But digital files can just be copied infinitely unlike physical works of art. Do NFTs allow you to really own an artwork?

Not necessarily. When people buy an NFT, they often think they are buying the digital file housed inside, and that isn’t always true. All they’re buying is the token. There is no perfect analogy for NFTs, but it’s helpful to think about the relation between the NFT and the asset that it represents outside of the blockchain like baseball cards. If you own a baseball card, that doesn’t give you any claim over the player featured on it, nor does it give you any property rights for the picture printed on the card. Also like baseball cards, there doesn't have to be a 1:1 relationship between NFT and asset. Just as there can be multiple baseball cards for one player, there can be multiple NFTs associated with one digital kitten or work of art.

You could also liken NFTs to purchasing the listening rights to a song on iTunes. The contract gives you the right to experience the song but not to reproduce or license it. One key difference is that you can't resell a song on iTunes, but you typically have the right to resell your NFT.

This made a lot of headlines when Christie’s auctioned Beeple’s NFT artwork for $69 million in March of 2021. But that buyer did not actually receive ownership of the artwork. Instead, they received viewing rights and resale rights.

So if you can’t claim ownership over an artwork (even after potentially paying millions of dollars for it), why buy it at all?

There’s no single or clear answer to this question, but the ability to resell NFTs at a profit (potentially) is one strong driver. Because NFTs have unchangeable, unique code, those who purchase them have verifiable proof (and bragging rights) that they supported an artist’s work and are able to resell it. That can be worth a lot to some people, and it’s even more noteworthy if someone purchases an NFT at the beginning of an artist’s career, allowing them to lay claim to discovering new talent at an early stage.

And, of course, if your NFT includes resale rights, there could be a potential financial upside (as is the case with Beeple).

Are NFTs here to stay? And what could they mean for the future of art?

NFTs are most definitely here to stay, but the prices attached to them are likely a bubble. NFTs are creating a new market, partially fueled by the hopes of how NFTs might provide remedies for the established art market and the ownership of digital files. In the end, this new market may be like the market for baseball cards that exists primarily for the satisfaction of the people participating in it.

PRIMER:

NFTS, BLOCKCHAIN AND ART