Anyone who has found themselves online or on social media lately, whether it’s to communicate with friends, make posts, find news, or, more likely, doom scroll, will likely recognize the term “NFT.” The acronym, which stands for the equally-confusing full name of “Non-Fungible Token,” refers, in essence, to a series of data units that are stored and encrypted onto a “blockchain;” a system of recording transactions made using cryptocurrency. These data sets, when it comes to NFTs, are tied to pieces of digital media, usually images, with these data sets functioning almost as a receipt for the purchase of said NFT. The idea behind this concept is that the person who buys the digital good will be the sole owner of the product, which can then change in value based on the demand of the product, and then trade/sell the product to others with each purchase being verifiable due to the crypto-based technology behind it. 

However, despite how it looks on paper, the logistics and execution of this trend seem to be much more detrimental than what it may look like on paper. Not only does it create many very serious problems for the environment, but also for artists and even those who directly involve themselves with the community in the first place. The use of NFTs has major environmental implications, provides a method for people to steal the art of others to be minted and sold involuntarily, seriously and borderline-criminally overprices art based on a demand structure that is determined almost at random, and has enabled people involved with selling NFTs to artificially create digital pieces (often using automatic, computer-based generation) in order to mass-produce products with no inherent value other than artificial scarcity as a means of profit. 

When NFTs first came onto the scene back in 2021, one of the most clear issues from the beginning was the environmental impact of these tokens. In order to create an NFT, as stated before, the art piece must be minted onto the blockchain. The process, which often costs the minter anywhere from $1 to $1,000, according to an article from Slate, is what assigns the piece a unique data set (the token), putting the item onto the blockchain permanently (Mak). From here, minters will then sell the data connected to the piece over the blockchain to someone wanting to purchase the token, hoping to have a net-gain in profit. According to a report from the website Digiconomist, a single transaction over Etherium (a blockchain, sometimes shortened to “eth”) can take approximately the same energy as a standard house being powered for 2 ½ days. With thousands of these NFT sales being made every day, the end result is an incredibly large carbon footprint, with environmental repercussions that could prove to be incredibly dangerous moving forward, even if some NFT blockchains and companies are attempting to move to a somewhat more sustainable method of encryption in the future. 

Even with the immediate problems that this presented, even more hurdles seemed to appear as NFTs began to manifest themselves, only this time with these problems directly impacting both artists outside of the community and even those who directly involve themselves with it. One of these fundamental problems comes with the borderline manipulative and unpredictable nature of the pricing method for these NFTs. 

The NFT market largely operates on the principle of artificial scarcity, or the premise of items being produced at a scarce rate despite technology that could produce enough to supply everyone as a means of driving up the demand, and, in turn, price, of that product. Because a digital piece can be easily created, but then encrypted as a one-of-a-kind product, it reaffirms the idea that the value of that piece is inherently justified because of its rarity. A great comparison for this could be a trading card game, such as Pokemon, where any amount of any card could be just as easily made as another, but some are intentionally underproduced to drive up the value of that card. The key difference here, though, is that NFTs can often be sold at upwards of hundreds of thousands of dollars. These prices are often determined based on who has owned them previously (if a celebrity was selling an NFT they previously owned, the price would increase), the amount of attention the piece already has (if the piece attached to the data is a popular meme, tweet, video, etc.), and the price of the original sale (since everyone who is reselling an item is attempting to have a net-gain, it will likely never fall below the baseline price of the token). This, though, is in spite of the fact that, although these changes surrounding the product are happening and affecting the price, the product itself is the exact same through these changes. As a result, NFTs tend to operate less as items to be had, and rather as a stock to be invested in. Due to this process of pricing, the market is completely unpredictable, leaving its consumers with a system of gambling over single products valued at thousands a piece. Additionally, crypto wallets, which is where individuals store purchased NFTs, can be easily hacked into. Due to the blockchain intending to authenticate these purchases, these hacking instances cause the NFT in question to completely lose its value, as the data connected to the digital piece can no longer be authenticated, even if the data is returned to the rightful owner. 

Unfortunately, this major problem of hacking isn’t the only widespread case of foul-play by individuals in the NFT community. There are also a large amount of cases where individuals have taken the art created by others outside of the community, and minted/sold them without the knowledge of the original artist. This issue sets up a situation where artists are having their art taken, and then sold at a much higher price than it would have been originally, with the artist seeing none of the money from that exchange, and, additionally, not having the resources to be aware that it’s happening in the first place. These artists have to rely on being told of the situation, mostly by other fans of their work, which, by nature, is not ideal, and is highly unreliable. As a result, many of these minters who take art can largely get away without repercussions for the effective stealing of that art. 

Although some might argue that the art hasn’t been stolen, since, as stated before, the object that is being sold is the piece of data, and not the art itself, there’s a major issue with that line of thinking. A comparison to what an NFT operates as in this case might be something along the lines of bootleg merch. What is essentially happening here is someone taking the art that someone else made, and then putting it into a different format. This is similar to how people on websites like Etsy might print someone’s art onto a physical item. The key difference here, though, not only lies in the fact that these bootlegs are still tangible products, but are also being sold for significantly less than NFTs. While, hypothetically, fake merchandise from a popular band might be valued around twenty dollars, NFTs can go for thousands, all of which the original artist ends up seeing none of. Additionally, the NFT community often views their purchase of an NFT as a purchase of the art itself, despite that not being the case whatsoever. As a result, people in the NFT community tend to view any form of downloading, screenshotting, or similar acts of copying a version of a digital good as invalid, or, in some cases, theft. Therefore, minting stolen art can, in some way, be compared to reselling the art directly. 

In fact, one extreme case of art being stolen, lies in the music-NFT sharing website Hitpiece, which we covered more in-depth in another article, linked here. In the case of the now-defunct website, many musicians were having their art minted without their knowledge. It was alleged, by credible labels and artists, that hundreds, if not, thousands of songs were being minted and bid on for, in some cases, millions of dollars without any money being given back to the creator of the art. All that Hitpiece has done, in turn, has been to state that the program is simply in a beta state, and then, eventually, remove the program temporarily. This proves how easy it is for NFTs to be sold without the consent of the artists while keeping under the radar, and, additionally, how easy it is to stay out of legal trouble even after these NFT minters are called out for stealing art. 

NFTs are not the new medium for artists, and are not giving artists a stronger stance in the mainstream. In fact, NFTs are almost definitively causing much more harm not only to artists, but even to the environment and the NFT community itself. They have proven to function like a timebomb, with many artists wondering when their art will get hit with the negatives that come with minting. From here, we either have to make NFTs much more ethical, environmentally friendly, and regulated for the safety of the artist and the consumer. Either these changes need to be made, to allow for a safe and reasonable market, or NFTs should be largely disregarded by those curious about them as an unreliable system of profit. 

“Bitcoin Energy Consumption Index.” Digiconomist, 25 Feb. 2022, https://digiconomist.net/bitcoin-energy-consumption/. 

Mak, Aaron. “How Much Money People Have Made-or Lost (From) Nfts.” Slate Magazine, Slate, 23 Mar. 2021, https://slate.com/technology/2021/03/nfts-fees-rarible-opensea-auction-profit.html.