As the founder of the first digital fine arts course at Brown University and Rhode Island School of Design in the early 1990s, Anne Spalter has long been deeply immersed in a space where creativity meets technology.
Then came nonfungible tokens – or NFTs – which are essentially digital certificates of authenticity that are created with unique identification codes, as part of a decentralized ledger technology called blockchain that’s also used to keep track of cryptocurrency transactions.
Throughout the past year, wealthy cryptocurrency enthusiasts have fueled a surge of interest in digital collectibles, including artwork linked to NFTs. And for many artists such as Spalter, whose NFT artwork includes surreal, digital renderings of spaceships and lighthouses, it’s been a boon.
Globally, the market for NFTs made for a record-smashing year in 2021, generating more than $23 billion in trading volume, up from $100 million recorded in the previous year, according to data from digital app store DappRadar.
“It’s affected how people are collecting and how creators are making things as well,” said Spalter, who has studios in Providence and New York City. “There are a lot of wonderful features for artists. It’s a way of tracking ownership. You still need to still make a community and develop interest among collectors. But you have the whole internet at your disposal and can develop marketplaces. You can sell your artwork easily online, get paid immediately, deliver the artwork instantaneously and get royalties if the artwork is sold.”
Spalter has “minted” – crypto lingo for publishing a token on the blockchain – and sold about 65 works of NFT art. A swirling space landscape she dubbed “The Wonder of It All” was being auctioned off through Sotheby’s art brokerage for $9,500 after receiving 22 bids three days before the closing of an auction held in April.
“It’s been a great space for me,” Spalter said. “It doesn’t do as well if you’re an oil painter and shift to NFTs. Because my art was already digital, it seemed like a natural platform.”
Spalter said there is growing interest among art students in NFTs as a way to commodify their works, but there's also been a lot of resistance to the technology due to environmental concerns. An immense amount of electricity is required to power computers performing transactions using the block chain and its proof of work verification processes.
"There’s a perception that it is a big problem," Spalter said about the environmental concerns. But, she said, "art students want to make a living and want to be able to do their art."
It’s not just skillful NFT art that’s going for big bucks, such as a collage piece called "Everydays: the First 5000 Days" by a digital artist known as Beeple that went for $69.3 million in March 2021. There’s also very rudimentary NFT artwork that has become highly sought after, such as the extremely successful CryptoPunks project, with a collection of 10,000 pixelated characters all with different traits, the most expensive one selling for $23.7 million in February.
Arati Kale, assistant professor of finance at Providence College, said the demand for digital tokenized items is partly driven by scarcity.
But at this point, she said, it’s “difficult to separate value from noise,” pointing to the example of an NFT attached to the first tweet published by Twitter founder Jack Dorsey. It sold last year for over $2.9 million, but recently plunged in value, fetching a high bid of just under $10,000 as of mid-April when an auction was still ongoing.
Nevertheless, Kale said there is underlying value in the blockchain technology due to its utility, and it’s something that businesses may increasingly seek to take advantage of when it comes to authentication and record keeping. “Falsifying ownership will become difficult,” she said.
Major businesses are exploring how to capitalize on NFTs. Woonsocket-based CVS Health Corp. filed patent applications in February to sell image files containing artwork verified by NFTs, along with other virtual goods, joining companies such as Nike Inc. and Walmart Inc. that have submitted similar filings.
“As the leading health solutions company, we’re consistently enhancing our omnichannel health services to meet the needs of consumers when and where they want them, including at home, virtually and in the community,” CVS said in an emailed statement. “We’re also regularly looking at new and innovative ways to engage consumers through a digital-first, technology-forward approach, which is why we recently made trademark filings related to virtual health care services, as well as other virtual goods and services.”
Kale said there are concerns over online hacking that have prevented widespread adoption of NFTs as a part of mainstream business. And another problem is that NFTs are stored in “crypto wallets,” she said, which are protected with passwords that people can potentially misplace without a way to recover them.
Eric John Palmieri, who creates intricate art out of pizza from his family’s D. Palmieri’s Bakery Inc. in Johnston, has turned photographs of the finished products into more than 70 NFTs over the past year. One NFT artwork he sold for $2,400 at a charity auction was a pizza in the form of rock singer Freddie Mercury, using black olives, tomatoes, yellow bell peppers, mozzarella and other ingredients to make a portrait of the Queen frontman.
Palmieri said he could imagine Netflix Inc. might adopt memberships as NFTs as a way of cracking down on people sharing passwords. Eventually, Palmieri predicts that “metaverse” NFT stores that allow internet users to explore a store and look at items in 3D will replace online shopping as we know it.
For now, Palmieri said big brands, such as Coca-Cola, Taco Bell and McDonald's, are doing promotions involving NFT art collectibles to connect with customers.
“They’re starting to get into it that way,” said Palmieri, who also made a series of collectible NFTs as part of what he calls the "Nifty Pizzas" project. “It’s hard for people to understand it. It’s sort of abstract to think about it.”
Spalter said the more big business experiments with NFTs the better the technology will develop, evolving to protect users from scams and problems with password retrieval.
“It will help usher in better regulation and safeguards for people participating in and creating NFTs,” Spalter said. “There are a lot of bad actors out there. I think big corporations stepping in and getting involved with that could help with that.”
Marc Larocque is a PBN staff writer. Contact him at Larocque@PBN.com.
