How NFTs shook up the art world

This is an audio transcript of the FT Weekend podcast episode: How NFTs shook up the art world

[Ambient sounds at a concert]

Eminem
Oh my god, bro. How did you get that in here?

Snoop Dogg
I got the connection. I feel like…

Eminem
Man, dont trip!

Snoop Dogg
I feel like, you get me high again bro.

Lilah Raptopoulos
About a month ago, Eminem and Snoop Dogg performed at the VMAs. The VMAs are the MTV Video Music Awards, and this is what it looked like. Snoop is on a stage, hes smoking a massive joint, Eminem is next to him. And, then, suddenly, the two of them are presumably too high for this earth, and they just shift into an alternate dimension. 

Eminem
Is that? Yo, what the?

Snoop
Man, shits the size of my hand. Shits gonna make me relapse

[MUSIC PLAYING]

Lilah Raptopoulos
They become cartoons, and then, they perform most of the set that way. The avatars theyve turned into are monkeys, or to be more specific theyre something called Bored Apes. If you dont know what Bored Apes are, theyre these illustrations of apes that are inspired by the band Gorillaz. And Bored Apes are also NFTs: non-fungible tokens. A little while ago, a Bored Ape NFT might have cost you more than a million dollars. 

Jemima Kelly
A lot of the NFT culture is just the crypto culture. Its the people who are buying, the people who are pumping NFTs are the same people whove been pumping various like, you know, shit coins as theyre called. (Chuckles)

Lilah Raptopoulos
Thats Jemima Kelly. Shes an FT columnist, and shes hosting a new season of our sister podcast Tech Tonic called A sceptics guide to crypto. If youre confused about how cartoons of Snoop Dogg and Eminem are also a digital token that people have become obsessed with, welcome to the club! Its confusing. And today, Jemima is going to help us untangle the knot. Its probably worth mentioning shes not a fan.

Jemima Kelly
NFTs are like already basically over. I mean, and I dont like calling the top of crypto, but, and I wont. And Im not going to say crypto is over. But NFTs, Im not saying that they might not have a little, little, you know, a little flourish again. But like theres no way theyre coming back like they did because people are just got wise to it. Like now that theyve. Yeah, its just. Its just not…not happening. Even, even Snoop Dogg and Eminem performed at the VMAs as NFTs and no one cared

Lilah Raptopoulos
This is FT Weekend. Im Lilah Raptopoulos.

[MUSIC PLAYING]

Lilah Raptopoulos
Before we start, let me just say that weve been wanting to talk about NFTs on this podcast for months. Because theyre all over the art world. In March 2021, Christies sold an NFT of a collage by an artist named Beeple for $69mn. By the end of the year, the entire entrance to Americas biggest art fair, Art Basel, was basically an ode to NFTs.

Outside the art world, smaller investors were buying NFTs at lower prices, like a few thousand dollars. If you havent heard of Beeple, maybe youve heard of CryptoPunks. Theyre these algorithmically generated little portraits that look like pixellated punks, and those have sold for millions of dollars, but theyve also spawned dozens of cheaper knockoffs for people who wanna spend less. 

But, overall, something just seemed off about the NFT market. When you look at a CryptoPunk character, it does not look like its worth a million dollars. It looks like it might have been made by a teenager on some software from the 90s. So what I needed help with is to understand how exactly they became so valuable. Which brought me to Jemima. Shes been covering the crypto market since its infancy, for seven years.

Lilah Raptopoulos
Jemima, hi. Thank you so much for joining.

Jemima Kelly
Hello, Lilah. Thanks for having me.

Lilah Raptopoulos
Welcome to the show.

Jemima Kelly
Thank you.

Lilah Raptopoulos
So were a culture podcast, and weve been trying to figure out how to cover NFTs for a long time now.

Jemima Kelly
Just dont. (Laughter) No, I get it. You have to grapple with it.

Lilah Raptopoulos
You have to, yeah. And we realize that the big question that we have about it is like, are they actually changing how we think about art? But first, maybe Im going to ask you a hard thing to do, but in like the sort of most tightest version you can, how would you define an NFT for people who dont know?

Jemima Kelly
Okay. Well, Im going to start by explaining what it stands for, because I actually think that most people dont really know what it… they know what it stands for, but they have no idea what those words mean. So it stands for non-fungible token. The reason we have this word that most people dont even know the meaning of fungible. Its… fungible means that you can trade something like for like. So a pound is fungible because you can, 1 is the same as another pound and cryptocurrencies like bitcoin are supposed to be fungible like that. NFTs are supposed to be different, so the reason theyre called NFT is to differentiate them from other cryptocurrencies because like cryptocurrencies, they run on blockchains. But in order to differentiate them, these ones are supposedly unique. So theyre not swappable one for one.

Lilah Raptopoulos
So its not just (inaudible) money.

Jemima Kelly
Its not money. Its supposedly, supposed to be more like. Yeah, like a unique thing.

Lilah Raptopoulos
Right, okay. So when Jemima is talking about the blockchain, shes talking about the technology that is used to verify digital tokens. The whole idea about bitcoin is that, theoretically, it cant be faked because it has its verification built right into it. If you have a five-dollar bill and youre wondering if its real, you need a bank to tell you. If you have $5 worth of bitcoin, the tokens code tells you whether its the bitcoin that it claims to be.

The reason Jemimas telling me about this is that this is the same technology thats used in NFTs. Only you dont use the blockchain verification to prove that your money is real. You use it to prove that your art is real.

Jemima Kelly
Its basically a digital receipt, and its meant to represent ownership of something, but it doesnt necessarily meanthat…So you might think that you own something, but thats quite a kind of … Again, sorry. So its all very abstract.

Lilah Raptopoulos
Yeah, yeah, yeah

Jemima Kelly
Its really, its really hard to… like you cant talk about it in a concrete way because its not concrete.

Lilah Raptopoulos
Right. But say its a piece of art. So somebody buys a piece….

Jemima Kelly
Its not a piece. So. Okay, so okay. So its not the art itself. Its the receipt for the art.

Lilah Raptopoulos
Okay. Stay with me. You want proof that a piece of art is yours? Thats what the NFT is meant to do. And thats why Jemima says its a receipt. And its meant to do that, especially because digital art can be so easily replicated and its hard to tell where it originated. You have one board, eight, you have a million all across the Internet.

Jemima Kelly
So basically digital art, the problem with digital art is that it can be replicated, it can be copied and pasted. And this has been a problem in the digital art world. People like, How are we going to stop people from doing this? And then suddenly there was this like, Oh, maybe we can do it with NFT is like, theres a way of making this. Even if the art itself can be copied, the ownership cant be.

Lilah Raptopoulos
Right. So, its sort of like because its not physical, you dont own Starry Night, for example, like because you dont own the physical version of Starry Night. If theres a digital version of art, then that can be replicated. And anyone can pretend they own it, I guess if they have an image of it. But if you have the receipt of it, its its yours.

Jemima Kelly
Right. Right.

[MUSIC PLAYING]

Lilah Raptopoulos
But the interesting thing about NFT art is that its kind of just gone off the deep end because people have stopped using it as a receipt for owning just digital images. Theyre using NFTs as receipts for all sorts of things. It can really be anything you decide you want to be an NFT.

Jemima Kelly
You can literally NFT yourself. (Laughter) You can, you can NFT a table, you can NFT anything. It doesnt… it just means that you create a string of code that you say represents something. And it can be something digital. It can be something physical.

Lilah Raptopoulos
So if I make an NFT out of myself and then I sell myself or like reverted the receipt to myself. In the market. And then somebody buys this digital receipt of me. Whos anybody to say that it isnt me, right? Its not me.

Jemima Kelly
Yeah, exactly right. So theres like that people think that there are this kind of legal rights that youre getting, but its completely unregulated. So, like, the ownership is very unclear. Like the kind of legal ownership even of these artworks is, its like, its very unclear that regulation and laws have not caught up with all of this stuff.

Lilah Raptopoulos
Its such a Wild West.

Jemima Kelly
Its a complete Wild West.

Lilah Raptopoulos
I met someone who is burning her art and then selling the burning of the art.

Jemima Kelly
As an NFT. I mean, you can. Anything is an NFT. But thats the kind of beauty of it in a way in the art world. Because it is the kind of perfect partner for, for the art world. Because in some ways it is kind of art. So like in order to make that receipt feel like its a piece of art, is it kind of a bit of a leap that you have to make, you know, like what is art? And so its like, who, whos to say that thats not art, right?

Lilah Raptopoulos
Yeah. Okay. So thats what NFTs are or what they claim to be. But how did we get here? Heres a very condensed timeline for you. At the start of 2021, very few people knew what NFTs were, but by March they hit the mainstream. And then by the end of 2021, nearly $41bn had been spent on NFTs. That made the digital art market almost as valuable as the global art market and all of that in just a year in change. The explosion is kind of like crypto and theyre related. But the difference is NFTs appealed to a different sort of person, too. They appeal to people who are actually interested in art.

Jemima Kelly
Because that kind of experimenting with and I get it like, if youre if youre an artist and youre kind of cutting edge, of course youre going to be experimenting with like the new stuff like, and you should thats part of your I think art has always been about that, about like experiment, you know, pushing boundaries and experimenting with new technology. And, and so you should.

Lilah Raptopoulos
Then in June of this year, the NFT market crashed. It dropped in value by 88 per cent. Thats mostly because the cryptocurrency market crashed and people were often paying for NFTs in crypto. And also because inflation was going up and people didnt want to gamble as much with the money they had. What was propping them up when it was big, when and when theyre at sort of their peak in 2021?

Jemima Kelly
I honestly think that it was just the, making money, just like making people were just hoping they could just flip it to someone else. I dont think it was… I mean, clearly, some people in the art world wanted to get involved from a kind of the point of view of like buying a piece of art. Right? But I think actually what was driving, you can see because it just traces the same, the price of crypto. So like if it wasnt kind of related to that, then it wouldnt just trace it. But it does. It just kind of it was just like people who were buying crypto were also buying NFTs and like they were hoping to flip it. Its like the greater fool theory. Youre hoping that youre going to be able to sell it to a bigger fool and… (Laughter)

Lilah Raptopoulos
To state the obvious. A lot of people lost a lot of money as the NFT market shrank. It wasnt great. And yet there is still something pretty compelling about NFTs for the art world for a couple of reasons. One, because it lets you make whatever you want and call it art. And two, because you can sell whatever you want as art and make a lot of money. It feels very easy for this conversation to become very abstract, very quickly. And Im thinking like, you know, you suddenly are asking yourself these questions like what is art and what is value and what is money? And is the economy real? Is currency real? And whatever. Umm, what is real, am I real? And it makes me wonder about how we define the value of art at all in the art market. Like, you know, I mean, Im going on a major limb here, but we decided culturally that Picasso was a genius, for example. We wrote that with an author on the show before. Is he you know, there were like so many women painters at that time that like, probably were also a genius, but their work has no value because we didnt know them. Weve inherited assumptions about whats actually good, so I dont know, is there a chance that this is going to change how we think about the value of art? Like, is it just us asking these big questions that valuable?

Jemima Kelly
Yeah, I think that is actually really valuable. And I think that the whole of crypto like, has been valuable. Its like a really interesting experiment thats been had. Like its opened this conversation about like what is art, what is value? And I mean, weve had those kinds of I mean, like modern art has done that a lot, hasnt it? Like what is art and, you know, unmade beds or whatever. This NFT discussion has been like, yeah, what is…Well, its also about like what does owning art mean because like a why do people want to own art, like why do people pay for art? So if the number one reason is to be able to brag about it, then holding a receipt, a digital receipt for a JPEG is just as valuable as, as owning a Picasso. But unfortunately, the other thing that owning a Picasso does, is that it like probably holds its value. So like, maybe buying an NFT is just as valuable as buying a Picasso. But if youre someone who truly cares about art and the history and, and you feel that maybe the actual physical art has like a special, magical kind of aura, like, I think people feel that when they go to museums, exciting to be with this kind of artifacts and to kind of imagine, you know, the paint strokes on the canvas and youre not getting any of that with an NFT. Youre just getting the bragging rights. And also the kind of internal sense that you own something and that does have some value.

Lilah Raptopoulos
And it…yeah…

Jemima Kelly
That does have some value.

Lilah Raptopoulos
And then theres the other question of like, okay, if theres a market for something like theres this CryptoPunk art, right? And people are buying it for millions of dollars.

Jemima Kelly
Oh, yeah. Tens of millions of dollars.

Lilah Raptopoulos
Sorry, tens of millions of dollars. Many of them didnt take a long time, didnt take a lot of actual craftsmanship or anything like that. So in that way, I guess its, its not of value in that way, artistically, but its built cultural value. And if theres a market for it, its developed cultural value. Like there must be a way in, you know, now we know CryptoPunks, now we know the people collage. That must give it some sort of value, you know?

Jemima Kelly
Interesting. I dont know. I mean…

Lilah Raptopoulos
Its like part of…

Jemima Kelly
Im not sure. I think. Yeah, it is part of this time. And so again, like, what do we mean by value? But like, its definitely. Yeah. Like it says a lot, and Im not sure it says anything like, very great. But it does say some stuff about our culture, unlike this current time in history. But the other thing that we should point out is like prices have collapsed. Like were saying, people are paying millions. I mean, currently theyre not really…

Lilah Raptopoulos
Jemimah says that from a financial perspective, the problem with NFTs is that theres no scarcity. The art market works because theres only so many Picassos in the world, but we can just keep making more NFTs. If you had to make an argument for them or see a world where they would hold a role.

Jemima Kelly
Mm-hmm. NFTs. Mm-hmm.

Lilah Raptopoulos
Yeah. What would you say? Like what role could they hold?

Jemima Kelly
Oh, Jesus, thats hard. Its almost impossible. Its, like, so hard to understand, to see…

Lilah Raptopoulos
Could you create scarcity for it? And then that could help, like?

Jemima Kelly
I think no. Like, is there a world in which NFT is could possibly do something? I mean, they would have to just not be NFTs. Like, could someone create a way of making a digital thing truly scarce? Maybe. Yeah. Like, Im not a technologist. I dont believe. But then it wouldnt be an NFT.

[MUSIC PLAYING]

Lilah Raptopoulos
Its worth saying that Jemimas just one person. Shes a very, very well-informed person, but shes also someone who hasnt bought into the crypto dream. But that doesnt mean its definitely over, because to give something value, all you really need is a lot of people to decide it has value. And right now, there are still a lot of people, including major investors, whove lost tons of money on NFTs, who are still willing to invest more. So were going to continue to watch this space. And in the meantime, I recommend Jemimas Tech Tonic series. It goes way beyond NFTs and into the minds of crypto lovers. I put the link in the show notes.

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Lilah Raptopoulos
Thats the show this week. Thank you for listening to FT Weekend, the podcast from the Financial Times. Next week we bring you to the FT Weekend Festival to a conversation I had live on stage with the iconic fiction and nonfiction writer Jamaica Kincaid and FT columnist Enuma Okoro. We also chat live and in person with a bunch of listeners and colleagues and well bring you all of their cultural recommendations. If you like what we do. Please do leave us a five-star review on the Weekend feed on Apple Podcasts or Spotify and leave us a few words. That is still the best way to help people find the show. We love hearing from you. So please say hi anytime. You can email us at ftweekendpodcast@ft.com. I read all those emails. The show is on Twitter @ftweekendpod and I am on Instagram and Twitter @lilahrap. I post a lot of things that feed into the show on my Instagram. Links to everything mentioned today are in the show notes alongside a link to the absolute best offers available on a subscription to the FT. Those offers are at ft.com/weekendpodcast. Make sure to use that link. I am Lilah Raptopoulos and heres my incredible team. Katya Kumkova is our senior producer. Lulu Smith is our producer. Molly Nugent is our contributing producer. Our sound engineers are Breen Turner and Sam Giovinco with original music by Metaphor Music. Topher Forhecz is our executive producer and special thanks go as always to Cheryl Brumley. Have a wonderful weekend and well find each other again next week.

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