Blockchain, Digital Rarity, and the Canadians Who Sparked the NFT Revolution

If you stay up-to-date with either contempory art or the tech world, you’ll have come across something or another about NFTs. A highly contentious topic that has launched debates about what constitutes art, the ethics of collecting, and the relationship between finance and art, NFTs have shaken the foundations of the arts like no other innovation of recent times. Whether you’re for or against them, or whether you’re not entirely sure what they even are, it’s without a doubt that NFTs are a major development for arts and culture. And it likely started, as it so happens, with a Canadian programming duo.

Sampling of CryptoPunks, from www.larvalabs.com.

To understand the significance of NFTs, we need to first understand what an NFT is. NFT stands for Non-Fungible Token. As the name suggests, it’s an entity that can’t be copied or replaced. Essentially, NFTs can be understood as a contract or a certificate of authenticity pertaining to a specific digital entity that exists on a blockchain, such as Ethereum.

Blockchain technology is often used to exchange money, recording transactions and tracking assets on a decentralised network. It was later discovered that some blockchains, including Ethereum, could be used to produce smart contracts, which gave them the flexibility to do more than just record and track exchange value. One of the things this allowed for is the exchange of digital assets. Such assets could be anything within the digital sphere, whether it’s a simple computer-generated graphic, a snippet of a video taken on mobile phone, a Tweet or a work of complex and responsive digital art.

At this point, one might be wondering what this has to do with art. Essentially, NFTs give collectors a concrete way to purchase ownership of something that does not have physical form. Whilst art in contemporary times has moved beyond French salons and museum walls, outside of private collections to public spaces or socially engaged projects, collecting is a deeply ingrained cultural phenomenon that extends to prehistory. As digitality permeated our present lives, new ways of collecting were sure to emerge. In this sense, the development of NFTs was perhaps even a natural evolution. 

So what does this have to do with the two aforementioned Canadian technologists? The first NFT was said to be created and minted in 2014 by digital artist Kevin McCoy and tech entrepreneur Anil Dash, but it wasn’t until a few years later that a revolution would be sparked. In 2017, John Watkinson and Matt Hall, graduates of University of Toronto, found themselves at the beginnings of this deluge that would soon take over the art world. The two were the founders of Larva Labs, and had been coding together for fun for over a decade. In a moment of nostalgia about their childhoods in Canada, collecting hockey cards and other trading cards, they wondered if such an activity that brought them so much excitement as young people could somehow be translated to the digital realm. How does one go about creating digital rarity? 

The answer was found in the Ethereum blockchain, and the creation of CryptoPunks. CryptoPunks was a work of generative art and a collection of 10,000 collectable digital entities, each one a punky-looking character of varying lo-fi, pixelated features. People could buy up rare CryptoPunks, and eventually resell them. They became a phenomenon relatively quickly, popping up as Twitter avatars and other social media networks. Heralded as the original collection of the sort, CryptoPunks set the stage for many such sets of collectable NFTs. 

Not long after Larva Labs’ first NFT project launched, Axiom Zen, a Vancouver-based venture firm produced their own set of collectible NFTs named CryptoKitties. Although set on a global stage and for an international audience, there is something to be said about Canada’s place in pushing forward a new cultural staple, without which the fervour of digital collecting might not be a part of the current cultural makeup.

The prices of these NFTs quickly rose with each wave of frenzy, and they seem to be rising still. They have been sold at auction by the likes of Sotheby's, and acquired by arts institutions including Miami's Institute of Contemporary Art. Last week, on 12 February, the record for the highest sales of a CryptoPunk was broken, at a staggering US$23.7M.

It's an astounding total, and you wouldn't be alone in raising an eyebrow at the price some people would pay for what has been called a glorified JPEG. But this type of behaviour, far from being unheard of in the art world, is practically a mainstay. I think Sandra Upson from Wired says in best:

“...recall that collectors have bought empty space, a closed gallery, and a duct-taped banana. The fine art world hasn't been held back by such concerns. Conceptual art can be an investment, sure, but it's also a way to distinguish yourself as a wealthy person with a nose for the future.”

With conceptual art and its often astonishing price tags drawing criticism, it’s no surprise that NFTs garner the same, both from within the art world and from without. Another issue that surrounds the production of NFTs and blockchain in general is the environmental impact, with the amount of energy used to “mint” these artworks being an important environmental consideration.

But this type of crypto art also has its dedicated–and culturally aware–fans. In the same article from Wired, a photography specialist from Christie’s and a Zurich-based gallerist talk about how Watkinson and Hall made art history, and that they were akin to our generation’s Warhol, tuned into the tensions of how we consume and engage with culture.

Even in less commercially-based art spaces, NFTs are an exciting development. One curator friend tells me that it’s a way for artists who push the boundaries of digitality in their work to financially sustain their practices, whereas before they were relying on physical and often imperfect reproductions of their work, such as a print. It also becomes a way to navigate the tricky field of digital copyright laws, a relatively young field that’s still working out its kinks.

Piggybacking off of this crypto hype, many artists, programmers, and entrepreneurs were able to make fortunes of varying sizes with their NFTs. Before long, the internet and beyond was abuzz with this new ardour, bright-eyed and beguiled by both the new communities it generated as well as the potential for riches. Thanks to two Canadians working with the ephemerality of nostalgia and digital creation, culture as we know it has changed for good. 

This new form of art speaks to the current cultural milieu, with the shaky promise of the metaverse ahead of us and the ubiquity of digital technology permeating our everyday lives. Our sense of physicality erodes as the immateriality of the digital takes hold, and the arts reflect on and question this. Whether we look back on this era of NFTs as a short-lived fever dream, or whether it opens the door to an entirely new way in which art and culture is understood, we’ll have to wait and see. But I'm hedging my bets on is that art history textbooks of the future speaking about art of this era will have dedicated mentions of the revolution sparked by two Canadians reminiscing about a simpler time.