Letter from the Staff

Million Dollar JPEGs

Photo courtesy of Mike Winkelmann (Beeple)

WORDS HEATHER VAN DOORN  DESIGN CHELSEA CALLAS

By now everyone has heard of Beeple, the creator of “Everyday: The First 5,000 Days,” a digital piece recently auctioned by Christie’s for $69 million. At the time of writing this article, Mike Winkleman’s (Beeple) sale holds the spot for the third highest-priced work of art paid to a living artist. Even more astounding than the price is the fact this art is a JPEG.

Like other graphic designers and digital artists, Winkleman felt stuck. Digital art can be reproduced an infinite number of times, making the work worth only the price of the piece It’s not the same even if it is as perfect as the masterpiece created by Leonardo da Vinci because it is missing the signature. So why can’t the same hold true for digital files?

NFTs have been around since 2014 with the very first piece titled, “Quantum,” by Anil Dash and Kevin McCoy. The piece is a looped video of falling dollar signs inside an ornate gold picture frame. Its current value is $7.5 million. NFTs became more widely used in 2017 with the release of CryptoKitties, an enormously popular virtual digital cat pet store. As we entered into 2021, the sale of digital art using cryptocurrency has gained much notoriety with the many high-profile sales just in the first few months. “Nyan Cat,” of meme fame, sold for 300 ETH (ether) worth just under $600,000. Then, of course, Beeple’s piece sold at Christie’s in March 2021 for that record-breaking sum. NFTs are pushing the art world into new territory by allowing artists to monetize digital goods, and buyers to show ownership. However, simply buying the NFT artwork does not necessarily mean you own the copyright or sole access to the work. Some creators choose to hold on to intellectual rights and continue to profit off of their creations. The buyer who purchased “Nyan Cat” paid for just the token itself, the creator retained control of the licensing.

It all seems like an amazing way for digital artists to support themselves through their art. Unfortunately, there is a darker side. There can be hefty fees that come along with creating an NFT, and you have to work with the seller site to create the token using cryptocurrency. After the token is created, a “gas” fee is charged, for each transaction, rather than a shipping and handling fee. If the tenuous and often confusing nature of cryptocurrency wasn’t deterrent enough, there is the environmental cost. Just like Bitcoin and every other cryptocurrency, Ethereum requires computers to “mine” the data and make computations. There is a system of computers that uses technology way above my head to authenticate valid transactions and this action requires a staggering amount of energy. Studies have been done to quantify how much energy is used in the process, and the results are jaw-dropping. Time, magazine (March 2021) reported “Ethereum mining consumes about 26.5 terawatt-hours of electricity a year, nearly as much as the entire country of Ireland.” Another study done by Nature Sustainability found that it requires less energy to extract gold or copper from the ground than to mine cryptocurrency, and a third found that every Ethereum transaction requires nearly as much energy as two American households use in a single day! All one has to do is search on Google to read about the unbelievable rates of energy consumption.

While we may feel that this monster is too big to be controlled now, all is not lost. Vitalik Buterin, the 24-year-old computer scientist who invented Ethereum when he was 18, is trying to undo the energy waste. He has written new code that will change how the mining and transactions are computed, moving from a Proof-of-Work (PoW) to Proof-of-Stake (PoS). What does that mean? The short answer is that computation time is far less in PoS, resulting in more efficient use of energy. Those energy costs are paid for with government-issued currencies, which in financial terms puts downward pressure on the value of Ethereum. Theoretically, by the end of 2021, Ethererum 2.0 should be up and running with PoW behind us. There will be less stress on the energy grid and more value in cryptocurrency so artists and buyers alike can feel good about this newfound wealth and unique purchases. The future is wide open for digital artists and art collectors. Who knows what the future will hold but what is certain, is NFTs are changing the way artists, musicians, and journalists create and sell their works of art. They are putting creators in charge of their own futures by turning their work into one-of-akind digital collectible items. Once the environmental pressures have been released, it can only get better!

of paper it is printed on. A new platform is being used to give contemporary artists a way to sell digital art, which just a few years ago had no market. This is known as nonfungible-tokens (NFTs) that use blockchain technology and has changed how these assets are handled. One-of-a-kind digital “provenance” that cannot be forged is created as proof that the work is genuine and belongs to the buyer. It can be compared to an artist’s signature or autograph. If you are still scratching your head, think of it as painting a perfect reproduction of the Mona Lisa on a wall. NFTs are changing the way artists, musicians, and journalists create and sell their works of art. They are putting creators in charge of their own futures by turning their work into one-of-akind digital collectible items.