A Beginner’s Guide to NFTs
We sat down with artist and CreatoRanch founder, Chris Trueman, to learn more about the world of NFTs, what makes them valuable, and what all the buzz is about. Look for his upcoming show with Grant Vetter, “Deep Time Digitally,” at Themes+Projects this summer.
Can you briefly describe NFTs to the unfamiliar lay-person?
NFTs (Non-fungible Tokens) are digital authenticators that are tied to a media file which confirms and tracks the authenticity, ownership, sales and transfer history on the blockchain for digital assets that would otherwise be infinitely reproducible. The example I like to give is that if I have a JPG and send it to you now we both have it, the NFT allows for us to have ownership and create scarcity for digital items.
What is the minting process, as it relates to NFTs?
The minting process is the process of committing the NFT to the blockchain. The media file is stored on a distributed file storage and the NFT is entered into the blockchain as a ledger entry containing the author, metadata, link to the media, and quantity. Minting is largely done by the platforms and typically does not require any coding skills from the user.
What is the appeal — why would someone want to purchase or invest in a particular NFT?
There are many types of NFTs that provide various benefits. Fine Art NFTs offer a way to own digital art which can be authenticated and ownership confirmed through the NFT, these art items can be displayed at varying scale, the still ones can be printed, they can be shown on screens or projected or simply collected. NFTs can be bought and sold allowing for a creator economy that incorporates digital creations that were previously difficult to sell. NFT collectibles often are similar to joining a social group or being a sports fan. If I said I was a Giants fan, I could purchase the merchandise and attend the games, meet up with fellow sports fans, and watch the games live and on TV. Being a sports fan is such an established norm that it doesn't seem strange at all. Whereas, if I said I owned a Bored Ape it could be perceived as silly or strange, but the idea is similar, you are buying into a club which has a variation of the designated subject and allows you access to the social circle, the in real life events and there are some IP allowances that are transferred through ownership. With an increasing attention on our digital personas, there is a shift from physical symbols of status to digital ones and, for most people, far more people will see that Twitter profile pic than will see your Louis Vuitton purse.
What makes certain NFTs popular or valuable? What are the best methods for an artist to market themselves in the NFT space?
NFTs are valuable for a variety of reasons, similar to the physical art world they may be valuable for their historical contribution, they may be valuable because of widespread popularity and limited supply, they may be valuable as an access point to a social or elite membership club. For many digital artists this is the first time that they have been able to sell their work outside of a commercial work-for-hire setting. Hundreds of very talented people are now able to participate in a burgeoning creative economy and are finding interested collectors and audience. Twitter has become an important space as has discord for the marketing and sharing of NFTs and many artists are joining communities for the purpose of sharing their work and networking with other creatives.
What are some of the benefits for an artist to display their work on NFT platforms?
The benefit for artists to show their work on platforms or marketplaces is the direct connection to buyers. Similar to the gallery in the fine art world, the platform becomes a meeting place for the discovery of new artists and serves to connect the creators and collectors. Some platforms are "Curated" meaning that there is an individual or group that determines who is shown on the platform. Some platforms are open access which means anyone can participate, but much of the marketing efforts are then up to the individuals.
What is your process in creating NFTs with analog versus digital mediums? Does art need to be created specifically to be an NFT (for example, art that is created through code and algorithms, animation, collections, etc.) to be a successful NFT?
There is a bit of a miss-understanding of what an NFT can be or how it can be made. Many people believe that an NFT has to be a purely digitally native asset that incorporates 3d elements or movement. While being digitally native can be a popular way of doing things, it is very wide open and artists are doing everything from scanning in physical works, to hybrid works to work that is AI or code generated. I have seen successful artists running the gamut in terms of project media and method. The more important aspect is why does your artwork make sense being made into an NFT? Does it make more sense to sell your artwork as an edition at a lower price? Does your work exist purely as a digital item? Does your project contain a utility or game quality that functions better digitally. Without a good reason for being an NFT, it is possible that a physical work that is photographed or scanned may not find success in the NFT industry.
Should we be concerned about the negative environmental impact of NFTs? What means have you found to improve this?
It is important to understand a bit of blockchain technology when talking about environmental impact. The two main consensus models for blockchain confirmation are Proof of Work and Proof of Stake. Proof of work means that each transaction on the Etherium or Bitcoin blockchain triggers an enormous amount of computers to run a complex math equation. The environmental impact has to do with the huge amount of energy used by the thousands of computers that are processing those transactions. Etherium was the first blockchain to use smart contract and NFT technology and has the benefit of being the original chain for NFTs. In addition to the energy usage there is a fee paid to the processors of the transactions called "gas" the higher the traffic at the time, the more the gas fees. Minting can cost anywhere from $75 to $1000 in gas fees.
Proof of Stake is a different consensus protocol where the transactions are processed by the holders of the coin itself. Instead of it going to thousands of computers to process, a "baker" is randomly selected and earns rewards by processing the transactions. They are penalized for not processing correctly. The energy usage for proof of stake is about as much as charging a tablet, a factor of several hundred times less energy usage than etherium and very very inexpensive. 25 cents to mint and pennies to transfer.
The tradeoff of using a proof of work vs proof of stake network is that the proof of work blockchains have been around longer and Etherium is the chain with the established NFTs, artists and collector base. Proof of Stake however is far more efficient and environmentally friendly but is not as established as Etherium so it will take a while to catch up.
Any additional information or advice you would like to share?
I think it is worth pointing out that more and more people are spending time and energy on their digital lives, even if we are not immersed in the metaverse, we often have digital avatars that are representations of our digital personas via facebook, twitter, instagram. As our digital lives become more a part of how we spend our time the digital assets that will go along with these developments are going to be increasingly more important. We are also just scratching the surface of what NFT technology can do. Imagine being at a concert and having to leave early, putting your NFT ticket on a platform for sale, someone can buy your ticket and use the rest of the evening. The idea that we can buy and sell these trackable objects at will is going to change many industries. We are already seeing NFTs used as social club memberships and tickets to events. Art is a very visible and public way to introduce NFT technology, but it will not stop there.
Click the images below to see more NFT artwork from Chris:
