From SI410
Revision as of 18:51, 20 April 2021 by Sanperez (Talk | contribs)

Jump to: navigation, search
Examples of fungible & non-fungible objects in their physical & digital manifestation. [1]

NFT art is a subset of NFT's or non fungible token's. NFT's are unique, noninterchangeable datum that invoke the novel blockchain technology. Blockchain technology functions like a digital ledger in which a digital asset, such as artwork or digital paintings, photography, logos, animations, cryptocurrencies, and even websites.[2] is digital art that is recorded and registered on a digital ledger known as a blockchain. [3] Non fungible tokens allow for digital art to be auctioned off and sold on digital marketplaces similar to how traditional art auctions function.[4] NFTs originally began as a way to trade unique tokens of virtual items such as pictures of cats using Ethereum’s auction feature. NFTs are often traded using Ethereum, a crypto currency which allows users to host auctions for both physical and virtual items using the ETH currency. [5] Artists can create digital art and then issue an NFT for it. A buyer can purchase the art, which is non-fungible and hence unique.] NFT's have created a new method for artists to distribute unique digital art such as trading cards, music, digital art, and internet memes. Due to its reliance on a blockchain, NFT’s have come under heavy scrutiny due to their massive environmental cost of crypto currency mining which consumes a lot of power. There have also been concerns about their security and the ethics of NFT ownership.

History of Auctioning Art

Prior to the creation of the NFT and NFT marketplaces, art was—and still is—sold in a physical setting. Global art sales generate anywhere from 60 to 70 billion dollars per year.[6] From this pool, 20% of the sales come from auctions.[6] The traditional way art gets into the market is when a collector or institution decides that they want to put their piece up for auction. Then, auction houses can work with the seller to host events to auction their piece. The top three auction companies sorted by payout are Sotheby’s, Christie’s, and Phillips, respectively.[7] Companies like these then have a team of experts who determine the authenticity and price of the piece. [6]

History and Conception of NFT's

Graphic of the present NFT ecosystem. [8]

Beginning in 2012, the issuance of “colored” Bitcoins on the Bitcoin blockchain can be argued as the first[9] real use of NFTs in the world of blockchain. While colored Bitcoin was not cryptographically secured as unique and therefore non-fungible, colored Bitcoin is instead a set of meta-data instructions and rules which groups of users could manipulate to enforce representation[10] of some non-bitcoin asset using an arbitrary store of Bitcoin. However, the weakness of Bitcoin’s scripting language led to these groups being very niche, as the price of these tokens had to be agreed upon by the members of the group. [10] Colored coins gave people an idea of the power of issuing assets on the blockchain, and with this recognition, Counterparty was born. Counterparty allowed users to buy and sell assets on the Counterparty decentralized exchange, all running atop a blockchain. [11]

On November 28th, 2017, an application on Ethereum known as CryptoKitties allowed users to buy and sell non-fungible tokens of cats. Some kitties were rarer than others, coming in a variety of costumes and fur types, ultimately creating a market for these non-fungible tokens and later creating a bubble with some of the original kitties selling for roughly $113,000.[12] Since 2018 and onwards, the use of NFT art has increased as part of the decentralized ecosystem. With the recognition of that importance came about a whole host of other projects seen in the figure to the right. [8]

Market Place

The logo for the Ethereum cryptocurrency [13]


There are many different websites one can use to buy NFT art. Some of the most used websites are Nifty Gateway, SuperRare, and OpenSea. [14] Art on these websites must be purchased with Ether, the native currency of the Ethereum blockchain. Since NFTs are created on the Ethereum blockchain, ownership of each piece is now public information and is verifiable on the public ledger. [14]


NFT art is also sold by creators on these marketplaces. The creation of the art is entirely up to the artist. Artists can sell any form of art, with the sole requirement being that it is digital, whether that be a PNG, GIF, WEBP, MP4, or MP3. [15] Some websites function like traditional auction houses where there is a barrier to entry. On, artists must apply to have their work listed. If accepted, Nifty will take 5% + 30 cents of every secondary sale. [16] Whereas on, anyone can instantly sell their artwork, making it more of an open market. [15] The artist has to decide how many issues of their art they want to mint. Additionally, artists can set what percentage of royalties they want on secondary sales of a piece. [15]

Notable Examples

Beeple's digital art piece (Everydays: The First 5000 Days) just sold for over $69 million. [17]

Everydays: The First 5000 Days

As NFT art continues to become more popular, some of the major auction houses known for their sales of physical art are starting to sell digital art. Christie’s recently listed a piece of NFT art called Everydays: The First 5000 Days from the popular digital artist Mike Winkelmann, commonly known as Beeple [18]. The piece was the first NFT they had ever offered for sale and the first piece ever sold at a major auction house. A digital collage, the piece was a collection of 5000 pieces of digital art that Beeple posted online day-after-day for over thirteen years starting in 2007. [18] Everydays: The First 5000 Days sold for over $69.3 million to Metakovan, a crypo-asset investor and the founder of Metapurse, a fund that collects NFTs. [19] The piece and Christie’s fees were all paid for entirely in Ether.

The First Tweet

Twitter co-founder and CEO Jack Dorsey auctioned off his first tweet, also the first ever tweet on the platform, as an NFT. The tweet, which reads “just setting up my twttr,” was published on March 21, 2006, and is being sold on the digital platform Valuables. The platform allows people to buy and sell tweets autographed by their original creators. [20]

The highest bid was $2.5 million by Sina Estavi, CEO of Bridge Oracle. The auction closed on March 21, 2021, on the day of the fifteenth anniversary of the tweet. Dorsey has pledged that he will immediately convert all proceeds into the cryptocurrency bitcoin and donate it to Give Directly’s Africa Covid Response program. The final auction winner will receive a digital certificate of the tweet, and the tweet will remain on the Twitter platform for everyone to view. [21]

NFT of LeBron dunking sold for over $200,000. [22]


Non fungible tokens have also been used to auction off and sell rights to music. The Weeknd hosted an NFT auction selling a collection of non fungible tokens related to his work and his brand.[23] An NFT token for one of his unreleased songs, dubbed as the “NFT song”, was auctioned off for nearly $490,000. In total, The Weeknd raised over 2 million dollars from his first NFT auction. [23]

The canadian artist Grimes has sold 6 million dollars worth of digital art packaged in the form of NFTs. [24] The NFT’s were auctioned off on Nifty Gateway on February 28th 2021, where one of the highest selling NFTs of her collection, “Death of the Old”, was sold for $389,000. [25]

American rapper Lil Pump also used NFT's to auction off virtual trading cards themed after himself to his fans. Over 2,000 NFT tokens of his trading cards were sold, each piece with a valuation of 10,000 dollars. [26]

Internet Pop Culture

Popular internet meme, “Nyan Cat”, was recently auctioned off as an NFT by the original creator Chris Torres. [27] The Nyan Cat gif was remastered and re-released by Torres for the purpose of auctioning it off on the NFT marketplace. It was sold through the Crypto Art Platform Foundation for 300ETH, which at the time was equivalent to roughly $454,000. [27]


A video clip of LeBron James dunking has been auctioned off as an NFT for roughly $200,000. [28] The clip was auctioned off by NBA topshot, a website which allows users to purchase the rights to certain video clips from the NBA. [28]

Impact of NFT Art on Artists

One reason NFT as an alternative form of art has been so successful is because of how potentially lucrative it is to (digital) artists. While many digital artists have created art garnering plenty of likes, comments, and shares, generating significant income from their work is much more difficult to do. NFT art has helped provide digital artists with a rare opportunity to earn thousands upon thousands of dollars selling their pieces on the market. [29] Aside from the monetary benefits of selling digital art, NFT art has also helped validate and empower artists, many of whom were previously struggling to to make ends meet. In particular, NFT art has helped reduce the importance of a middleman between artists and those buying their digital pieces. [30] Artists no longer have to deal with auction houses, galleries, etc. Furthermore, the introduction of NFTs in the art world has the potential to promote inclusivity. Museum collections have always been predominantly male. With NFT art, the biased channels of distributing art are removed and replaced with a digital marketplace providing a direct connection between the creator and buyer. [31]

Although NFT art evidently can be a very profitable opportunity for artists, there are still risks and downsides involved with creating and selling such art. In order to profit off of creating NFT art pieces, artists must first invest in cryptocurrency. [32] This serves as a barrier of entry, as one must have the initial funds to participate. Adding on, artists must have basic knowledge of the cryptocurrency world, which can be a burden. Furthermore, as is the case with any investment, there is no guarantee that profit will be made. Stories of success often overshadow the plethora of failed investments, which overly glorifies creating NFT art. In fact, the primary profiteers of the business are the hyper capitalists holding the most cryptocurrency. [32] Finally, as more artists decide to partake in creating NFT art, competition will only increase, making an already risky investment even riskier.

NFT's and Criminal Activity

Ever since the popularity of NFT’s gathered media attention, concerns surrounding NFT’s involvement in facilitating criminal activities grew more. On March 26 2021, TechCrunch, an online newspaper focusing on high-tech and startup companies, published an article highlighting the similarity between the rise in interest in NFT’s and the level of interest back in 2017 during the Initial Coin Offerings[33]. According to Connie Loizos of TechCrunch, the reason behind this popularity in the realm of NFT’s is the implementation of strict security protocols by the SEC. Loizos, however, as well as other experts, believe that NFT’s display a tremendous potential for abuse despite their traceable nature. According to Jesse Spiro, chief of government affairs at Chainalysis, the most likely threat posed by NFT’s is trade-based money laundering[34]. Trade-based money laundering is defined as the process of disguising illegal proceeds by moving them through trade transactions in an effort to legitimize them. According to Asaf Meir, CEO of Solidus Labs, the issue of money laundering in the world of art was already a huge issue, and the digital nature of NFT’s is making pricing more erratic[35]. While these concerns have been brought to public attention and some experts have called for regulation, the future of this industry as well as its involvement in criminal activities remains to be unclear at the moment.

Regulatory Attempts

As concerns regarding NFT’s security and its possible involvement in criminal activity are growing, a legal framework on how to regulate NFT’s is still yet to be determined. United States, the second largest market of cryptocurrencies and NFT’s with respect to volume, is one of the actors that is trying resolve this ambiguity regarding the categorization of NFT’s. According to Business Insider, Hester Peirce, one of the commissioners of the SEC, warned NFT issuers to be careful about the investment products they produce, as certain products are securities by nature and would require legal efforts as well as regulation[36]. In addition, Peirce also said that “Considering the creative approaches some issuers have been developing, people should be asking questions and be careful”. According to National Law Review, however, SEC’s broad definition of a security may not be applicable. In their March 25 article, National Law Review included The Commodity Futures Trading Commission’s statement on NFT’s as a legal entity[37]. CFTC argues that due to its nature of being a interchangeable good or material that can be bought and sold freely, NFT’s should be recognized as “Commodities” and not securities. According to National Law Review, this would mean that NFT’s will be subject to CFTC’s anti-fraud and anti-manipulation regulatory framework in the future[38].

Ethical Implications

Energy use

One of the main ethical implications of NFT art is the amount of energy consumed in the creation process. NFT's exist on the Ethereum blockchain, and mining NFTs on the network requires servers, which consumes energy and produces carbon emissions. French artist Joanie Lemercier previously sold some of his work on Nifty Gateway and later found out that the sale of his work used 8.7 megawatt-hours of energy, equivalent to two years of energy use in his apartment. [39]As cases like Lemercier’s gathered media attention and public criticism, Ethereum blockchain, one of the largest crypto platforms, promised to shift its operations to a less energy-intensive method[40]. From, “Renewables powers almost 40% of proof-of-work cryptocurrency mining”. [41] A large portion of crypto mining still relies on non-renewable energy. Yet, even if crypto was all renewable, cities like Missoula, Montana are stopping crypto mining, as they create more competition for renewable energy, and thus, pushing big energy users to rely on "dirtier," non-renewable sources.[39]


As NFTs are digital art, anyone can copy art and sell it as their own. Recently, artist RJ Palmer had his artwork copied and sold as an NFT, as someone just downloaded pictures of his artwork and sold them as their own.[42] So if the artist puts out art on the internet for free, then anyone can claim it as their own. The artist needs to be the first to issue an NFT, producing more overhead for the creator. Supporters say that NFT art is safer than purchasing traditional art. Gregory Barber, a blockchain specialist from the University of Columbia, has said “with an NFT, the owner buys a verified token providing digital evidence that the art is theirs—a bit like an artist’s signature”. [39] So now you can verify all the past owners of a piece of art on the blockchain’s public domain. However, reports show that the blockchain is not entirely secure yet. A report from the MIT Technology Review said that nearly $2 billion dollars worth of cryptocurrencies have been hacked. [43] This poses a concern for collectors who fear that their ownership of their art may be at risk. Additionally, accounts containing art can be compromised in traditional ways, such as a password being stolen. Recent account breaches have occurred in which the marketplace Nifty Gateway was accessed by credential-stealing thieves. [44]

Artist control

Artists producing NFT art can set royalties for secondary sales of their original work. In the past, once ownership transferred, the artists no longer had rights over their art. Even after the artist dies, their family can receive commissions on their work. Vincent Van Gogh sold his first painting for 400 francs, and it was not until after he died that his paintings were worth millions.[45] Artists do not have to go through auction houses anymore to sell their artwork. This eliminates the chance of rejection before a piece is even available to the public, as auction houses like Christie’s do not have to accept the artist's art.[46] Additionally, artists can have the power to set the price of their art and not have it set by auction houses.


  1. Zachary Crockett. "Why NFTs are suddenly selling for millions of dollars" (2021, March 06). The Hustle. Retrieved March 12, 2021.
  2. Lehavi, Amnon, and Levine-Schnur, Ronit. Disruptive Technology, Legal Innovation, and the Future of Real Estate. 1st ed. 2020., Springer International Publishing : Imprint: Springer, 2020.
  3. Mitchell, Clark. "NFTs, explained" (2021, March 11). The Verge. Retrieved March 12, 2021.
  4. Oscar, Schwartz. "Can anyone become an NFT collector? I tried it to find out" (2021, March 23). The Guardian . Retrieved March 25, 2021.
  5. Josie, Thaddeus-Johns. "What Are NFTs, Anyway? One Just Sold for $69 Million. (2021, March 11). The New York Times. Retrieved March 11, 2021.
  6. 6.0 6.1 6.2 Steven, Murphy. "Art explained: How do art auctions really work?" (2018, August 30). CNN . Retrieved March 11, 2021.
  7. Thierry, Ehrmann"The best auction houses". Art Price. Retrieved March 11, 2021
  8. 8.0 8.1 Tepper, Fitz"NFT Ecosystem Overview". The Nifty Crypto Nomad. Retrieved March 18, 2021
  9. Steinwold, Andrew"The History of Non-Fungible Tokens (NFT's)". Colored Bitcoins. Retrieved March 18, 2021
  10. 10.0 10.1 Bradburry, Danny"Colored coins paint sophisticated future for Bitcoin". Colored Bitcoins Metadata Scheme. Retrieved March 18, 2021
  11. Cathy, Hackl"Five Things Brands Need To Know About NFTs (Non-Fungible Tokens)". Forbes. Retrieved March 18, 2021
  12. Tepper, Fitz"People have spent over $1M buying virtual cats on the Ethereum blockchain". CryptoKitties information. Retrieved March 18, 2021
  13. “Ethereum Logo.” LOGO Wine, Ethereum ,
  14. 14.0 14.1 Stan, Horaczek "NFTs are blowing up the digital art and collectibles worlds. Here’s how they work."(2021, March 10) Popular Science . Retrieved March 11, 2021.
  15. 15.0 15.1 15.2 "Create single collectible" Rarible . Retrieved March 11, 2021.
  16. "Work With Us to Create and Sell your Own Nifties" Gemini. Retrieved March 11, 2021.
  17. Alexi, Horowitz-ghazi & Stacey, Smith. "Market Power To The Beeple" (2021, March 10). NPR. Retrieved March 12, 2021.
  18. 18.0 18.1 “Beeple's Masterwork: the First Purely Digital Artwork Offered at Christie's” Beeple: A Visionary Digital Artist at the Forefront of NFTs | Christie's, Christies, 11 Mar. 2021,
  19. Palumbo, Jacqui, and Amy Woodyatt. “Buyer behind $69m Record-Breaking Art Sale Revealed.” CNN, Cable News Network, 13 Mar. 2021,
  20. Goodwin, Jazmin. “You Can Buy the First-Ever Tweet. The Current Bid: $2.5 Million.” CNN, Cable News Network, 7 Mar. 2021,
  21. Peters, Jay. “Jack Dorsey's First Tweet May Fetch $2.5 Million, and He'll Donate the NFTy Proceeds to Charity.” The Verge, The Verge, 9 Mar. 2021,
  22. Cardiff, Garcia & Stacey, Smith"The $200k NBA NFT". NPR. Retrieved March 18, 2021
  23. 23.0 23.1 Williams, Chris, and Chris Williams. “The Weeknd Raises Over $2 Million in First NFT Auction.” Crypto Briefing, 5 Apr. 2021,
  24. Kastrenakes, Jacob. “Grimes Sold $6 Million Worth of Digital Art as NFTs.” The Verge, The Verge, 1 Mar. 2021,
  25. Curto, Justin. “Musician NFT Projects, Ranked by How Many F's I Can Give.” Vulture, Vulture, 18 Mar. 2021,
  26. About SCN Team The editorial team at SuperCryptoNews. Read More. “Fans of Lil Pump, You May Want to Check Out His Latest NFT Collection.” SuperCryptoNews, 11 Mar. 2021,
  27. 27.0 27.1 “A NFT for the 'Nyan Cat' GIF Fetched Nearly $500,000 (Number of the Day).” Yahoo!, Yahoo!,
  28. 28.0 28.1 Garcia, Cardiff, and Stacey Vanek Smith. “The $200k NBA NFT.” NPR, NPR, 10 Mar. 2021,
  29. Chow, A. R. (2021, March 22). What Are NFTs and Why They Are Shaking Up the Art World? Retrieved April 2, 2021, from
  30. Vansynghel, M. (2021, March 29). WTF are NFTs? The Seattle arts scene is finding out. Retrieved April 2, 2021, from
  31. Wilser, J., Nelson, D., & Schiller, B. (2021, March 08). How NFTs Became Art, and Everything Became an NFT. Retrieved April 2, 2021, from
  32. 32.0 32.1 Munster, B. (2021, March 31). NFT art bubble? 2017 crypto bust could spell out the future of current boom. Retrieved April 2, 2021, from
  33. Loizos, C. (2021, March 25). As more artists and musicians turn their attention to nfts, so, likely, do money launderers. Retrieved April 09, 2021, from
  34. Loizos, C. (2021, March 25). As more artists and musicians turn their attention to nfts, so, likely, do money launderers. Retrieved April 09, 2021, from
  35. De Nikhilesh De CoinDesk, N. (2020, November 19). Solidus Labs Believes Its Crypto Surveillance Tool Can Help Launch a Bitcoin ETF. Retrieved April 09, 2021, from
  36. Kiderlin, S. (2021, March 26). The SEC's 'crypto Mom' Hester Peirce says SELLING fractionalized NFTs could be illegal. Retrieved April 09, 2021, from
  37. Histed, C. (2021, March 25). The coming Blockchain revolution in consumption of digital art and music: The Thinking Lawyer's guide to Non-fungible Tokens (NFTS). Retrieved April 09, 2021, from
  38. Histed, C. (2021, March 25). The coming Blockchain revolution in consumption of digital art and music: The Thinking Lawyer's guide to Non-fungible Tokens (NFTS). Retrieved April 09, 2021, from
  39. 39.0 39.1 39.2 Gregory, Barber. "NFTs Are Hot. So Is Their Effect on the Earth’s Climate" (2021, March 06). . Wired. Retrieved March 12, 2021.
  40. Li, T., & Columnist, M. (2021, March 16). Bitcoin, NFTS and other CRYPTO fads are destroying our planet. Retrieved April 09, 2021, from
  41. Johnathan, Jones. "Renewables powers almost 40% of proof-of-work cryptocurrency mining" (2020, September 29). . smart-energy. Retrieved March 12, 2021.
  42. Anna, Lee. "Everything You Need to Know About NFTs—the Crypto Art Selling For Millions" (2021, March 11). esquire. Retrieved March 12, 2021.
  43. Mike, Orcutt. "Once hailed as unhackable, blockchains are now getting hacked" (2019, February 19). MIT Technology Review. Retrieved March 12, 2021.
  44. Grace, Kay. [
  45. Erik, Velde. "WAS 'THE RED VINEYARD’ REALLY THE ONLY PAINTING VAN GOGH EVER SOLD?" (2020, February 13). . Van Gogh Studio. Retrieved March 12, 2021.
  46. "Selling at Christie's" . Christies. Retrieved March 12, 2021.