CRYPTO AND ART GALLERIES Why Algorand for Art?
Perhaps the largest confusion within the art community at present regarding NFTs is this notion that NFTs are in some way specifically made for, or synonymous with, Art.
NFTs are, in fact, a general system for validating ownership of assets that are not fungible (as opposed to a currency, which is fungible in that it has a universally agreed upon market value). As such, we do ourselves a disservice by continuing to refer to NFTs as anything other than a digital deed for a non-fungible item. Literally anything without universal market value can be considered a non-fungible item, so this obsession with art is a misplaced fad at best.
To be clear, we are an art gallery, and we are in the business of selling art.
But in this rapidly evolving space it’s important to understand what sort of technology you’re using to accomplish future proof of ownership and provenance.
A digital deed is the logical next progression for ownership, regardless of whether the art is physical or digital. Therefore it’s vital for all of us to take a step back and deeply consider what the NFT phenomena technologically represents.
After much consideration, we deeply feel it’s a revolution in ownership – not a revolution in art. It’s easy to loose sight of the fact that the NFT is not the art itself, nor is it specific to the art world.
The blockchain used for creating a digital deed is, therefore, an important decision that no one seems to be considering beyond the current fixation on environmental concerns.
We’d like to here recalibrate everyone’s attention. It’s not about the art being protected – it’s about the framework of the blockchain used for that protection. Understanding the technical aspects of the blockchain itself is fundamental to deciding which blockchain one wants their assets to be protected by.
The following is an exploration into why we chose Algorand for that protection.
The status quo is limping along...
If you are in any way plugged into the crypto space, you’ll notice a divide between Bitcoin advocates (commonly referred to as “Maximalists”), and just about everyone else in the Decentralized Finance (DeFi) space (from Ethereum to Doge Coin). BTC Maximalists point out that, as a trusted store of value, Bitcoin is unequivocally the best option.
While we don’t contest this fact (which is a complicated topic involving the history of money), we do believe that the DeFi space is creating innovative solutions to myriad problems that Bitcoin cannot, by its very nature, address. There are a seemingly infinite number of solutions being manifested in real time, and a whole host of these deal with the problem of validating ownership.
Historically, proving that person A gave ownership of item B to person C involves a mixture of record keeping and a trusted central authority.
To use an example specific to the art world, if someone sells a painting by Banksy through an auction at Sotheby’s, the record of the seller’s ownership is either required or created by Sotheby’s central authority, and kept in a way that is easily accessible should anyone question the validity of that ownership. Furthermore, the transfer of that ownership is both validated by Sotheby’s, and stored somewhere so that anyone who asks can easily see that the Banksy painting is now the property of person C.
The provenance associated with the Banksy painting, as well as any copyright attached to it, will likely exist in a soup of sources ranging from additional documents either obtained or copied by Sotheby’s, held onto by the previous owner, handed off to the current owner, or supported by a series of external entities with a vested interest in Banksy’s artwork. Although this is a veritable maze of potentially misaligned information, it’s part of the fiery forge that produces context after a piece of art has been created, bought and sold.
But no one is claiming that the current system isn’t sloppy. And blockchain offers a real chance at eradicating that sloppiness.
Record keeping just got easier...
Keeping records on a completely decentralized public ledger offers an incredible opportunity for allowing validation on a network that isn’t supported by just one central authority.
One of the logistical issues regarding provenance is the fact it typically exists in many forms and in many places.
Blockchain eliminates this issue by placing all existing information (as well as any reference notes) in one place. While many people point out that this is often reliant on a series of external URLs for supporting documentation, we would remind everyone that NFTs must be passed from one entity to another. Because there is this literal transfer in digital ownership, the blockchain provides a binding of that ownership and the provenance associated with it in a way heretofore unseen.
And then there is the monumental task of physically maintaining data over time.
If it exists on a distributed ledger, no single server crash or catastrophe can do anything to the record itself. Barring a massive solar flare that takes out all power grids on earth (in which case we all have bigger issues to attend to), everyone’s information is always secure, and can always be referenced.
This means in 30 years when no one remembers who owns what and why, the blockchain can easily be referenced as a source of ownership, regardless of what’s happened to the institutions originally involved with the transaction.
Longevity matters...
While it’s entirely possible to “transfer” your NFT to a new blockchain in the future by minting a new one to take over the old one, the preference is that the blockchain the NFT was originally minted on is still in existence. Therefore, people should take time to review the blockchain they’re minting their NFTs on. In this day and age of token abundance, new currencies are being manifested into existence right and left.
It’s vital that we fight human instinct, which is to create something new for something niche.
The reality is, the newer and more niche a technology, the less long-term viability it has because it’s a) less proven than competitors and b) will have a relatively smaller group of support that dwindles given enough time.
Creating a new blockchain specifically for the art community is, then, fraught with compounding issues from the start. Obsolescence is baked into such a cryptocurrency.
Algorand offers a more widely accepted, streamlined alternative.
Scalability and low fees...
Anyone who’s tried to transact on the Ethereum network (and this will likely change after they switch to PoS consensus) has likely encountered the high gas fees associated with such a transaction. The network sometimes sees high traffic, which drives up prices, meaning a simple transaction can cost anywhere from $5 – $30. Because of the way Algorand was created the Pure Proof-of-stake consensus allows for cheaper transaction fees, which allows for more transactions, which gives people greater reason to use the network over time.
To be clear, NFTs built on the Algorand network have absolutely nothing to do with the market value of Algorand. But the transactional capabilities of Algorand DO impact any NFTs built on the network as transferring any NFT between wallets is a transaction. And the speed of that transaction is emblematic of the quality of the blockchain ecosystem where it takes place.
Simply put, Algorand offers a better, faster, and stronger network than most of the alternatives.
Lastly, yes, the environment...
Although much of the conversation centered around the environmental impact of cryptocurrency is filled with logical incongruity, misunderstandings, and a general lack of technical knowledge, we do believe that sustainability matters.
From the beginning, the Algorand network was built on an alternative to Proof-of-work (PoW) consensus, requiring such a small amount of energy as to constitute near Carbon neutrality. They’ve additionally gone a step beyond this by partnering with ClimateTrade for sustained Carbon neutrality as the blockchain scales up in use over time.
Due to this foresight, Algorand is currently Carbon negative.
We chose Alogrand for its ability to scale, its low fees, its speed, and yes, because of its commitment to the environment.
The Joseph Nease Gallery is open by appointment only. Our hours are Thursday through Saturday, 12 to 4 pm. Appointments can be made by calling the gallery or by emailing our Gallery Manager Amanda Hunter at manager@josephneasegallery.com. All visitors are to wear masks, and we will be routinely disinfecting common surfaces within the gallery space.
