Read about encryption art and NFT in one article

This article is an overview of the recently emerging field of "crypto art", including the use of "non-fungible tokens (NFT)" as a distribution mechanism for digital art.

limited edition tokens

NFTs, or what I will call tokens, can be understood as unique digital objects that can be collected and transferred from one user to another within a cryptocurrency network. In the field of crypto art, they usually represent a media file, a piece of software or some artistic concept. These NFTs can be issued in limited quantities and are cryptographically signed and traceable directly to the provenance of the artist.

These NFTs are very similar to signed inkjet prints produced by digital media. Let’s say an artist is selling a series of limited-edition digital art prints that he created himself. The artist sets the number of limited edition releases (1, 5, 50, etc.), promises not to release more than that number, and signs each work to say "this item is special". If his work is highly regarded, others will rush to buy and own it, and perhaps the work will end up being purchased and managed by a private collector or a public institution.

Shaded Structure Diagram, yazid, Hic et Nunc (https://hicetnunc.art/yazid)

However, works that are sought after and have proven provenance are not just prints of media or images, but limited releases of signed artworks by artists. To give a concrete example, photographs signed by Ansel Adams can fetch hundreds of thousands at auction, while those that are not signed, even for the same photograph, fetch only Can be sold for a fraction of the auction price. Jack Rusher covers this situation in detail in his article on crypto art.

scarcity and abundance

One of the amusing, and oft-mocked, things about crypto art is that collector-bought art is common on the internet, and full-resolution images are often free to view and download.

Art Blocks by Monica Rizzolli

"Fragments of an Infinite Field": https://artblocks.io/project/159

You might notice that the economic value of art has been tied to the scarcity of its medium since ancient times. Yet crypto art represents a paradigm shift that separates signatures (tokens signed by artists) and artistic mediums (images, photographs, animations, concepts). This allows the former to remain scarce and uniquely transferable, while making the latter resourceful and accessible.

Signature art medium carried in limited edition tokens

While this is a polarizing paradigm, it is not new, and similar ideas exist in the distribution and purchase of works of conceptual art, such as Sol LeWitt's murals. In these cases, what is "possessed" and transferred (e.g. acquired by a collector, museum, institution) may simply be a signed certificate of authenticity. The same goes for crypto art: the tokens being issued and traded are not documents, but more akin to certificates of authenticity signed by artists, each with some conceptual connection to a particular medium, artwork, or idea.

Mural #793B by Sol LeWitt (1996)

A common refrain is that tokens impose an "artificial scarcity" - one might argue that limited-edition signed prints have an equally artificial and arbitrary scarcity, especially when the works are produced by an inkjet printer and authenticated with a pencil signature when. Prints can be faked or copied, and sometimes the copies are almost indistinguishable from the original (such as the MSCHF's recent "Possibly Original Andy Warhol's Fairies" prank) . Conversely, duplicating a token contract, even by the artist himself, would result in a completely different new identifier and hash (a string of numbers and bytes) that would also be clearly identifiable on the blockchain. Provenance and History. Of course, this doesn't mean that crypto art is completely immune to counterfeiting - piracy is plentiful and still requires careful research. Copied or poorly designed interfaces, similar-looking tokens, and believable imitations of artists can all lead to regrettable purchases.

alternative plan

These thoughts might make you wonder : Does art really need scarcity, signatures, and ownership? The answer is no: Many artists give away unsigned public copyright works, build public structures that cannot be owned, and make their work freely available online for all to see. However, in the absence of widespread support from non-profit arts organizations, public agencies, and government grants, most artists have had to find alternative distribution mechanisms and monetization models if they hope to sustain art practice as a cause.

Some of these alternatives include platforms like Patreon, Etsy, Gumroad, Kickstarter, Shopify, etc., which collectively help artists maintain their practices. But there is no silver bullet, and for many artists, income from platforms like Patreon barely covers rent, let alone debt, family and other living expenses. What's more, most platforms fail to recommend physical mediums for digital artists that match their skills and preferences. Does it really make sense for a 3D animator to open a print shop to sell physical work and still images?

Maybe we can "pay the artists", which means "donate to them, expecting nothing in return". It's a lofty ideal, but one that has so far eluded it, and most of those who tout it don't actually donate regularly to artists (ironically, they might buy signed works from them, or commission artists trade goods in the hope of getting something in return).

This is not to say that we should abandon public funding, if there were to be systemic change, if governments around the world would generally pay their artist-citizens annual salaries, we might not need these digital privately-funded art and creative marketplaces anymore. Aside from government changes, another possible avenue for supporting artists more generally is through nonprofit arts organizations—a common goal in the crypto art space. Art Blocks artists and collectors have helped direct approximately $45 million to various nonprofits, many of them art-related, in the platform’s first year (including Rhizome’s largest single sale in its 25-year history) donation).

Ownership & Property

People often confuse the concepts of copyright and intellectual property ownership. As with the purchase of signed prints, there is no transfer of copyright or proof of license in the purchase of signed tokens. Unless otherwise specified, copyright and proof of license remain the property of the artist or content distribution licensor. Different tokens may have different licenses, some are valid in the public domain as CC0, some are free for non-commercial use, and some try to separate copyright and token holders (no proof of court-validated license) connect.

It goes without saying that purchasing tokens does not make you the "owner" of the particular media file that token represents or points to. As mentioned above, there are many ways to access this media file on the Internet, and anyone can right-click to save this file. In fact, most tokens that point to media files will use a technology called "IPFS" to save and distribute the files to as many computers as possible, alleviating the reliance on a central point of failure.

The generative artwork "Bougainvillea" released by gpitombo on fxhash: https://fxhash.xyz/gentk/slug/bougainvillea-29

Still, we might be able to make a claim around "ownership of works of art." This assertion can only be made if we acknowledge that conceptual art can be owned (like LeWitt's work), and only if we acknowledge that tokens can conceptually represent some degree of artistic meaning, not just file indicators and digital collectibles. is correct. It's a controversial topic: some readers, artists, and collectors will reject the idea that conceptual art can or should be owned. The most popular crypto art markets are filled with gimmicky apes, bears, penguins, and just about every other animal figure that usually doesn’t belong to any real artist and doesn’t help with ownership of the artwork.

At the very least, it is generally agreed that collectors do own the token itself, which some might see as the only record in a distributed database, similar to the sole owner of a domain name, who have the right to transfer and sell that digital property (note: some Some NFTs are themselves domain names, which are used exclusively within the blockchain protocol).

a new distribution mechanism

A new mechanism emerged: artists can distribute digital art, and viewers can buy and collect it. In particular, the digital art I am talking about usually refers to digital media such as "animation, generative art, photography, illustration, graphic design". I think digital tokens are not suitable for the certification, distribution and transfer of physical artworks such as oil paintings and sculptures. .

Pixel Art GIF by giomariani on Hic et Nunc

Works: https://hicetnunc.art/giomariani

In fact, the encrypted art mechanism is fundamentally different from other online distribution platforms, and each has its own advantages and disadvantages. Hic et Nunc is a distribution platform built on the Tezos ecosystem, allowing artists to "mint" their work in a fixed circulation to on the public ledger. Artists use the private keys of their cryptocurrency wallets to sign transactions, and they receive tokens for payment directly, and the platform then takes a 1% service fee from each sale.

Artists can set token royalties, usually between 5-25%, and they get paid on an ongoing basis each time tokens trade (and potentially appreciate in value) on the platform’s secondary market. In other marketplaces, royalties can be distributed among multiple beneficiaries (such as direct distribution of a percentage to non-profit organizations or open source software tools).

It is worth pointing out that the transaction amount of many primary markets on the Tezos chain is in the range of 1-50 XTZ, which is actually almost the same as the price of the artist's limited physical works. Yet mainstream coverage tends to focus only on high prices and eye-catching deals, which can distort perceptions of the market.

The fee scale on the Tezos chain is very different from that of the traditional art creation market. In the traditional art market, galleries often take 40%-60% of each transaction, while artists do not receive any royalties in the secondary market. It's also way beyond what distribution channels like Bandcamp charge (14-21%), leading some artists to experiment with Hic et Nunc as an alternative music distribution platform.

An experimental music distribution platform built on Hic et Nunc (hen.radio)

In some cases, artists in this field can circumvent these platforms and services, customize a smart contract and sell directly to interested collectors peer-to-peer, such as Rhea Myers, Mitchell F. Chan, Sarah Friend, Deafbeef, Andrew Benson Wait, they started exploring blockchain art many years ago.

Borderless

A distinctive feature of crypto art is that it is borderless to some extent, while individuals participating in a cryptocurrency network are still bound by national laws and regulations (such as paying taxes on income from crypto art).

A distributed and global platform like Hic et Nunc enables encrypted art to flourish globally, allowing artists and collectors to exchange art and value using the same shared currency, and this transaction is recorded in a network that is not subject to any particular jurisdiction. on the public account of the jurisdiction. This is crucial: artists no longer price their art in local currencies and markets, but in a globally shared market. While it's difficult to measure artists by country and varies by platform, some informal polls on Hic et Nunc can provide us with some insight.

Unfortunately, this doesn't mean global fairness: sales tend to be concentrated on artists from the West (often white males), which can be caused by factors including hardware, education, language barriers, technical barriers, social media popularity, discrimination, etc. There are a number of reasons, and the sales promotion in the center of the website interface exacerbates this inequality. Galleries, curators, hashtags, and other outlets have sprung up to try to address some of these issues and open interfaces (pop twig, alterHEN, JPG), with varying degrees of success.

Platforms like the Feral File take another approach to a fully open marketplace: assigning a curator to each exhibition, highlighting the diversity of artists and artworks rather than amplifying the diversity of potentially biased populations. whim.

GRAPH, an exhibition curated by Processing co-founder Casey Reas: https://feralfile.com/

Decentralized & Permissionless

It’s worth noting that most crypto art builds on two other unique properties of blockchains: decentralization and permissionlessness. That is, no single participant controls the public ledger, and users only need to pay fees to record transactions. This is a double-edged sword.

On the one hand, this can help remove reliance on centralized services and intermediaries (PayPal, Instagram, auction houses), while giving users more ownership over the assets they issue and collect. This was borne out by Hic et Nunc, whose ecosystem, assets, and many forked sites were largely untouched when the platform shut down after its owners and developers quit in anger. This is possible because the distribution medium and blockchain records are not controlled by the owner in the first place; instead, the responsibility for ownership and maintenance falls on the user community (more on this here).

The hicetnunc.xyz website was shut down by its owner,

But was subsequently forked as hicetnunc.art which continues to function normally.

The benefits of decentralization can also be seen in different competing marketplaces on the same chain, such as Objkt.com, Versum.xyz, Fxhash.xyz and other marketplaces on the Tezos chain, which all operate on the same public ledger, Many of these platforms have the same token index. This allows users to buy a token on one market and sell it on another, and even trade those tokens peer-to-peer from one user to another without relying on any particular website.

On the other hand, however, a system with zero moderation can lead to many problems: spam rampage, illegal content, "plagiarism" (plagiarism), phishing, impersonation, etc. Open marketplaces like Hic et Nunc and Opensea are often forced to de-index and remove content that violates codes of conduct. It's like Google removing your website from the search results - your website is still there and functional, but it's no longer easily discoverable by people. Moderation and indexing on these platforms is a huge challenge and essentially a game of whack-a-mole, leading many users to favor curated or well-known collections.

Not all chains are created equal

So far, I've primarily mentioned the Tezos blockchain in my articles, as it has a thriving art community and a range of different marketplace platforms. The fact that the chain is energy-efficient (about the same energy used by common network activities like tweeting and blogging) and has extremely low transaction fees (a fraction of a dollar, sometimes as little as a fraction of a cent) has also become a topic of discussion about the potential future of crypto art. core of the discussion.

I don't think Tezos is a perfect blockchain, but when Ethereum improves its energy consumption and scalability issues through proof of stake, sharding and zero knowledge proof, the energy efficiency and cheapness of the Tezos chain make it worth considering As an option for crypto art. Deciding which chain is best for an artist is complicated, for example, while fees on Ethereum are currently prohibitive, it supports some well-tested algorithmic stablecoins that can mitigate short-term price volatility, while the Ethereum ecosystem and infrastructure are often more developed than other chains (for example, can be compatible with certain features that are not available on Tezos chains or are more challenging).

Personally, I've been using and exploring many different blockchains as they have different applications, areas of research, pros and cons (e.g. Mina is in early development and its focus on zero-knowledge proofs gives it some interesting features and use cases).

Not all tokens are created equal

It is also important to understand that not all tokens are built on the same protocols and smart contracts. Some tokens will use IPFS as the main medium, and tokens like Art Blocks will embed the entire medium as software on the blockchain. An example of direct use of on-chain media and programmable smart contracts is artist Deafbeef, whose work Entropy is “downgraded” each time it is transferred to a new owner.

other concerns

Energy consumption: Ethereum is currently energy-intensive, which drives artists to move to smaller, less developed networks like Tezos (where energy consumption is negligible). This may change in 2022 with Ethereum's migration to proof-of-stake, at which point Ethereum's energy consumption will be reduced by 99.95%.

Fees: Ethereum fees are prohibitive, sometimes costing hundreds of dollars to mint a single work of art. This tends to push people towards alternative chains and sidechains like Tezos and Polygon (which have fees of a fraction of a dollar). The scalability of future versions of Ethereum may be improved, but this will take several years to fully mature.

Risks: There is a risk that is obvious to both artists and collectors. Minted works may not be sold, tokens may depreciate in value, and there are many security risks in the management of private keys (if you accidentally share your private key online, you may lose all your funds).

Quality: Some platforms with a complete lack of moderation have led to a lot of negative perceptions, as most of the content posted on marketplaces like OpenSea is of low quality, and even outright spam, pornography, and theft. Flamboyant profile pictures, avatars, and digital collectibles are often thrown into the bulky crypto art mixing pot, and their high sales tend to garner mainstream attention.

Speculation: Extremely high prices in these markets are often the result of speculation and sometimes FOMO buying, gaming, insider trading, pump and dumps. Given the sheer size of these permissionless networks, it can sometimes be difficult to distinguish fraud from the rest.

Volatility: Tokens may fluctuate significantly (appreciate or depreciate) on a daily basis, and users are often encouraged to withdraw profits, hold stablecoins, and avoid holding any coins that cannot afford to lose value.

looking to the future

Considering that crypto art has only just emerged in the mainstream in 2021, it is still in its early stages, and its space and technology will likely continue to grow, evolve and improve. This requires a series of efforts: better curators, critics, exhibitions, technological development, management and new modes of transaction.

Through independent exhibitions such as The Digital (Miami, 2021) and Right Click + Save (Singapore, 2021), we can see that this field is struggling to develop. At the same time, more well-known artists, institutions and curators are cautiously testing the waters, including the Museum of Contemporary Art (MOMA), OÖ Kunst, Karlsruhe Center for Art and Media (ZKM) and Pace Gallery.

The Digital (2021)

A pop-up art exhibition of crypto and generative art during Miami Art Week.

We still have a long way to go, and many token contracts and technical systems that crypto art currently relies on are quite crude. I'm particularly interested in the new opportunities for collaboration and automated revenue distribution via programmable contracts, which has been implemented in the Transfer Gallery Pieces of Me (2021) collection sale.

This post is merely an introductory level discussion around crypto art, intended to showcase the interest groups and communities that have sprung out of it, while placing it in a broader art-centric context. There are still many points that can be further explored about this technology: file storage, governance models, consensus mechanisms, zero-knowledge proofs, and many works of art that deserve attention, discussion, and critical analysis. I will discuss them later in a dedicated article .

Author: mattdesl

Translated by: Guo Yuchen