The latest surge of internet photography chatter is about NFT, mainly since a piece of digital art called JPEG was sold at auction by Christie’s for $69 million. (If they had wanted to get the photo industry’s attention, they couldn’t have picked a better name.) The promise of riches closely tied to cryptic technology has all the attributes of another gold rush not seen since the latest blockchain / ICO craze. But what is it all about, and should the photo industry care?
A crash course in Non-Fungible Token and blockchain.
For those who took the time to learn a bit about blockchain, NFT is not that far away. With the same distributed ledger principle at its core, it is a very secure way to store data. In this case, its data associated with a digital file and associated transaction history. Since each NFT is forever tied to a unique digital file, it is not exchangeable with another NFT. In the same way, you wouldn’t trade (in your right mind) a Picasso against another Picasso. Each painting is unique and certainly does not have the same value. That is the Non-Fungible part of the name Non-Fungible Token. It can, however, be traded for money. Or, more precisely, cryptocurrency.
Because it’s mostly a transaction representation, NFT’s are very comfortable in the smart contract-friendly Etherium universe. Most transactions are thus done in ETH.
So, what’s there to like?
A very appealing part of an NFT is that it can contain immutable instructions for delivering a percentage of every subsequent sale back to the initial seller. Thus, if a photographer sells an NFT, he/she will get a cut every time that NFT gets resold by its new owner, ad aeternam. Interest in second sales has forever been eluding photographers as it was impossible until now to trace accurately.
Another intriguing aspect of NFT is that they represent ownership rights but not licensing or copyright. In other words, a buyer of a photograph associated with an NFT can legitimately claim a photo belongs to them but can neither license the images nor make any copyright claims. Photographers can continue to exploit their images.
What’s there not to like.
First and foremost, it’s always the same issue with blockchain: While it claims it’s an independent, decentralized system, you are still bound to the gatekeepers. While It can be peer to peer, it’s just not easy to handle.
It’s also about mining and processing power. Mining blockchains is so resource-intensive, there are very legitimate concerns it could quickly become a major cause of climate change. NFT popularity would only increase the charge, making sales of photographs more damaging to the earth’s atmosphere than coal burning.
Etherium is even less regulated than Bitcoin. Many in the cryptocurrency world label it as a scam as a substantial amount of pre-mining Etherium initially distributed to its founders. On top of being extremely volatile, It is also even less regulated than Bitcoins.
A file’s link to an NFT is often just a simple text description residing in its metadata. This opens the door to misrepresentations. Photos can be inserted as a hash value, but here again, the hash function’s creator is the only one capable of retrieving the hash. An unbreakable chain to the issuer of the NFT. Finally, it can be an URL. But those get corrupted as well.
Finally, anyone can associate an NFT with any digital file, regardless of their copyright ownership. One could take any Cartier Bresson image or a Rembrandt, create and sell an associate NFT and if they find a buyer, make money off of it. Ownership of an image can be sold by anyone.
Where to now?
NFT’s are frequently described as buying and owning “bragging rights.” The opportunity to claim ownership over a digital file. The more popular the file, the more the value of the claim. Sometimes, like with the $69 million JPEG art piece, its value creates its popularity.
For photography, that means the opportunity to reap revenue from NFT is either by offering already popular images or somehow making them popular when issuing the NFT. This can take any form like selling the NFT to a celebrity and reaping the subsequent media attention benefits.
The unknown, for now, is how much this is a fad. Online being a big part of where we spend our lives, NFT does answer a true demand. Digital files have become an important part of our lives, whether in games, social media, or one-to-one SMS. People have a legitimate interest and desire to own digital files, the same way they like to collect objects. If anything, games have demonstrated a massive economy in and around digital content, fueled mostly by a generation raised by computer screens. NFT partly answers this demand but in an imperfect way.
While NFT’s certainly offers potential for the photography world, it’s more like a good first try. Better implementations of smart-contract/blockchain like ISCC Content Identifiers are in the works. They are just not mature yet. Unlike NFTs, it is non-speculative and better adapted to visual content. But more about that in a future post….