Part 1 – Getting my feet wet
I decided to dive headfirst into the NFT world a few months back. I wanted to understand how it all worked, and I gotta say, it’s not really something you can dip your toe in… so I decided the only way to do it was to become a collector.
If you don’t know already, Twitter is the place where most of the NFT action takes place and you will hear lots of discussions about how the photography world on Twitter is so supportive and kind to photographers. After spending lots of time building an audience on Instagram, many are coming over and seem to be having a much better time of it.
I have been on Twitter for a long time and have to say it’s been refreshing to see all the photography discussions on there now. In the past, Twitter was dominated by news organizations, and during the Trump presidency, it was simply unbearable with all the breathless takes every 5 min. Once I started following more people engaged in the NFT photography world, my feed filled with photos.
Another aspect of photo NFT and crypto, in general, is that the slang and abbreviations make it difficult to understand what’s going on. If you are just getting started, you will spend lots of time googling terms and concepts. Here’s a glossary you can start with: https://www.finder.com/nft-glossary Unfortunately, the terms people use make it difficult to follow along until you have memorized and studied a bit. At the root of all this is the blockchain and a token called Ethereum. It’s helpful to watch some videos or visit the official Ethereum site: https://ethereum.org/ to get familiar with the underlying tech. Many photographers would be happy to “onboard” you to this world as well.
As a collector, once you’ve identified an NFT you want to own, you need a wallet to buy it and store it, and before you get a wallet, you need some ETH to make the purchase in the first place. A quick note on Ethereum… the price is volatile, making messing around with this world difficult if you don’t have money you can afford to lose. Since I’ve been involved these last 3 months, I’ve seen the price of 1 ETH in USD go between $2,500 and $3,500. If you buy some ETH at the peak, you can easily lose thousands.
I opened an account at coinbase.com, linked my bank account and bought an ETH. Then I got a Rainbow wallet https://rainbow.me and tried to transfer the ETH over but soon found out that for your own safety, there are delays in purchasing crypto and transferring it out of your account which in my case took a week before I had it in a wallet where I could make a purchase. This is a good thing but be aware that moving between USD, cryptocurrencies, and NFTs can take time.
I should also mention that it’s somewhat trivial for someone to steal all your money (your wallet address is public, and everyone can see what’s inside the wallet). There’s a private key that only you have access to with a passphrase of 20 words that you have to store somewhere that gives anyone access to your wallet. You can put this in a file cabinet in your house (don’t lose it or the wallet is lost forever) but putting it on your computer or backing up to iCloud or google drive leaves you vulnerable to hacks. You can also accidentally click a link and authorize someone to wipe out your funds. If you are playing with lots of money here, you need to take security seriously and it’s not an easy topic to understand. Here’s a thread that explains it: https://twitter.com/punk6529/status/1506175497834795012
Are you still with me? Once you get all set up it’s very easy and fun but there’s a steep learning curve to get started.
Once I found an NFT, I wanted to buy… I realized I had no idea what I was buying, and further research was needed.
Without getting into the weeds too deep, my research revealed that most NFT transactions happen on the Ethereum blockchain because it’s where a contract can be written. You can start here if you want specifics: https://ethereum.org/en/nft/ but what I was really interested in was the license associated with the image you are buying. Turns out there isn’t one. In very simple terms, an NFT is a digital receipt that points to an image. You own the digital receipt in the form of a token. I think it’s common knowledge that you do not own the image, but I don’t think most people know you don’t have any rights to the image either. ZERO. The erc-721 token, which most NFTs use, simply creates a unique digital receipt in the form of a token that points to an image.
But there must be rights associated with NFT photography because marketplaces, wallets, Twitter posts, and virtual galleries display images all the time. I discovered that these rights are given to you by the marketplace where you purchase the NFT. For example https://foundation.app, a popular marketplace with photographers, states the following:
When you collect an NFT on Foundation:
* You own the NFT that represents the artwork on the blockchain.
* You can display and share the piece.
* You can exhibit the piece on any platform or in any virtual space.
* You can resell or trade it on a secondary market.
What you can’t do as a collector:
* You can’t claim legal ownership, copyrights, trademarks, or other intellectual property rights.
* You can’t use the artwork in a commercial context.
* You can’t make any changes to the artwork.
* You can’t share the work in a hateful, cruel, or intolerant context.
* You can’t create additional NFTs that represent the same artwork.
The actual terms of Service spells it out even further: https://foundation.app/terms
So what happens when you resell the NFT, or the marketplace disappears, or the NFT is delisted because of a copyright dispute? I don’t know, but I have experienced this firsthand and will address it in another article. Let’s just say that as a photo industry veteran, the whole licensing aspect of NFT is stupid. It’s such an afterthought right now, but I’m hopeful that this will change as more people who understand that licensing is everything get involved. We shall see.
I’m finally ready to buy my first NFT, which I will get to in Part 2. But there’s the elephant in the room I haven’t even addressed that makes NFTs a nonstarter for most people. Energy consumption. I believe this will be solved very soon with changes proposed many years ago that Ethereum seems to be on the verge of implementing. If these changes are not implemented, I don’t want to participate in the photography NFT world. Here’s an article that covers the changes https://coinmarketcap.com/alexandria/article/how-will-ethereum-2-reduce-energy-consumption. This series of articles assume the wasteful energy consumption of doing things on the blockchain will be addressed.
Hope you get in on the pyramid scheme early 😁
Thanks, much-needed info.
Thanks for looking into this – this is one of the most straightforward and helpful discussions about photography NFT’s that I’ve seen. Given all the downsides you acknowledge, I simply can’t see the value in investing in an NFT that represents a photo or artwork.
Do you think there’s any faint possibility that when the novelty of NFT’s wears off, people might turn their attention to valuing and paying for actual photography again?
The arguments I see that NFT’s are here to stay are pretty compelling: Collectors who are very online and want the artwork to live online with them, crypto investors with cash to burn, people who want to collect 1/1 NFT versions of prestigious works.