It’s not to be missed: If you happen to have $280,000 to spare right now, you can buy a bored ape – and become a member of the elite “Bored Ape Yacht Club.”
The Bored Ape Circle doesn’t physically exist, but owning this NFT marks you out as a trend-conscious and dedicated art collector in the metaverse. There you go.
Plus, you can mutate the monkeys. But, do you have any idea what we are talking about here? No problem, we’ll explain it to you.
The NFT Concept
The concept of NFTs comes from the world of blockchain and crypto enthusiasts. Tokens can be thought of as a kind of digital tokens that can perform various functions. The kicker is that, unlike cryptocurrency that you can get with a crypto trading bot for Kraken, NFTs are “non-fungible.”
Admittedly, that still sounds cryptic to newbies. Think of it as things that are immediately exchangeable. Money, for example. A $20 bill can be replaced by any other $20 bill or four five-dollar bills. Money is fungible, that is, divisible.
Data with Collector Value
It’s different when you borrow a unique object with a collector’s value. You can’t just return another object in its place. And so it is with NFTs: they are not divisible or interchangeable, each is unique. This predestines NFTs to digitally map the ownership of art and collectibles.
For digital art creators, the art market has long been a tough place. Thanks to NFTs, that’s changing. After the digital collage “Everydays – The First 5000 Days” by US graphic artist Mike Winkelmann, aka Beeple, was auctioned off at the renowned auction house Christie’s for an incredible $58 million, a veritable hype broke out.
Since then, there have been NFT auctions, major art fairs have founded new projects for digital art, and well-known galleries are suddenly representing NFT artists. The first museums included NFTs in their collections, and Seattle even founded its own NFT museum.
Old School Heavyweights Storm the Crypto Space
Famous artists such as Damien Hirst and Erwin Wurm are now also making art NFTs. And the renowned magazine Art Review even named protected files the most influential force in contemporary art.
More and more museums and exhibition houses are trying to get a foot in the hype themselves, digitizing analog masterpieces to offer them as NFTs: The Uffizi in Florence is offering a work by Michelangelo, the British Museum a Turner painting, or the Belvedere in Vienna Klimt’s “Kiss.”
Quantity Instead of Quality
On the art scene, the structures are still relatively new. Most NFTs are offered on large online platforms such as Open Sea or Nifty Gateway, with which auction houses also cooperate. While these present themselves as online galleries, there are now countless other sites where any user can offer his or her files – a confusing plethora of graphics, pixel collages, and animations that contributes to the accusation that serious quality deficiencies prevail.
Exhibitions in established galleries or on curated platforms, on the other hand, give a glimpse of the potential: Just recently, people queued for hours to see artist Refik Anadol’s immersive NFT works in Berlin, which is currently touring the world in both analog and web formats.
New Legal Territory
In addition to aesthetic and qualitative differences, there is also a great deal of uncertainty with regard to legal issues. What is allowed to be done with an NFT that has been bought at an online auction or on a platform?
To the question of what one can and should not do with an NFT, there’s only one classic answer: It depends.
Copyright is generally inalienable – that’s no different in the virtual world than in the real one. What can be sold off, on the other hand, are the so-called rights of use and exploitation.
Anyone who buys an NFT in an effort to print millions of copies on T-shirts should first take a close look at what rights they are buying. Often, the terms of use of the sales platforms also provide information about what the buyer is allowed to do with the NFT and what not.
In any case, you don’t automatically buy the rights of use. A crypto group recently experienced this firsthand: they wanted to turn the science fiction classic Dune into an animated series and bought a rare copy of the script for just under three million dollars. But apparently, no one thought about the fact that this did not buy the rights for a film adaptation.
What is Art?
What’s more, in the bizarre crypto world there are also things for sale that no one would buy in the real world. The website tzcolors.io, for example, offers over a thousand colors for a price starting at $100.
At N Project, on the other hand, you can buy your favorite number for around $4,500. This is where the legal concept of “work of art” comes into play: a work of art must have been created by a creative act.
Because courts have always been reluctant to get too involved in the unresolved question of “What is art?”, this work height was deliberately set low. But is it now permissible to own and sell a color, a word, or a simple symbol?
That will probably have to be clarified by the courts – like so much that is currently going on in the crypto world.
Unique Counterfeits
Where millions are moved back and forth, fraudsters are not far behind. As recently revealed, many of the NFTs on offer are counterfeits or plagiarized. Among tokens created with a specific function at market leader Open Sea, it is said to be as high as 80%. But wait. Aren’t NFTs supposed to be unique and irreplaceable, as their name suggests?
They are – as long as you get the right NFT. But any person can “mine” an NFT with just a few clicks and freely determine what that NFT should represent. Because the blockchain lacks a central authority, it is possible to mine a Picasso, a Banksy, or the works of another NFT artist. And what is technically possible is done.
Often, NFT projects turn out to be a so-called “rug pull,” a scam in which the initiators use the collected coins to shoot themselves into digital nirvana.
This is what happened last October: “Evolved Apes” was a collection of 10,000 NFTs depicting monkeys. Buyers of these monkey pictures would later have been able to compete against each other in a specially developed video game and even earn crypto coins.
But this never happened: as soon as the NFTs were sold, the developers made off with over $2.4 million. Crypto wallets on which expensive NFTs are stored are also stolen time and again.
What’s Gone is Gone
For those who have lost their NFT due to a hacker attack, for example, there is usually little hope, because blockchain transactions are anonymous and final. However, recently, authorities have certainly achieved success and recovered stolen crypto assets.
Specialized forensics companies have now specialized in analyzing the transactions on the blockchain – which are, after all, public. Thus, tracing the path of the stolen goods. Whether it pays to pursue the matter legally depends on the value of the token hab.
But you don’t even have to talk about fraud right away to find points of criticism. For example, it is in the nature of NFTs that they are indivisible – and thus the barrier to entry to participate in large investments is enormously high. Only a few people can afford to own a virtual monkey. At the same time, the Bored Apes are considered more of a “safe” investment than smaller projects because of their high profile among connoisseurs.
The Dirty Chain
And then there is the question of whether you can keep what you have bought forever – because the blockchain does not contain the actual work of art, but merely a link to it.
Last year, Moxie Marlinspike, founder of the messenger service Signal, showed what this can mean: he sold NFTs that turned into fecal emojis after purchase – by simply changing the image stored under the link.
Nevertheless, the biggest criticism traces down to the issue of sustainability. Because most NFTs are created on the Ethereum blockchain, whose cryptocurrency Ether is created according to the proof-of-work concept.
This rewards the server that has solved a complex computational task to create the next block, using a corresponding amount of energy. Overall, the Ethereum network is already said to consume as much power as smaller states.
In the medium term, Ethereum wants to switch to the more environmentally friendly proof-of-stake concept, in which ownership rather than computing power counts. The switch has already been postponed several times. However, other blockchains such as Solana or Polygon already work with proof of stake. NFTs can be traded there as well.
Hoping for the Next Beeple
Collecting – be it works of art, trading cards, or weapons in games – is by no means the only use for NFTs: What is an NFT is determined by the person who mines it. In the future, for example, membership cards could also be placed on the blockchain as NFTs and linked to a bonus – such as the right to speak with a star for half an hour per year.
For artists, including female musicians, this opens up entirely new possibilities for distribution and interaction with fans.
The list of new possibilities offered by NFTs is as long as the list of problems and unresolved issues in the world. To all appearances, NFTs will not really disappear. However, it remains to be seen to what extent the phenomenon will become established.
Whether buyers of NFTs like the “Bored Ape Yacht Club” will one day be able to sit on a yacht themselves or whether they will find themselves under the rubble of a burst speculative bubble will only be known in retrospect. At the moment, the crypto community knows one motto above all: buy what it can – and hope that the next Beeple will be there.
Source: Plato Data Intelligence: PlatoData.io
