Speaker 1: Welcome back to what happens next the podcast that examines
Speaker 1: some of the biggest challenges facing our world and ask
Speaker 1: the experts what will happen if we don't change and
Speaker 1: what can we do to create a better future? I'm
Speaker 1: dr Susan Karlin, keep listening to find out what happens next.
Speaker 1: N. F. T. S. Are an interesting use of crypto
Speaker 1: technology and could enable artists to make a living from
Speaker 1: their work. But they could also be, well kind of silly.
Speaker 1: Do they work are they here to stay R. N. F. T. S.
Speaker 1: As nifty as they seem? Stay with us over the
Speaker 1: next two episodes of what happens next As we take
Speaker 1: a look at N. F. T. S.
Speaker 1: So firstly and don't laugh at me. Tech heads, what
Speaker 1: the hell is an N. F. T. Oh boy. How
Speaker 1: long is this podcast?
Speaker 2: This is going to be a challenge. But I'll try.
Speaker 2: It exists in this world we can't touch and we
Speaker 2: can't see.
Speaker 1: The short answer is it's a non fungible token. Non fungible. Hey,
Speaker 1: when
Speaker 2: it's non fungible it's got an identification number that's unique
Speaker 2: to that token.
Speaker 1: Okay, so N. F. T. Stands for non fungible token.
Speaker 1: Non fungible means it can't be replaced. But that sounds
Speaker 1: odd because an N. F. T. Is usually an artwork
Speaker 1: in the form of a digital file, like a jpeg
Speaker 1: or video, which can obviously be duplicated copied and shared
Speaker 1: over and over again. However, and if I'm following this right.
Speaker 1: What makes an N. F. T. Unique is that every N. F. T.
Speaker 1: Artwork has its own code. Can someone please just give
Speaker 1: me a simple definition.
Speaker 1: Okay it's a it's a digital receipt
Speaker 1: a digital receipt a digital receipt. There we go. That
Speaker 1: was easy attached to a Blockchain which is okay so
Speaker 1: an N. F. T. Is a unique token that is
Speaker 1: attached to the Blockchain. You know the Blockchain? It's like
Speaker 1: a shared database of transactions on the.
Speaker 1: Okay how about I get art lawyer Alana Kushnir to explain.
Speaker 1: Well the first question really is what is Blockchain? I
Speaker 1: think when you're trying to understand what an N. F. T.
Speaker 1: Is you have to question what is Blockchain? Blockchain is
Speaker 1: a type of a technology
Speaker 1: which is a distributed ledger where transactions are recorded and
Speaker 1: the idea is they're immutable in that they can never
Speaker 1: be hacked or change. They can only be built on
Speaker 1: top of it's written in stone is written in stone.
Speaker 1: So part of the value of N. F. T. S.
Speaker 1: Comes with this immune ability that the block
Speaker 1: chain gives N. F. T. So tokens essentially live on
Speaker 1: the Blockchain tokens represent the transactions that are recorded on
Speaker 1: the Blockchain and some of those are fungible. Some of
Speaker 1: those are non fungible and fungible tokens are Bitcoin ethereum
Speaker 1: that your cryptocurrencies and the idea is if I had
Speaker 1: one Bitcoin and you had one Bitcoin we exchange those,
Speaker 1: we would end up with the same
Speaker 1: amount. Whereas a non fungible token is slightly different. So
Speaker 1: it's kind of like if I bought a Picasso and
Speaker 1: you bought a Rembrandt and we exchange those paintings, we
Speaker 1: wouldn't end up with the same thing that we started
Speaker 1: off with. So they're non fungible. So the idea is
Speaker 1: the token is unique and that's also a part of
Speaker 1: the value of non non fungible tokens lies because they
Speaker 1: are unique on the Blockchain. We can tell that there's
Speaker 1: only one of that type.
Speaker 1: So if I'm an artist, how do I create one
Speaker 1: of these tokens? How do I make an N. F. T.
Speaker 1: I need to speak to a digital artist.
Speaker 2: Hi I'm john McCormack, a computer artist and computer scientist
Speaker 2: and I'm the director of Sensei Lab, a creative technologies
Speaker 2: lab at Monash University's caulfield campus.
Speaker 1: Right? I want to create an N. F. T. For
Speaker 1: this painting that I've created. How do I do that?
Speaker 1: How do I make an N. F. T. For that?
Speaker 2: So usually you do it via one of the many
Speaker 2: sites that deal in cryptocurrencies and N. F. T. S.
Speaker 2: So you basically go onto the site, you have to
Speaker 2: have a digital asset usually associated with your work people
Speaker 2: have associated with physical paintings or physical objects as well.
Speaker 2: Um And then basically you pay what's called a gas
Speaker 2: fee which is the fee to generate some unique token
Speaker 2: which is the N. F. T. Itself and you get
Speaker 2: given the N. F. T. Digitally and then someone can
Speaker 2: buy that N. F. T. From you and transfer ownership
Speaker 2: from you to the person who buys that.
Speaker 1: Okay, so if I'm an artist I can turn an
Speaker 1: artwork into an N. F. T. And sell it. However,
Speaker 1: if I'm buying an N. F. T. What do I
Speaker 1: actually own?
Speaker 2: Hi, My name is Ben Hayward. I'm a senior lecturer
Speaker 2: in the Department of Business Law and taxation at the
Speaker 2: Monash business School. And my research work looks at how
Speaker 2: the law can support international trade in various forms in particular.
Speaker 1: So
Speaker 2: you don't really own that artwork in the same way
Speaker 2: that you might own a physical painting. What you worrying
Speaker 2: is the token and it's linked to some extra right?
Speaker 1: You can actually think of it like buying a bottle
Speaker 1: of water from a vending machine or
Speaker 1: um you know, buy a cup of coffee when you
Speaker 1: buy that bottle of water or a coffee. You own
Speaker 1: that property, you can enjoy it to the exclusion of
Speaker 1: anybody else. That's the kind of that's the fundamental principle
Speaker 1: of personal property. It's something that you can possess and
Speaker 1: you can possess it to the exclusion of anyone else.
Speaker 1: So take that in the context of a painting or
Speaker 1: a sculpture, you buy your painting, you buy a sculpture,
Speaker 1: you can
Speaker 1: display in your house, you can loan it to somebody.
Speaker 1: You know, you could loan it to a museum for
Speaker 1: an exhibition, you could sell it as well. Um So
Speaker 1: that's your kind of traditional artwork. Um But you know
Speaker 1: when it comes to digital artwork it's a little bit
Speaker 1: different and that's because it's so easy to reproduce. Right?
Speaker 1: So
Speaker 1: you don't necessarily, you know, if I send it to
Speaker 1: you via email, you know, a digital file, we could
Speaker 1: both enjoy it at the same time. You could look
Speaker 1: at the image the digital file and I could look
Speaker 1: at it on, you know, we could be in complete
Speaker 1: other sides of the world and we can both enjoy
Speaker 1: it um as it's meant to be enjoyed. So in
Speaker 1: that way a digital artwork has some fundamental differences to
Speaker 1: a painting or a sculpture.
Speaker 1: Um And you know if we look at the history
Speaker 1: of art and especially you know, late modern art and
Speaker 1: contemporary art, a lot of artists were um driven by
Speaker 1: this idea of wanting to question this idea of what
Speaker 1: is an original artwork. What is an authentic artwork? The
Speaker 1: idea that there's no, you know, in today's world there's
Speaker 1: no such thing as the one authentic piece. Um You know,
Speaker 1: think of like performance art for example, that's also intangible.
Speaker 1: So
Speaker 1: you know in some ways I also think digital artworks
Speaker 1: and FTS not so new artists have really been pushing
Speaker 1: the boundaries when it comes to what is art and
Speaker 1: what you buy when you buy an artwork for far
Speaker 1: longer than N. F. T. S. Have existed. What N. F. T. S.
Speaker 1: Do though is um you know from a very practical
Speaker 1: level they do tell us who owns that N. F. T.
Speaker 1: Who owns that digital artwork. So that's the that's the
Speaker 1: basic benefit of minting your digital artwork as an N. F. T.
Speaker 1: So why are people so excited about N. F. T. S.
Speaker 1: Here's Ben Hayward.
Speaker 2: I think people get excited about anything that's new. People
Speaker 2: got excited about the Beatles and Elvis when they hit
Speaker 2: the scene. And I wonder if it's really much different,
Speaker 2: much different to that. Um I think it's it's a
Speaker 2: way for us to explore new types of trade and
Speaker 2: you know in the future this may be something that persists.
Speaker 2: We might end up using N. F. T. S. For
Speaker 2: different purposes. It's a bit hard to know at this
Speaker 2: stage but they give us an opportunity to do something
Speaker 2: we've never really done before. And I guess for the
Speaker 2: purpose of trading art where previously you have a digital
Speaker 2: file that represents some artwork that's infinitely reproducible meaning its
Speaker 2: value is basically nothing.
Speaker 2: Not really a very attractive prospect for trading those kinds
Speaker 2: of artworks online. And this is a way to maybe
Speaker 2: deal with that make online artwork unique and allow it
Speaker 2: to have a tradable value and possibly support artists at
Speaker 2: the same time.
Speaker 1: Do you think N. F. T. S. Are beneficial for artists?
Speaker 2: They could be in the sense that I don't know
Speaker 2: that there was really an effective way to trade digital
Speaker 2: art before this technology.
Speaker 2: I guess artists are going to want to make sure
Speaker 2: that the contracts they have in place around the trade
Speaker 2: in these N. F. T. S are beneficial to them.
Speaker 2: Whether that means retaining the intellectual property rights, making sure
Speaker 2: they are properly paid for the work they're producing,
Speaker 2: but I guess, as we've said, if you've got an
Speaker 2: ordinary file infinitely reproducible, so effectively worth nothing, this situation
Speaker 2: has some definite advantages over that. Personally. I have a
Speaker 2: lot of reservations, so I've never really used them.
Speaker 1: Here's Director of Sensei Lab, john McCormack
Speaker 2: dabbled a little bit, but I didn't really get in
Speaker 2: when it was, I probably could have probably wouldn't be
Speaker 2: talking to you now, or you'll be talking to me
Speaker 2: from my multi million dollar apartment somewhere
Speaker 2: wherever. Um if I had. But um I'm not sure,
Speaker 2: I mean, I do appreciate the fact that there were
Speaker 2: a lot of people who had menial jobs who wanted
Speaker 2: to be artists who suddenly could could live that that possibility.
Speaker 2: I mean, being an artist and earning money to things
Speaker 2: that normally don't go together, and if you look at,
Speaker 2: even in Australia, the average income of people who professionally say,
Speaker 2: the artist is amongst the lowest of any profession,
Speaker 2: so I certainly don't want to deny people, you know,
Speaker 2: if a technical mechanism enables somebody to earn a living
Speaker 2: from something that is creative and gives them enjoy them
Speaker 2: pleasure and gives other people enjoyment, then I think that's
Speaker 2: a fantastic thing,
Speaker 2: but also, you know, cryptocurrencies ultimately are kind of Ponzi schemes.
Speaker 2: They're basically they rely on a whole lot of collective
Speaker 2: herd mentality about the value of something that doesn't really
Speaker 2: actually have that value.
Speaker 1: N. F. T. Proponents might say that it helps protect
Speaker 1: from fraud and theft, because you've got this untraceable digital
Speaker 1: receipt that's forever linked to a particular artwork, but that's
Speaker 1: yeah, that doesn't, to my mind that doesn't hold up
Speaker 1: to scrutiny at all, josh. Drummond is an artist from
Speaker 1: new Zealand and a very proud N. F. T cynic.
Speaker 1: One of the major problems when I first got big
Speaker 1: was people would
Speaker 1: um N. F. T. Fans or grifters or whatever, um
Speaker 1: would grab someone's jpeg that's floating around on the internet,
Speaker 1: like like a named artist or someone, someone with the following,
Speaker 1: they take their work and just sell it, make an N. F. D.
Speaker 1: Of it and sell someone else's stuff that's that's just
Speaker 1: that's just stealing and it facilitated tons of this stuff
Speaker 1: and none of the N. F. T. Marketplace is originally,
Speaker 1: and I still don't really think currently had super robust
Speaker 1: systems in place to protect against this. So they didn't
Speaker 1: really facilitate um
Speaker 1: and viability, they actually just made it a lot easier
Speaker 1: to steal I'm not gonna lie, this is a big
Speaker 1: problem at the moment, and I'm finding that a lot
Speaker 1: of artists that I work with are finding copycat N. F. T.
Speaker 1: S of their works online and they ask the same question,
Speaker 1: what do I do, what can I do at this
Speaker 1: point in time? Most mainstream and FT platforms have set
Speaker 1: out what we call a D. M. C. A takedown
Speaker 1: notification process. And that's essentially an american style of requesting
Speaker 1: that you take down infringing content
Speaker 1: and you have to follow the strict guidelines that the
Speaker 1: platform sets out in order to do that. But you know,
Speaker 1: even myself in practice when I've acted for artists and
Speaker 1: we've done these takedown notices, it hasn't been that straightforward
Speaker 1: even a year ago. I would say, you know, a
Speaker 1: lot of the mainstream platforms
Speaker 1: perhaps didn't get as much legal advice as they have
Speaker 1: at this point in time. And so those processes that
Speaker 1: are set up weren't that straightforward. They weren't easy for some,
Speaker 1: you know, for somebody who's not a lawyer to be
Speaker 1: able to navigate and do, they are getting easier. Um
Speaker 1: But you know,
Speaker 1: there's been lots of instances in which artists have tried
Speaker 1: to get their content taken down. They haven't had the
Speaker 1: result that they wanted. Some of them have gone out
Speaker 1: on social media vented about on social media. And unfortunately
Speaker 1: unfortunately that's when the platforms have acted unless you can
Speaker 1: afford or no you've got a friend as a copyright
Speaker 1: lawyer who can afford to fling out notices all day.
Speaker 1: And it's a lot of overhead with, even if even
Speaker 1: if you are wealthy, it's um it's it would be
Speaker 1: pretty hard to keep up with. So yeah, that's um
Speaker 1: I think the promise of of you know of eternal
Speaker 1: receipt or whatever. I think I really think it's it's
Speaker 1: kind of overblown. The main interest for me was whether
Speaker 1: seeing artists could kind of hitch their hitch there,
Speaker 1: their artwork to this trendy new bandwagon and make a
Speaker 1: killing off it. And some definitely did like people is
Speaker 1: the obvious use case who is now richer than God
Speaker 1: before N. F. T. S were a thing the digital
Speaker 1: artist known as people, Mike Winkelmann to his friends hadn't
Speaker 1: sold a print for anything over $100. However, since he
Speaker 1: turned some of his work into N. F. T. S,
Speaker 1: he's made some serious money. How serious. Well one of
Speaker 1: his N. F. T. S. A collage of his work
Speaker 1: sold at auction for almost $90 million yep, 90 million.
Speaker 1: So for that price, the buyer of people's work gets
Speaker 1: a digital file and the artist himself as josh Drummond
Speaker 1: just said, becomes richer than God,
Speaker 1: But is the artwork any good
Speaker 1: or is this just a fundamental never ending question we
Speaker 1: seem to ask every time something new happens in the
Speaker 1: art world,
Speaker 1: if
Speaker 2: you look at the famous FT works like the people
Speaker 2: work if you know about this, people was an artist
Speaker 2: who he was well known but not super well known
Speaker 2: and he famously auctioned off this work that sold for
Speaker 2: millions and millions of dollars, huge amounts of money, massive
Speaker 2: amounts of money, but anyone can have a copy of
Speaker 2: that work, the same copy that the person who paid
Speaker 2: all that money has, there's no difference.
Speaker 2: So I have the full resolution image, is it great art?
Speaker 2: It doesn't, not, to me it's not, it's not worth
Speaker 2: anywhere near the amount of money that was paid for.
Speaker 2: If you compare it to actual works that you think
Speaker 2: throughout history of sort of earned a reputation as being
Speaker 2: significant human works of art. This is not in that league,
Speaker 2: in my opinion. Um, so there is this, this tainted
Speaker 2: aspect that this has, that, I think it's sort of
Speaker 2: typical of the tech world
Speaker 2: at the moment when as soon as something, there's a
Speaker 2: scheme to make money, this sort of human greed takes
Speaker 2: over and it just seems to be the vehicle that
Speaker 2: provided that money making mechanism and it was largely peripheral.
Speaker 1: I suppose in the end, people will buy whatever art
Speaker 1: they like, whether it's good or rubbish or, you know,
Speaker 1: if you look at it as a talented artist and
Speaker 1: that's a piece of
Speaker 1: crap, but I might go, but it's lovely, like that's
Speaker 1: always existed, hasn't it? Like, you know, people,
Speaker 2: yeah, you know, I've thought about this quite a line,
Speaker 2: I wrote an essay recently about it and I think
Speaker 2: it's more complicated than that. I think
Speaker 2: a lot of it was to do with because there's
Speaker 2: money involved and eye watering amounts of money in some cases.
Speaker 2: I think people lost sight of the fact that it
Speaker 2: might just have artistic value for its own sake and
Speaker 2: looked at it more as a kind of investment thing.
Speaker 2: I think it's also the kind of fear of missing out.
Speaker 2: Like if all of your friends are saying I bought
Speaker 2: an N. F. T. I own this,
Speaker 2: Look at what I bought for $20,000. You think I've
Speaker 2: got to get into that too? I don't want to
Speaker 2: be left out. And so issues of aesthetics or taste
Speaker 2: or meaning or you know, any of those things that
Speaker 2: you might traditionally think of as being qualities that you
Speaker 2: might cause you to like not kind of thrown out
Speaker 2: the window. You know that's the power of ownership is
Speaker 2: really important
Speaker 2: because that's the only thing that really did. They didn't
Speaker 2: change the art itself. I mean people were always making digital.
Speaker 2: I they just had this weird way of saying you
Speaker 2: own this in some very nebulous, unleash Ghaly, verifiable sense.
Speaker 1: That's really interesting. I wonder if it tapped into this
Speaker 1: part of the human psyche
Speaker 1: uh you know this very
Speaker 1: animalistic part of human psyche which is I want the
Speaker 1: rare thing I want the thing that other people can't
Speaker 1: have because it makes it valuable and so n. F. T. S.
Speaker 1: We're putting something that's very rare in the hands of
Speaker 1: every day. Most of us can't will never be in
Speaker 1: a position to buy the $5 million.01 of a kind
Speaker 1: sports car or you know the Picasso.
Speaker 1: But N. F. T. S. Were saying actually you you
Speaker 1: can do this now you can have a thing no
Speaker 1: one else can have and it will give you the
Speaker 1: bragging rights and I wonder if there's a very human
Speaker 1: inclination to want those things.
Speaker 2: There's a whole lot of psychology around conspicuous consumption and
Speaker 2: people you know why why do people have an art
Speaker 2: collection that they want to show off to show that
Speaker 2: they have wealth power and status and so on.
Speaker 2: Um And then there's sort of more probably more fundamental
Speaker 2: evolutionary biological reasons why you might want to do that
Speaker 2: to just to just to sort of show the quality
Speaker 2: of genetically that you've that you've managed to achieve this
Speaker 2: ability to buy something that no one else can can have.
Speaker 2: So I think there was a lot of it was
Speaker 2: that a lot of it is also that you could
Speaker 2: own a Porsche if you traded in N. F. T.
Speaker 2: S at the right time. So if you bought in
Speaker 2: low and sold hi you could basically take your crypto
Speaker 2: money that you paid for the N. F. T. Or
Speaker 2: that you received for it when you sold it on
Speaker 2: to someone else and turn that into real money and
Speaker 2: then actually be able to spend that real money on something.
Speaker 1: It turns out there are also environmental impacts associated with
Speaker 1: Professor john McCormack explains
Speaker 2: when I first took off and cryptocurrencies became a mainstream thing,
Speaker 2: there was a lot of discussion about the environmental impact.
Speaker 2: So you were seeing for example large bit mining of
Speaker 2: Bitcoin mining factories, I guess you could call them in
Speaker 2: china for example that were using coal fired power plants
Speaker 2: to power
Speaker 2: their their crypto mining that they were doing.
Speaker 2: And so there was a reaction against this. It gets
Speaker 2: more complicated technically because there's two different kinds of crypto
Speaker 2: mining mechanisms they're called and one of them is far
Speaker 2: less environmentally damaging than the other. But the major platforms
Speaker 2: like ethereum Bitcoin still use the old method which is
Speaker 2: environmentally quite, you know, I mean also
Speaker 2: you know there's lots of industries that are environmentally bad
Speaker 2: in terms of their power consumption but this just seems
Speaker 2: to be an added thing that's purely largely for human
Speaker 2: folly and the environmental impacts have been really high and
Speaker 2: now that when the market drops out it's also not
Speaker 2: just the power consumption, it's all the e waste. So
Speaker 2: people were this big shortage of
Speaker 2: computer chips partially arose because of this rise in crypto
Speaker 2: and 50 people were buying hundreds of thousands or hundreds
Speaker 2: of thousands of Gpus or Cpus putting them in big
Speaker 2: racks running them with from coal fired power for example
Speaker 2: and that caused a chip shortage that caused a whole
Speaker 2: lot of people that might be using these for other
Speaker 2: perhaps you might argue more
Speaker 2: well ethically interesting or ethically valid reasons we're not able
Speaker 2: to access it because the crypto miners have brought them
Speaker 2: all up. So I think there is this huge issue
Speaker 2: with it. It still exists today. The theory have said
Speaker 2: they're going to change to a more environmentally friendly scheme
Speaker 2: but they haven't yet.
Speaker 2: Um and you know so and I think there was
Speaker 2: a lot of pressure on artists to to think carefully
Speaker 2: about the environmental impact of selling their work on N. F. T. S.
Speaker 2: And so a lot of platforms arose that were supposedly green.
Speaker 2: I mean any N. F. C. Or any computer system
Speaker 2: uses power. You can't get around that.
Speaker 2: So there is an additional cost in terms of the
Speaker 2: power consumption and that's largely opaque to the user. Where
Speaker 2: does the crypto get its power from and who's doing
Speaker 2: the mining and because it's all distributed it's very difficult
Speaker 2: to chase all that up. So
Speaker 1: has the bubble already burst on?
Speaker 2: I think a lot of interest. And again I think
Speaker 2: this is due to sort of hesitated at the end
Speaker 2: of the pandemic. But at least a change in the
Speaker 2: way we're no longer in lockdown. We're no longer galleries
Speaker 2: are open again. You can go to museums. People are
Speaker 2: getting out digital works great if you're sitting in front
Speaker 2: of a computer. But as you said, I mean you
Speaker 2: can print them out and hanging on the wall if
Speaker 2: you want to. But
Speaker 2: most of them I think people might look back and
Speaker 2: say really I paid that much money for that.
Speaker 1: I'm glad I can finally get my head around what
Speaker 1: an N. F. T. Actually is. R. N. F. T.
Speaker 1: Is all that bad? Is there potential for artists to
Speaker 1: get paid and consumers to make a good investment? What
Speaker 1: does the future look like for N. F. T. S.
Speaker 1: In our next episode, experts in the field of business
Speaker 1: and law discuss some of the ways they are helping
Speaker 1: both artists and consumers navigate the tricky legal world of N. F. T. S.
Speaker 1: We'll also find out about the world's first self proclaimed
Speaker 1: anti TNF T project. Thanks to all our guests. Dr
Speaker 1: Ben Hayward, Professor john McCormack, Alana Kushnir and josh Drummond
Speaker 1: for more information about their work, visit our show notes.
Speaker 1: If you're enjoying what happens next, don't forget to give
Speaker 1: us a five star rating on Apple podcast or Spotify
Speaker 1: and share the show with your friends. Thanks for joining us.
Speaker 1: See you next week