What is a non-fungible token (NFT)? Is it a vehicle that helps us support creators and circulate songs, photos, images, and other digital artworks that inspire us? Is an NFT a digital asset to be used for profit? Is it both?
Once, NFTs were a subculture about community. Now, they hold a unique position at the intersection of the finance, tech, and creative industries and exist in a class of their own. Ultimately, NFTs hold this unique position because they can be attached to a wide and diverse array of songs, gaming assets, photographs, videos, event tickets, and even real-world physical assets like yachts. As a result, they have brought together a remarkably diverse range of communities and industries, all with vastly different backgrounds, goals, and values.
And this week, value became a major topic of debate within the NFT ecosystem.
Specifically, the upheaval is centered on the utility of art NFTs — on tokens that feature photography, music, poems, and so on. Is the value of these kinds of NFTs inherently tied to the piece of digital art represented within the token? Or is the value the incentives (financial or otherwise) that are offered to those who own the token?
These are just a few of the questions being asked by artists, collectors, and developers.
The discussion stems from First Day Out, a recent NFT release from prominent photographer and crypto-artist Isaac “Drift” Wright. First Day Out was minted on Drift’s customized Manifold smart contract as an ERC-721. Collectors who already had NFTs featuring Draft’s work were able to mint early, and public minting was then opened for a period of 24 hours.
The project raised millions, and then things got heated.
Why is the NFT community split over utility?
This entire discussion surrounding Drift’s First Day Out collection comes down to one word: utility.
Utility is a major buzzword within the NFT ecosystem. Broadly speaking, the utility of an NFT refers to the usefulness, profitability, and benefit that it affords its owner.
The utility of an NFT can be a multitude of things: membership to an exclusive community or DAO, a ticket to a virtual or physical event, and much more. With the rise of the PFP (profile picture) NFT market, it has become commonplace to base the value of a project on its roadmap, deliverables, and community initiatives rather than the quality of the art itself (or the artist).
So, what happened? Why is the discussion resurfacing now?
As noted, Drift had a 24-hour public sale. In the NFT ecosystem, this kind of sale is known as a “limited open edition.” It’s basically a free-for-all where anyone can purchase an edition of the same NFT for a certain amount of time. Drift sold over 10,000 NFTs by the close of the sale, raking in more than $6 million. In response, some collectors started to ask Drift about what comes next i.e., about what utility he plans to add (free airdrops? live meet-and-greets?) to reward those who supported him.
However, Drift has been adamant that he doesn’t owe anyone who buys his work anything. To him, and many others within the NFT community, art can just be for art’s sake. It doesn’t need to have any underlying utility beyond that. Others are underwhelmed by this ideology. They believe that NFT creators should support their community by giving back, especially when their project is so fantastically successful.
And this is where the debate stems from. Is it right for Drift to make that much money without giving anything back to his collectors? Or does he truly have no obligation because the art itself is the utility and benefit?
Here’s a sample of what the community is saying:
As artists, our entire lives are dedicated to our art.— Ravi Vora (@RaviVora) April 13, 2022
The utility is that you get own a piece of that.
Pretty remarkable, really.
Some thoughts on NFTs and utility
In 2022, the NFT market stands in stark contrast to what it was even a year prior. At the start of 2021, the NFT ecosystem seemed to be solely about digital art. Artists were finding that NFTs were a new way to sell art and connect with their fans. Collectors were finding that trading NFTs was a new way to collect digital art and accrue a profit.
But the truth is, things have changed. Since NFTs when mainstream, a number of new individuals and communities have entered the space, and many artists are making millions (so are many collectors).
Yet, it wouldn’t be an overgeneralization to say that art, the actual application of creative skill (drawings, paintings, animations), still runs the NFT market. It’s not all money and profit. After all, Bored Apes, Cool Cats, Doodles, Cath Simard, and Drift wouldn’t have become successful by selling blank NFTs. But this doesn’t mean artists are at the center of the ecosystem.
That said, artists have been creating and selling art for hundreds of years. History has shown that art, in and of itself, has value. Why now must an artist provide more to their collectors than the product of their years of dedication to their craft?
Again, things have changed. NFTs have changed things. They provided a way for collectors to both own a piece of art and gain access to unique incentives. They provided a way for artists to make millions from their work and become a rising tide for all ships — to share the wealth with their collectors when their project is successful. These changes brought with them a host of new questions, and it’s unlikely that the debate will be settled anytime soon (if ever). The debate that unfurled this week and started to cause ripples will very likely lead to some pretty big waves.