CEO DailyCFO DailyBroadsheetData SheetTerm Sheet

The work of art in the age of blockchain reproduction

March 3, 2021, 4:14 PM UTC

This is the web version of The Ledger, Fortune’s weekly newsletter covering financial technology and cryptocurrency. Sign up here to get it free in your inbox.

The world of digital art exploded last month with a sudden surge of investor and public interest in so-called “NFTs,” or non-fungible tokens. These digital tokens give holders ownership over (mostly) digital art pieces or collectibles. Sales volumes on the NFT trading platform OpenSea exploded from around $5 million in January to well over $80 million in February. Major pop culture figures like Logan Paul, Grimes, and Post Malone have gotten in on NFTs, and Christie’s, arguably the most elite auction house in the world, sold its first NFT artwork last month.

But there’s plenty of justified confusion about the flood of cash and activity. Most NFTs grant ownership over things like digital videos or even images, and there’s no easy way to prevent those pixels from being shared and copied, regardless of who ‘owns’ them.

So why are NFTs valuable (maybe)?

Technologically, NFTs are quite simple if you already understand blockchain. An NFT is essentially no different from a Bitcoin, but it represents ownership of a piece of media – not just art, but tweets, videos, and memes. Because they’re tracked on a blockchain, they can’t be forged or hacked. But while there are more than 18 million interchangeable Bitcoins, there is only one copy of any single NFT, which is why they’re ‘non-fungible’: they can’t replace each other on a 1-to-1 basis.

This uniqueness is fundamental to NFTs’ value, and to recent price spikes. In the postmodern economy, especially for the wealthy, chasing ownership of truly unique and special objects can drive prices to astonishing heights. That holds not just for paintings, but for classic cars, sports memorabilia, etc. NFTs make it possible for the something akin to real-world rarity to drive the prices of ‘digital objects.’

But uniqueness is only part of the equation of art’s value. The philosopher Walter Benjamin argued in 1935 that the appeal of objects like paintings relies on an ‘aura’ that sticks to an original physical object. This became obvious when it became technologically possible to create thousands of copies of, say, the Mona Lisa: the copy was clearly not a replacement for the original. Copies don’t carry history. Standing in front of the real thing, knowing that it was literally touched by greatness, is essential to its appeal – and its market value.

Beyond mere uniqueness, NFTs must recreate the same ‘aura’ for digital art, especially at the high end, if they are to retain their appeal to buyers and collectors. To do that, they have to be more than just deeds of ownership.

That’s well-understood in the traditional art market, where artists have been successfully selling ‘digital’ works without the help of NFTs for decades. Matthew Barney, perhaps the most important fine artist of the ‘90s and 2000s, sold limited DVD copies of his Cremaster films to collectors, and made them very hard for anyone else to see. In 2007, a DVD copy of 1999’s Cremaster 2 sold at auction for $571,000. Lack of an NFT doesn’t seem to have harmed the Barney’s ability to shill pixels, despite the fact that the films were, even at the time, widely pirated.

What the Cremaster 2 DVD did come with, though, was an elaborate context, well beyond its physical display case. It was shown in limited theatrical runs, alongside props from the film that themselves sold as art. The art industry, from critics to galleries, created a kind of frame around the object that lent it value.

For now, ongoing blockchain technohype is taking the place of those structures in helping drive up NFT values. But for blockchain art and collectibles to really persist, they will need a much broader ecosystem, particularly contexts for displaying and experiencing NFTs which emphasize their uniqueness and cultivate their aura. Games are a great opportunity – imagine a virtual world like Second Life, but with rules requiring that all displayed art be backed by an NFT. Or social networks integrating NFT ‘display cases’ that check ownership against the blockchain. In this sort of context, a few lines of code just might start to feel ‘real.’

There is another, less subtle problem here, though: especially given that the entire NFT category is speculative, some of the prices being paid for works right now seem thoroughly out of whack with the broader art and collectible markets. Several CryptoPunks have sold for more than rare Babe Ruth trading cards. Some NFT artworks are selling for many times more than paintings by ultra-hot New York art-world stars like Julie Curtiss.

Defenders will say that’s because the NFT market opens up art investing to new audiences, but the two markets will eventually meld and converge (see Christie’s getting in on NFTs). That means prices will too.

David Z. Morris




Walmart poaches ex-Goldman bankers for new fintech ... Square gets its bank off the ground ... Amazon blockchain service now supports Ethereum ... Citi says Bitcoin could become a currency for international trade ... Microstrategy bought the Bitcoin dip ... Scott Galloway digs into Ethereum ... 60% of investors under 40 share strategies on forums like Reddit ... SEC chair nominee says crypto has been 'a catalyst for change' ... PayPal to buy crypto firm Curv, per sources ... Kentucky House passes proposed tax break for crypto miners.


Robinhood expects $26.6m regulatory fine over Gamestop trading disruptions ... Bitcoin faces down biggest weekly drop in a year (then retakes $50k) ... Moneygram faces lawsuit over Ripple partnership ... NY Attorney General warns of 'extreme risk' in crypto investing ... Low-effort Elon Musk Twitter scam nets $243k from some unfortunate soul.




$6.6 million

Price paid in late February for an NFT-backed video piece by Beeple. The price is significant both because it's among the highest ever paid for NFT-backed art, and because it was paid on the secondary market, netting the original investor a huge return.


“If you think about someone working at Walmart, Target, someone like that,” says Keith Corbett, of the Center for Responsible Lending, “their pay is going to maybe be $150 to $200 for a week. They’re desperate for their money, so they’re willing to give up some. But what they’re going to find is when payday comes, the money is not going to be there. They’re going to be in the same boat. These companies know that.”

From an in-depth new report on the downsides of Fintech aimed at the working poor, particularly so-called "wage-access providers" looking to take on the role currently filled by payday lenders. The good news is the apps are a potential net benefit: "If [users] don’t use payday loans anymore and they don’t overdraft anymore, that would be a good news story,” researcher Alex Horowitz told New Republic reporter Kyle Paoletta. “But we don’t know if that’s happening.”

Some fintechs are recreating their own fee traps and debt treadmills. But the more troubling issues are systemic, and may have more to do with economic inequality than fintech. Many of the services partner with employers, who stand to benefit significantly by facilitating loans instead of raising pay. A Harvard study found that workers using payday advance apps were 19 percent less likely to leave their jobs, saving employers potentially huge amounts of money on retention and retraining.

But that lower turnover has a dark implication. As Paoletta writes, "it’s hard to ignore that employees are being drawn into a situation where they may feel perpetually indebted to their bosses," inviting comparisons to the company store or old-fashioned debt peonage. That's particularly true for services like Kashable and SalaryFinance, which charge credit card-like rates on larger loans, despite being able to deduct payments directly from employee paychecks.



How to sell a cat GIF for half a million dollars - Aaron Pressman

Coinbase's stock market entry could make Brian Armstrong one of the world's richest people - David Z. Morris

Wallstreetbets has a new target: CNBC - Chris Morris

Sexism in economics has implications far beyond academia - Emma Hinchcliffe and Kristen Bellstrom

Another part of the blockchain economy takes off - Lucinda Shen

J.P. Morgan says investors should consider holding Bitcoin - Chris Morris

Yes, the Gamestop bulls are back - Bernhard Warner


This edition of The Ledger was curated by David Z. Morris. Contact him at

Our mission to make business better is fueled by readers like you. To enjoy unlimited access to our journalism, subscribe today.