NFT gives rise to crypto millionaires while courting controversies.

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[NEW YORK] Last week, the artist Ben Mauro was dividing his pay cheques into three categories: rent, food and art. Now, suddenly he’s a multimillionaire. Thanks to NFT.

Mr Mauro, who has created concept art for films including The Hobbit and video games such as Halo, is newly wealthy thanks to the phenomenon of non-fungible tokens, or NFTs. These tokens are a type of cryptocurrency, similar to Bitcoin, but each one is unique and can’t be replaced or replicated. They’ve grown popular among digital artists because they serve as certificates of authenticity. In the online world, where anyone can replicate images an infinite number of times, NFTs allow artists to create a stamp of ownership. With ownership comes value.

Over the past few months, NFTs have exploded in popularity as cryptocurrencies gained mainstream acceptance. Collectors dished out more than US$60 million in February for gifs, jpegs, memes and other art that’s only available on a screen. 

Video game artists, who are native to digital creations, have embraced the phenomenon. Raf Grassetti, the art director of the popular video game God of War, has been selling 3D models of celebrities like Tesla chief executive officer Elon Musk for tens of thousands of dollars. Halo Infinite art director Nicolas Bouvier sold a painting of a castle on Tuesday for nearly US$35,000. And Mr Mauro’s collection of art, which he sold in the form of collectible card packs, has earned more than US$2 million on an NFT website called Viv3.

"I still kind of don't believe it," Mr Mauro said. "This whole thing moves so fast. One day, alright, I'm broke. Now I'm a millionaire. Sure, I guess."

The NFT phenomenon has made some top artists rich, but it has also been controversial in the video game art scene. Critics point to the astronomical energy costs of mining cryptocurrency, which requires high-end computers to operate constantly at full power, as an ecological disaster. 

Most NFTs are linked to a cryptocurrency called Ethereum, which was estimated in 2018 to use more energy than Iceland. The creators of Ethereum have been promising for years to switch to a more ecologically friendly mechanism, but that hasn’t yet come to fruition.

Others say NFTs deepen the wealth disparity among artists and that they are prone to scams, since the creator of an NFT doesn’t have to prove ownership of the original work. Already, NFT marketplaces are seeing instances of stolen art and copyright violations.

The controversy became more pronounced on Monday night when ArtStation, one of the most popular websites for video game artists to share their work, said it would open up a market to buy and sell NFTs. Thousands of artists slammed the decision on Twitter and threatened to delete their accounts. By Tuesday morning, ArtStation had backtracked, apologising and saying in a statement that it hoped “at some point in the future we’ll be able to find a solution that is equitable and ecologically sound”. 

“I would never engage with Ethereum NFTs and cryptoart,” said Douglas Copeland, an artist who has worked on games like Lawbreakers. “I don’t believe I could morally do that with climate change currently hitting at the rate it’s going.” 

Mr Mauro’s newfound wealth isn’t in Ethereum. It’s actually tied up in a cryptocurrency called Flow that claims to have less of a carbon footprint than its peers. The downside is that it’s not available in the US yet, so Mr Mauro can’t actually get his money. He says he joined a Flow-operated network because they recruited him and he was impressed by their track record of success with sites such as the trading card marketplace NBA Top Shot. 

“I’ve seen all the ups and downs, so my cynicism level is pretty high,” Mr Mauro said. “I plan for the worst and hope for the best in all situations, and I’m doing that here.” 

Mr Mauro compares the NFT phenomenon to the music industry, in which a single hit song might alter a musician’s entire career. Digital art hasn’t been capable of that until now, he says. “In the same way not every person who picks up a guitar will have a big hit song, it at least gives all of us an opportunity to have that chance,” he said.

Even as NFTs have created a way for artists to claim ownership of their work, there are still loopholes and potential for fakes. On Tuesday, many video game artists were warning one another on Twitter to look out for copyright thieves and even ambitious hucksters looking to package and sell NFTs for the art contained in Tweets.

For Mr Mauro, the potential reward outweighs the risk. He’s been following cryptocurrency for a few years and got involved with NFTs late last year. He said he was inspired to get in early after missing out on the opportunity to buy Bitcoin several years ago, when it was trading at closer to US$500 than its current price of over US$54,000.

“What Bitcoin did for money, this is going to do for art,” Mr Mauro said. “I missed it for that thing, not going to miss it for this one.” 

He began working with Viv3 to create listings for some of the personal art he’d been making for the past decade, then began selling them on March 3. His collection sold out in seven minutes.

Source: Bloomberg

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