Debunking EVERYTHING About NFTs — The Controversy, Technology, and How They Affect Artists.
Tags: Nft, Controvery, Activism, Ecological Impact, Cryptocurrency

The real benefits of NFTs and Cryptocurrency

A conversation that needs to be had for any and all crypto skeptics/enthusiasts is why it was even created in the first place.

Is Cryptocurrency just another Silicon-Valley scheme?

Firstly, cryptocurrency is NOT a silicon valley invention. There have been numerous attacks alleging that it is some “tech bro” scheme, but major silicon valley players (Square) and major banks have only really started to invest in it within the past few years. It is a global phenomenon with many of its enthusiasts being international. The origins of Crypto also began with an anonymous person who goes by ‘Satoshi Nakamoto’, who cannot be traced and does not align with any country or culture. The only assumption that can be made is that they founded it to address the deep flaws within our financial system.

Stops inflation

The first notable trait of Cryptocurrency is that it is a finite resource. Almost all major currencies in the world are FIAT — meaning they are not backed by any finite resource for real value. If you have played the stock market, you know the numbers on your screen are as valuable as dirt and it is all speculation (making bets on the potential risks/rewards of an investment). Inflation has been such a huge issue for decades (centuries even), and with costs only rising while wages stay low, printing more money only helps those at the top as they get to spend it before it reaches the bottom.

Removes Monopolies

Cryptocurrency also addresses the issue of centralization where only major banks control ALL the money in the world. Do you remember the economic crash of 2008? That was caused because major banks overspeculated the housing market and burst the HUGE bubble they were building in the first place. Do you know how many people went to jail over that? One. Do you know how many families, lives, and futures were destroyed? Millions. Decentralizing money in an unbiased system where no one person can overplay/underplay the market prevents such crashes and ensures that the money you have is yours and no one else can play with it.

Unifies the Global Economy

As it is right now, there are numerous different currencies, all with different exchange rates, all dependent on very intricate geopolitical factors. When you buy something from another country, you are subject to a multitude of different laws, taxes, import fees, etc — all varying from country to country. The same item also carries different prices depending on where you live. Even within the US alone, a bunch of bananas costs considerably more in New York City than it would in Columbus, Ohio. These differences come back to geopolitical and socioeconomic factors, but using a global currency that is race/culture/nation-agnostic fixes that.

Uplifts Small/Developing-Economies

A largely overlooked benefit of cryptocurrencies is how they actually empower less-developed countries. Many underdeveloped countries have unstable economies and lack the proper infrastructure for a national banking system. Many of their citizens thus cannot seek out financial ownership or freedom and are subject to unethical occupations and working conditions simply to make ends meet. Cryptocurrency solves that in multiple ways — stabilized currency, true ownership, accessible through technology, and absolved of politics/corruption. Many smaller countries are already adopting it in their ecosystems and building upon it. (Defi is actually one of the biggest players on the ETH marketplace and has huge promises for uplifting those in Africa).

Completely Transparent

Due to the nature of how blockchains work — everything is recorded. You cannot tamper with this, and you cannot destroy it. This solves the problem of potential manipulation and fraud, and removes the flawed aspect of human trust.

What about NFTs?

NFTs share a lot of the same benefits as cryptocurrency does as they operate on the same technologies. As a concept, they were made to provide real value to digital work. They are NOT a means of stealing or devaluing your work — quite the opposite.

Provides Legitimacy to a Digital File

Digital files are inherently replicable. There is no difference between a file you duplicate and distribute to others. NFTs solve that by adding an indisputable certificate that you nor anyone else can destroy.

You may scoff at the idea of a digital token being the difference between one .jpeg being authentic over the other, but this concept has existed for centuries. There are many Mona Lisa’s in existence, but only one true Mona Lisa. This is no different from distributing many Nyan Cats, but only one owning the true Nyan Cat. To come back to the idea of how value is malleable — just because you do not value it, does not mean others feel the same.

Adds Value to Digital Art

Have you ever created a digital work, only for someone who is not educated about how digital art works to question the authenticity of it simply because you drew it on a computer? Someone who spends their time in a digital software creating a one-of-a-kind work shouldn’t be put on a lower rung in society just because there is no physical original to all their copies. NFTs solve that and now you can sell/auction your work as an original.

Actually REDUCES the carbon footprint of artists

Many artists traditionally would have to sell physical merch online or at conventions — which the entirety of that pipeline (printing, traveling, etc). Produces a large carbon footprint, especially if you are accounting for how there’s multiple artists doing this multiple times a year. Minting and selling one NFT has the potential to generate income equal to that of many conventions, and since it is completely digital, cuts out the ecological costs of mass-producing merchandise and traveling.

Funnels money from OUTSIDE the community to within

I think a huge problem we don’t realize is that most of the art community generates income from each other. Most big opportunities for artists to make money involve art education and selling our merch to our fans (a big proportion being artists). Artists can also seek freelance gigs and work at studios for fixed income, but that is reliant entirely on how businesses value art, rather than real art enthusiasts and collectors. Any chance to introduce real money from outside is always a plus and only grows the overall wealth of the entire community.

Are NFTs just another Silicon-Valley get-rich-quick scheme?

NFTs shouldn’t be thought of in this way either. They are a legitimate technology that does not have origins within Silicon Valley, and has carved itself a legitimate market which has existed for a long time. The concept of selling limited edition copies of work has existed for centuries — except now it can be done digitally. And now it can be done through a decentralized currency that no one can devalue because they said so. Similarly, once you own the copy of an NFT, no one can deny that, because every computer on the blockchain will validate that for you.

This may not resonate with the greater public since it can be a lot to grasp, but there’s already a community of collectors and artists exchanging their goods, and most importantly — there is real money being exchanged.

The benefits of NFTs to artists who are lesser-known or are from developing countries

Many crypto artists actually hail from places like Africa, Eastern Europe, and Latin America — all regions rich with histories of political and economic instability. This shouldn’t be a surprise as cryptocurrencies are a global phenomenon and are a powerful tool for providing opportunity. I’m not going to list any artists in particular, but if you do a deep-dive into their social networks you’ll find many of their artists (and collectors) know English as their second language. This is real-wealth distribution, and again, agnostic of any culture or race.

Discussions such as these always seem to occur from the point of view of western communities. It is often overlooked that they are global issues. Artists who live in countries that are run differently are often overlooked when perspectives are being shared. For the advancement of any disruptive technology, it is important to consider the perspectives of these communities. This section was a collaborative effort and provides unedited perspectives from international artists:

Real Perspectives from International/Marginalized Artists

“South Africa is a developing country. Most of us [are] living just to survive. We have the financial resources but because of corruption, they [are] not allocated to the right places. The government is letting a lot of other bigger ecological costs go over their head , they just don’t care :) NFTs are providing the youth ‘a way out‘ of poverty. Also another thing is that our youth unemployment rate is so high so most of us are forced to look for alternative ways to make a living. A lot of students sit at home for 5–6 years after graduating because jobs are so scarce mainly due to corruption. To make it more personal , I decided to pursue a career in art. The appreciation for art in this country is very little and mostly due to the fact that there is no money. Most people simply can’t afford art so that appreciation is lost. I have only sold 4 prints in South Africa and all my other clients live outside of Africa.”

Lethabo: South-African Artist

“Climate activism is a first-world concern, in my opinion, can’t lie. Like, to me, regardless of how you spin it, you can’t tell me, a citizen in a country where majority of our people are starving, poor, and uneducated to magically look up at the sky and start thinking of this environment when basic needs haven’t been met yet. And then, there’s the problem of why are people coming at artists playing a role in this game that corporations run? Total, Shell, and co have ruined our environments for years and we’ve rationalised it because we consider it a necessity. But when artists are just trying to make a fraction (a tiny fraction) of this money to keep themselves afloat, suddenly they’re devils. To me, the conversation has been hilarious, can’t even lie. Because a lot of people just want something to fight against and/or are mad that they can’t make headway in the space.”

Anthony Azekwoh: Nigerian Artist

In a Gizmundo article, Ameer Carter, artist and advocate for inclusion in the space, wants to ensure that erasure is minimized in the NFT community. Ameer mentions that if the space is largely dominated by a few groups globally, then it will only be those people shaping the collective future of crypto. He stresses that we can’t expect to think that we are the only participants that have ideas for this space.

On Crypto and the Environmental Costs

“As a person who has lived and worked in a diesel-dependent economy, it just seems kind of silly for you to ask me to consider individual carbon neutrality when it comes to people who live in similar places,” says a Nigerian artist (she wishes to remain unnamed). Anthony Azekwoh, another Nigerian digital artist, further agrees, “Climate activism is a first-world concern, in my opinion.”

For context, the Nigerian government only provides electricity for less than 9 hours a day. Some areas do not even see this power. This means that for the remaining 15 or so hours, most households and businesses are burning insane amounts of diesel using backup generators. And this is the only affordable alternative means of obtaining power.

Burning diesel in a country like this is not a choice. This is the case due to bad infrastructure and corruption, (both of which are largely bolstered by the influence of more powerful countries — an entirely new topic for another day). South African artist Lethabo, who lives in a similar situation, also notes, “The government lets a lot of other bigger ecological costs go over their head. They just don’t care.”

On Financial Empowerment

Lethabo further mentions that the local appreciation for art in her home country is very minimal. In an international scene that can be highly exclusive against artists in developing countries, anybody can create their own audience and participate. NFTs have uplifted many small artists — both traditional and digital — to finally be able to participate in the global art market. They get to interact with people from all over the planet. Crypto levels the playing field for them.

This international aspect also offers a real way to wire money internationally, bypassing huge barriers and security issues. Money-transfer services like Paypal have traditionally been used by western artists to collect payment, but these services are not available to every country (particularly LEDCs) — and many artists have been barred from wealth distribution in this way.

“Let’s not gloss over the fact that my own currency itself is highly volatile and far less valuable than Ethereum,” Another Nigerian artist mentions. In her home country, Nigeria, those that can manage it use cryptocurrency as an investment tool. Many express their frustrations with government policy and the decline of the economy and trust cryptocurrency more than they trust their own government. “So when people say it’s fake money, I’m just like, is my currency real money? What is real money?”

However, the general opinion about cryptocurrency is not one sided. The trend in volatility is acknowledged and artists and adopters are cautious of this. “ I guess I’m wary too, crypto is always spoken in a “be careful” manner because you never know what will happen.“

Financial empowerment crypto offers to artists is praised, but the capitalistic aspects are also further criticised :

“Crypto doesn’t make me very enthusiastic. I don’t like the feel of it pressuring artists to join, even though I am happy for artists selling and all. The fact that popularity is also a factor with it actually selling in some places like SuperRare also makes me roll my eyes. At the end of the day, the smallest artists will still suffer.”

Anonymous (Did not wish to be named)

There are just too many things to consider in a discussion that seems to become more convoluted every day. The fact that it is so complicated is only further evidence that the global financial system is already imperfect, and failing to consider the experiences from people — not just artists, but all well meaning cryptocurrency adopters from developing countries — is erasure.

Further Additions On This Topic

It should NOT be downplayed just how valuable it is that there are new, democratized opportunities for money to flow into less developed countries. We’ve already addressed how Paypal dominates the freelance artist sphere, but imagine being an international artist who simply cannot access this market just because of where they live. Similarly, even if you can access Paypal, if your own country’s currency remains volatile and almost has no real market value, then receiving money from USD to that currency may actually just devalue your work. Cryptocurrency solves this which is why, again, many smaller countries have already embraced it with open arms.

There are also large groups that already exist to help poor or marginalized artists with the startup costs to participate in the NFT market. These groups operate solely on educating artists and providing even necessary funds to smaller artists. So it is safe to say that NFTs/Crypto are actually enabling real positive change.

It’s not going to be perfect however.

The real downsides of NFTs and Cryptocurrency

Art Theft

You may have already seen the twitter blocklists to prevent your work from being tokenized. In today’s fast-paced world, it almost feels like eat or be eaten — and in some cases this is true. This is especially true in hyper-capitalist markets where it’s a free-for-all and there is little to no regulation. It is a real issue and is quickly compromising many artists’ work.

NFTs are no different from the real marketplace in the sense that you cannot replace trust. Trust is the fundamental bridge needed to convince someone that you are credible and can be trusted with their money. There are already marketplaces such as SuperRare and Nifty that require several levels of authentication before any artist can list their work. There are still a lot of flaws however, as other platforms such as Rarible and Opensea allow anyone to upload work, allowing thieves the opportunity to steal content and profit.

Money Laundering/Manipulation

I have read articles about the uses for Crypto Art as a means to launder money. It is true, and unfortunately, you can’t stop it. While many digital artists are appalled, fine artists will know it’s been happening in the real world for centuries. That doesn’t mean that there aren’t legitimate collectors who sincerely just want to own cool art, but it is uncertain what percentage of money is actually being used to genuinely collect art v. launder funds. A recent controversy surrounds the latest sale of Beeple’s work for $69 million, which cemented his name as the world’s 3rd-most valuable living artist, but possibly unearthed a nefarious underhanded scheme.

Cryptocurrency and Crime

On the topic of cryptocurrency and drugs — criminals have only moved on from the last non-traceable currency (cash) to the next (crypto). People have been using cash as a means to conduct tax fraud, do drug deals, and launder money for centuries.

I am sure we’ve all heard about the war on drugs, but regardless of your stance, people are going to do them. Traditionally you would have to meet up in-person to conduct drug deals. This made it very dangerous as there was significantly more risk of being harmed or scammed. What cryptocurrency allows for is online marketplaces on the dark web to function essentially as open markets, but for drugs. These markets operate like any online retailer — reviews, storefronts, etc — and remove all the risk of meeting in-person since your goods will be shipped and the money sent immediately with no risk of chargeback (Once bitcoin is sent, you cannot return it).

Market Volatility

Despite Bitcoin’s roaring success, it has a long history of being unstable. Its value fluctuates by the second, and while that is true for almost any currency, because it is NOT widespread, and is mostly valued on speculative estimations — there is no real telling what it’s actual value is. It could drop today, next week, next month — or even right now. And historically, it has. Due to its volatility, it is classified on your taxes as an asset (like a stock) rather than tangible capital. There are some arguments to be made as big institutions buy into it that the money might end up collecting towards the top — but, crypto as a whole now is mostly decentralized and spread out to the point where no one holds a majority share. The only situation where that could happen is if huge mining farms or institutions decided to collude and pool their funds, but that is highly unlikely as it is so spread out and every party has their own vested interests.

Counterpoints

I think it’s important to address how to fight the negatives because like we’ve established, cryptocurrency and NFTs probably aren’t going away, so you need to know what to do.

Fighting Art Theft

There are already groups of artists afraid of posting their work online out of fear of being tokenized, and rightfully so; however, that never stopped people from printing your work out physically and selling it at conventions (Which many of my friends have personally fallen victim to).

That being said — should we ban conventions? No, and just like conventions, NFTs are just another marketplace where the more it is legitimized, the more you as an artist will have to learn how to protect your work and prevent it from getting in the wrong hands. I am not saying that you should just accept this thievery, but as long as the world continues to adopt this new type of market, it’s only going to get worse. On the other hand, the more it is legitimized — the more regulated it will be.

The current platforms (Nifty, Rarible, SuperRare, etc.) that uphold a verification process are long-established and growing. There is also the aspect to which real collectors would only want to purchase from certified sources. This is no different from when a professional art history expert verifies the validity of an original 18th century painting. There are also organizations that large companies work with to release their assets as a verified brand.

There is also discourse surrounding implications about copyright law. Large media conglomerates (Disney, Marvel, etc.) may get involved in this space (or already have) so it is of EVEN more importance that artists wield the proper knowledge to navigate this new space. The next time you are making work, you might have to consider now that it can be used within the NFT space and know your rights within that.

It is exhausting as an artist to fight all of this. I understand. We are constantly fighting against twitter tshirt bots, Etsy thieves, convention art thieves, instagram reposters, and even huge companies like Urban Outfitters stealing our work — and now this.

Thieves and con-artists have existed since the beginning of time. While it is unfortunate that they have infiltrated the NFT space, it is important as a digital creative to know the right tools to protect yourself. In general, many artists already utilize tactics like watermarks, low-res copies, anti-distribution clauses in case of lawsuits, etc. You can also block any account that you know steals artwork. Unfortunately, this probably will not be enough as the speed of which bot accounts can be created is faster than the rate you can regulate them.

That is even more reason for why artists need to push for better platforms and development within the technology so that our work can be protected. This all being said — this is still not a direct negative of NFT technology, and we as artists need to apply pressure to existing platforms to fight this.

Money Laundering/Manipulation

One important note to make is that if you yourself decide to put up your work, you are 100% receiving the money (and all following royalties). While the other party could possibly write it off as some sort of tax expense, the money from the sale goes to you. The concerning cases of money-laundering involve multi-layered schemes (such as the allegations involving Beeple) where an entity lists a piece of work and then bids on it themselves as if they were two independent parties. This however, does not really affect you, and if anything drives up the value of your work as they contribute money into ETH/NFTs.

Another point is that the vast majority of crypto artists and collectors sincerely just believe in NFTs as a concept and want it to succeed. That means legitimizing it as a real marketplace, and buying/speculating as a real world marketplace would. There are numerous legitimate art collectors who sincerely just want to collect cool work. Likewise, the majority of artists are legitimate creators who sincerely just want to share and sell their work. They are aware of the money laundering, and probably dislike it as much as you.

I also want to note that a huge proportion of money laundering within the fine art world (and likely to transfer to NFTs) is actually from banks. This was largely exposed by the FinCEN files and is a HUGE topic everyone should be educated on. Numerous corporations and banks create “shell companies” which essentially act as a separate entity to push money through, under the guise that it’s a legitimate transaction. This is actually another big reason why cryptocurrency/NFTs are important, as they prevent fraud since all transactions are recorded and cannot be tampered with on a blockchain network, and decentralization keeps all the money from pooling into the wrong hands.

How Cryptocurrency prevents crime

While crypto undeniably helps people get their drug fix, what people fail to mention is that it’s actually made doing drug deals considerably safer. Because the crypto market is anonymous and online, there is NO physical meeting — meaning, there is no possibility of threat or violence. Physical drug deals are notorious for being dangerous — and especially for lower-income neighborhoods where that is one of the only ways to generate income — there is a high violence and mortality rate.

There is also the risk that physical drug deals are done mostly on pure faith and word-of-mouth. This is because drugs are outlawed, meaning the customer cannot go to the police in case something goes wrong or else they risk being arrested. This results in many drug dealers giving shady products to their consumers, which can lead to a number of health problems and even death.

In online sales, the worst that could happen is that either party gets scammed; however that is largely countered by a review system where users can warn others if they receive a bad product. Additionally, for the seller, there is no possibility of a chargeback, unlike credit cards, since once cryptocurrency is sent, it cannot be taken back.

How Cryptocurrency SOLVES market volatility

While cryptocurrency is in its infancy, it will probably continue to fall up and down. It should be noted that economies/markets in general follow that trend, and the overall trend should be observed, not a short time period. Cryptocurrency generally has an upward trend, with a very bullish (positive) outlook moving forward. That doesn’t mean it’s not going to drop down again, but most experts are pretty confident that it will bounce back and even higher. This is why many big players are now investing into it themselves, and in doing so, further stabilizing and legitimizing crypto’s value.

The long term outlook is that eventually, once crypto is mainstream, your money will actually be absolved of REAL market manipulation. If you have ever invested in stocks, you should NOT be a stranger at all to this. The majority owners of any market are always pulling the strings — this being the hedge funds, banks, large investment firms, etc. Without getting into too much detail, it is generally impossible for the retail trader (everyday people) to manipulate markets. Since cryptocurrency is decentralized, it builds a case for itself for why we need to adopt it on a large scale so we can change that.