NFTs have become a multi-billion dollar industry in less than a year, raising questions of ethics, sustainability, and ownership as we try to figure out whether these digital assets are a 21st-century gold rush or whether we’re facing another dot.com crash. As the fashion industry launches into this brave new world of emerging digital technologies, there are many considerations for the role of NFTs. First things first:
What is an NFT?
Simply, NFTs are non-fungible tokens. They are one-of-a-kind, digital assets that represent real-world objects like art, games, or clothing, bought and sold online with cryptocurrency. NFTs can be JPEG images, music, video game avatars, or even tweets. The core value of NFTs lies in how they are able to create scarcity and exclusivity in widely accessible digital media that is easily right-click-saved, torrented, and freely shared on the internet.
To better understand, look at the 2017 sale of the Hermès Diamond Himalaya Birkin bag. At a Sotheby’s auction this crocodile leather handbag, encrusted with over 200 white diamonds and 18 karat white gold, sold for a hefty $400,000 (around R15 million at the time), despite its original retail price being $300,000. Birkin bags, made by the French luxury house Hermès, are notoriously rare and hard to obtain. It’s estimated that only 12,000 are produced each year and fans of a Birkin can expect to be on its waiting list for up to 6 years.
Even with extreme levels of wealth and fame, you cannot walk into a Hermès store and leave with a Birkin handbag. This has made it one of the greatest status symbols of our time, and as such, driven the perceived value of the handbag beyond its use of precious stones and exotic skins so much so that its second-hand value can exceed retail prices.
At auctions across the world, Hermès handbags are outperforming luxury cars, fine art, and vintage whiskey. This is all possible due to scarcity and exclusivity – the more rare something is, the more value it has.
In November of 2021, the MetaBirkin was launched, a collection of 100 faux-fur Birkin handbags in a range of high-octane colours, psychedelic patterns, and some with Michelangelo, Da Vinci, and Basquiat artworks, selling for an estimated $13,000 to $65,000. This might seem par for the course until you realise that the MetaBirkin, while similar to the famed arm candy, was created by Mason Rothschild and not the French luxury house. And, it is only available as a digital product that can’t be carried on your arm.
What makes NFTs different from purchasing a digital artwork or downloading a JPEG is that, similar to the certificate of authenticity you receive when purchasing a real-life artwork or a designer sneaker, they are encrypted with unique digital signatures. These signatures are tracked and stored on blockchain technology making it impossible to interchange one MetaBirkin with another. This is the non-fungible aspect of the NFT. Fungible items are interchangeable because they are identical to each other, such as a R10 note that is traded for another R10 note. While a mass-produced Mr Price jersey from a Cape Town branch can be exchanged for an identical one from a Johannesburg store, a Diamond Himalaya Birkin is non-fungible. The latter has specific qualities and characteristics that make it a non-replaceable item. The irregularity of animal skin and diamonds mean that no two Diamond Himalayas are alike.
Ownership in the Metaverse
NFTs exist on the Ethereum blockchain. Much like other blockchain technology such as Bitcoin, Ethereum is a fungible currency where one Ethereum coin, or ETH, can be exchanged for another in the same way physical currencies can be exchanged with one another. However, NFTs on the blockchain do not store monetary value but store data that proves ownership of digital assets. Blockchain technology allows creators to verify an artwork is of their own making and allows collectors to verify their purchase is unique and authentic.
In theory, NFTs provide a way of safeguarding intellectual property and allowing artists protection from having their work plagiarised and stolen online.
In practice, however, this is much more complex. Currently, Mason Rothschild is facing a trademark infringement lawsuit from Hermes who view the creator’s rendition of their product as a “blatant violation of intellectual property”. Acts of plagiarism are common in the real-world fashion industry, from black markets producing knock-off Louis Vuitton to fast fashion giants imitating the works of smaller labels, driving them out with their lower prices and global supply chains. Without the deep pockets of these conglomerates, there is little legal recourse for independent designers to challenge theft and this is only multiplied in the metaverse. It is then ironic that NFTs, proposed to create scarcity and authenticity for artists, are also used to commit the same crimes artists frequently suffer.
The Ethical Implications of NFTs
Anyone anywhere can mint an NFT, and there is little regulation as to what qualifies as an NFT. While an independent artist can use NFTs to sell their original artworks, any person can appropriate a tweet, photo, or video and mint it as their own artwork without any credit or remuneration to the original source.
While on one hand, this creates a gatekeeper-free art market, it also raises concerns about the value-centric culture promoted by NFTs. Sales of bored apes or Paris Hilton’s CryptoQueen are not necessarily being traded for their aesthetic qualities, artistic skill, or the personal enrichment they inspire but, much like the luxury realm at large, monetary value outweighs any cultural, personal, or societal values.
Purchasing a $500 Gucci T-shirt has less to do today with its construction or design but rather the social capital tied to the price tag and brand name.
NFTs are a part of a culture that values art as an investment first and foremost rather than contributions by culture and people. Valuing art and fashion in this way is why the real and metaverse fashion industry can continue with acts of plagiarism and misappropriation, rendering labour and artistic intent meaningless.
And much like its real-world counterparts, this also comes at a grave cost to the environment. Blockchain technology, for now, depends on an energy-intensive interconnected network of thousands of servers running puzzles in order to mine cryptocurrency and store transactions.
A single Bitcoin transaction uses more electricity in a single day than the average American household does in 75 days.
Some cryptocurrencies use more or less, it’s currently estimated that Ethereum uses more electricity than the entire country of Libya, with some experts saying that a single NFT has the same carbon footprint as a single EU resident’s two-month electricity usage. Still in its infancy, the full extent of the environmental costs of NFTs have yet to be calculated and some artists have taken to offsetting their carbon emissions by investing their profits into environmental initiatives or research into carbon-neutral Blockchain technology.
It’s not yet clear how great the role of NFTs will be in the future of fashion. Cryptoart is ground-breaking in its ability to decentralise authority and power in the realms of fashion and art. There is still the danger of the exploitative and profiteering tenets of capitalism corrupting the space as it has its real-world counterparts. At the very least it has managed to make us question how we value the production and consumption of art, hopefully towards our betterment.
- Cover image: Yekaterina Burmatnova and MetaBirkin image: TheIndustry.fashion
- This is Part Two of a three-part series, by Khensani Mohlatlole, unpacking fashion, the metaverse, and how emerging digital technologies can play a part in creating a more ethical and sustainable future. Read Part One here
- Cape Town non-profit organisation, Electric South collaborates with artists across Africa to create immersive, interactive stories including working with digital media and virtual and augmented reality technology to ensure inclusion in the metaverse
- Read about the Design Futures Lab 2022, a collaboration between Twyg, British Council #SouthernAfricaArts, Electric South and Crossover Labs
