NFTs 101 the Museum Part 1: Not many topics in the realm of digital art have been as contentious as NFTs and the blockchain technology that supports them. Under the auspices of our Art + Technology Lab, we present a series of interviews with museum and non-museum professionals that will examine the artistic, curatorial, conservational, registrational, and legal aspects of NFTs and their implications for digital art collecting institutions.
What are they?
Non-fungible tokens, or NFTs, are recorded on a distributed digital ledger called a blockchain. This ledger is updated and maintained by a computer network that executes complex operations; however, we will get to that quickly. To distinguish them from other digital files that can be duplicated indefinitely, NFTs are registered as smart contracts that attest to their uniqueness and non-interchangeability. Non-fungible tokens (NFTs) can stand in for everything from actual goods to digital media like music, video, and photos, and they are linked to tradable assets.
Online markets abound where creatives can “mint” (make) and sell NFTs. Some are more democratic, where anybody can mint NFTs, while others are invitation-only. Artists who use NFTs to sell their digital artwork can set a resale fee that they can receive every time the work is sold. This price is usually around 5-10 percent. This cost is “baked” into the NFT during its minting process.
Blockchain and Cryptocurrency
Blockchains hold data in interconnected blocks, unlike typical databases using rows of tables. Adding data builds blocks incrementally. Timestamped blocks are added to the chain. In theory, these blocks constitute an unchangeable timeline. A distributed blockchain is maintained by a computer network that constantly communicates and has a copy of the same data. Any attempt to change data on one machine will be detected and refused by the others. Mining keeps this network going when computers “agree” on a shared ledger. Users who dedicate their PCs to this activity earn blockchain-specific coinage. Ether rewards Ethereum miners like Bitcoin does.
Reports have shown that certain blockchains utilize more energy than whole nations, highlighting the potential environmental impact of the machines used to operate blockchains. Competition to mine a cryptocurrency increases as its value rises, drawing more power-hungry miners and their computers into the grid.
Alternatives
While there are less power-hungry ways to keep a blockchain running, the proof-of-work protocol is the most popular. While alternatives such as the proof-of-stake protocol have not yet caught on at the same level as proof-of-work, the industry-leading Ethereum blockchain plans to transition by 2021. This is because proof-of-stake uses less energy.
While NFTs are still in their early stages as a marketing tool, many artists, particularly those working in the digital realm—who the art establishment previously ignored due to their lack of confidence in their abilities—have already jumped on the bandwagon. There is still a long way to go before there is an agreement. Still, the rising value of several cryptocurrencies and the improving efficiency of certain blockchains have spurred this acceptance. The environmental impact of blockchain technology is not the only concern; some worry that it would only serve to amplify existing socially repressive practices.
What does all of this have to do with Museums?
I appreciate you talking to me. After my cat passed away a few years ago, you surprised me with a CryptoKitty, a virtual NFT kitty. In my opinion, it requires far less maintenance than the genuine thing. Of course! However, I can’t promise that a CryptoKitty will be as devoted a friend. It would have been uncomfortable to ask for the talented cat back then, so I’m relieved her value hasn’t soared.
Perhaps that was when the idea of purchasing an NFT was brought up about LACMA’s Official Museum Business. Honestly, though, how long has LACMA been considering NFTs and blockchain?
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My first investment in NFTs was with TurkTurk, and then CryptoKitties brought them to our notice. By then, we understood blockchain technology, cryptocurrencies, tokens, and coins, but storing and trading non-fungible assets was emerging. The first NFTs I noticed were CryptoPunks, even though I didn’t anticipate they would sell for millions.
Since then, NFTs have been increasingly prominent in the general public’s mind. Not only have prominent NFTs fetched incredible sums at auction, but this technology’s potential to revolutionize industries like the arts, media distribution, and banking has also brought it into the spotlight.
There are presently 1,000 out of 10,000 cryptopunks in the world. Due to a defective number augmentation, the image does not show all pixels (24 pixels enlarged to about 38). A product of Larva Labs
What are some of the potential positive outcomes of engaging them?
LACMA’s NFT and blockchain involvement is inspired by many merits. NFTs are key for our artists and fans. After experiencing their influence and demand, many artists like us want to join NFTs. LACMA curators, instructors, and conservators should be competent in this new discipline since they talk to artists.
Public art organizations like LACMA may help community people engage with this region. LACMA will continue to discuss art-technology collaboration since the 1960s. NFTs and blockchain give the museum a new foundation for digital artworks in numerous mediums. LA County Museum of Art collects, preserves, shows, and interprets art for cultural, intellectual, aesthetic, and educational enrichment. Our role as translators may rise when these works progress into more technically or thematically complex formats. Museums buying NFTs is another reason LACMA should participate. 2021 “Tomas” is watching you in 2025!
Several artists are developing NFTs for enjoyment and financial gain. As the landscape changes, these NFTs will be bought, sold, kept, lost, and destroyed, but their cultural and historical moment needs preservation. Whatever way they arrive at LACMA, NFTs will be in our collection. We must conserve and display these precious antiques when that day comes. The museum has many divisions that acquire and display art. These include curatorial, legal, registrar, installation, and conservation. Digital artworks and NFTs will present challenges for each category. While the format is still being developed, our efforts could save museums a lot of bother. We must participate in this space to create, preserve, and contextualize these artworks.
What are some of the Downsides?
Museums may not be alone in experiencing some drawbacks associated with participating in this discussion, but many are industry-wide. One reason is that it’s still in its infancy. There are several exciting potential future directions for NFT. Still, as with any field evolving at this rate, any investments in time or resources are likely lost if the NFT roadmap is drastically altered. Anyone now engaged in NFT work should be aware of this; operating in experimental settings is an inevitable risk.
The burden we bear is a potential threat that may be specific to museums participating in this discussion. As the largest comprehensive museum in the western US, we must analyze how our purchases, public events, publications, and exhibitions impact culture. As a public agency, we must carefully evaluate all time, energy, and money investments. We won’t bid on the record-breaking auctions, but we’re watching to see what they mean for the art market, digital artists, and their presentation and acquisition.
It’s an intriguing mix of art and technology that could inspire native digital media makers, designers, and artists. As NFTs evolve, we expect more efficient platforms, more options and audiences, and new opportunities for artists to make a living and promote their work.
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