recontextualizing these vitrines was about who frames ownership, but it also questioned what kind of value an object can retain when isolated from the social context in which it was produced, which to me has resonances with NFTs.

Robert Alice: On the question of ownership, I think it might be worth saying a bit more about that particular artwork, To the Young Artists of Cyberspace (iNFT) (2021). This was an NFT that used Open AI’s GPT-3, which is probably the most sophisticated neural net language generator. So you can put a prompt into it, maybe a couple of words, and the AI can spit out text. I got interested through a book called Pharmako-AI (2020), which started with the author writing a seed text of one line, with the subsequent book written by GPT-3. It can do long-form humor, it can do metaphor and simile, pathos, emotion, long-form conversation, narrative arcs, paragraphs, chapters, you name it. And up until now, GTP-3 has really been closely guarded. And so I applied to get access to the AI, experimenting with it, and then along with Alethea AI made what’s called an intelligent NFT (iNFT), whose seed text was governed by a character text that I had written. You can hold a long-form conversation with this avatar that is self-learning. But when it’s put on the blockchain it holds greater powers. 

For example, a thousand people can speak to it at once, and every time, the avatar is growing in wisdom in real time. The seed text I wrote was a manifesto of forms on NFTs, the idea being that each time the audience interacts with the avatar, the “manifesto” is slowly getting pulled away from its original seed text and toward the mind share of the audience. Imagine a metaverse experience where thousands of people are speaking to an avatar at the same time, in several different languages, across several different time zones. The “manifesto” is being directly shaped and updated by the audience, continually remaking itself. And so it affords insight into the wisdom or madness of crowds. Will it debase itself to the level of Tay, the controversial chatbot that was spammed with right-wing rhetoric, or will it develop great wisdom due to an avalanche of positive interactions? I have no answer! All I know is that when the avatar was released, the internet appetite for these kinds of futuristic experiences was huge. Over the course of the exhibition, in various formats, the avatar was viewed many hundreds of thousands of times.

The work was ultimately sold to an individual collector, and now lives on the blockchain and in the metaverse. I think there will be worlds where DAOs group together and pick up these avatars, because they’re quite interesting artistic models from an economic point of view: Selling a continually new experience. And so one might enter, say, Decentraland and link up a Metamask wallet and for a few dollars ask 20 questions to an avatar. From the perspective of art and ownership, this is a highly novel form of digital experience.

MN: I want to finish by asking the most popular question about NFTs: What’s the point of buying a JPEG that everyone else can right-click and save? 

AK: I can offer a story from my gallery prior to the mass popularization of NFTs. When we opened in 2015, specializing entirely in new media art, our first solo show was with Molly Soda. And her entire work, when it was shown, was already online: YouTube, Vimeo, everywhere. So we had this challenge to show her 25 video works in a white gallery space. And we used iPhones, iPads, small and large screens. Some iPhones she even placed in plant pots. And people were asking me, why do you sell this work when it’s already available online? 

Now that we have NFTs, we can price this kind of work like an auction house. But before, we were pricing Molly Soda’s work according to the number of views a video had received, at 10 pence per view, so that the most desired work would also be the most expensive. This was our system of pricing for the show back in 2015, and now we see that hype is a primary driver of value.

AB: At the end of the day, [...] we have to take a step back and say “there’s no magic in the blockchain.” It’s just a really, really good book of records.