What the Fuck are NFTs?
NFTs are a hot asset class that is blowing up but what are NFTs? How will it affect the income of artists? What does it mean for intellectual property? The following is an interview with Bianca Lessard, a newly minted lawyer working towards the bar specializing in intellectual property with a passion for digital art.
Bianca, thank you for taking the time.
Thank you for reaching out!
I am super curious and impressed by your background. Tell me more about how you ended up being passionate about digital art, blockchain and intellectual property.
It all started with Blockchain, but the more I learned about intellectual property and digital art, the more it felt like they naturally intertwined. In 2017, my brother encouraged me to invest in Ethereum and Bitcoin and little did I know, it was going to be a turning point in my life. At the time, I was thinking of going into family law! Fast-forward 4 years, I have just completed an LL.M. in Intellectual Property and Technology. I submitted my thesis last fall on how to use blockchain on the art market to ensure better authentication and provenance. At the same time, the famous artist Beeple sold the piece CROSSROAD on Nifty Gateway for $66,666.60. Only 5 months later, it was sold to a new owner for $6.6 million and his piece Everydays: The First 5000 days was then sold at auction with Christie’s for $69,3 million... You could say that things are moving pretty fast in this space! I think investing my own money in this technology pushed me to build a strong knowledge around it and research it thoroughly. Diving into this industry at such a young age has already opened so many doors and I’m really excited for what’s to come. This summer, I will be starting my Quebec bar internship at Robic, an IP and technology law firm in Montreal.
This is pretty remarkable, I could definitely see how investing your own money could make you want to dig deeper. Before I ask you more about the tech itself, how was your thesis received among your professors? Is the legal world receptive to this new technology?
My thesis was co-directed by two professors because my LL.M. was a joint program between Université Paris-Sud (France) and Université Laval (Québec). It was the first thesis on this subject in the program, so it was very well received. I was lucky to have my work directed by an expert in blockchain (Québec) and an expert in the art market (France), which really helped to build a strong foundation for my thesis.
In my opinion, the legal world is more and more receptive to this new technology. Of course, it’s always been very slow to adapt to new technologies, and it still is. However, I personally have been seeing a lot more interest and hype since I first started researching on the subject, 4 years ago. I think lawyers are starting to understand how this technology can help them, and also that no matter how much they resist it, it will eventually be a big part of their lives, even professionally.
For those of us who are not tech savvy how would you describe blockchain?
To keep it simple, a Blockchain is a digital record of transactions. Each individual record (block) is chained to the next one using cryptography. This technology is decentralized and distributed on a network of multiple computers around the world. As a result, the records cannot be altered, destroyed or forged, making it a very interesting technology for banks, governments, retail, and more. Blockchain as we know it was actually invented in 1991 by two researchers who tried to create a system where documents could not be tampered with. About two decades later, in 2008, Bitcoin was invented. The rest is history!
This seems like such a simple and straightforward idea. I can see how it can help transparency in many industries and even solve corruption in the third world. Why hasn’t it been widely adopted by many industries?
Even though I wouldn’t say it has reached “mass adoption”, it has already been adopted by many different industries. To only name a few, you can now use cryptocurrencies as a method of payment at Starbucks, Tesla, Visa (with crypto.com), Paypal, Expedia, AXA Insurance, Microsoft, Lush (with bitpay.com). Blockchain is used as a supply chain solution by companies like Walmart, Ford and Unilever. In Healthcare, you would be surprised to know that it’s being used by Pfizer! In Dubai, the Dubai Blockchain Strategy is helping the city to become the first city fully powered by Blockchain. The Emirates Blockchain Strategy 2021 is aiming to capitalize on this technology to transform 50% of government transactions into the blockchain. Blockchain is also used in the fashion industry to authenticate luxury items and to tackle counterfeiting. LVMH launched their own blockchain to track their high-priced goods. In all, I think even though this technology is not used by masses yet, there is a growing interest, and we’re still in the adoption stage for many industries.
What are NFT’s?
NFTs are a far more recent concept. Even though there were some attempts to bring it to life since 2012 - with the Colored Coins, for example - it only became mainstream around October 2017, when CryptoKitties was released. Broadly, NFTs are “non-fungible tokens”, meaning each of them represents a unique and collectible digital asset that cannot be interchanged, contrarily to Bitcoins, which are fungible tokens. Since NFTs rely on Blockchain technology, anyone can have access to the current and previous ownership details, to the date of purchase and to the value of the asset at that time. This allows for better transparency and accessibility to information, something that has never been seen before in the traditional art market. A lot of people are thinking: can’t you just “screenshot” any NFT you find online and use it? Well, think of it this way: if you take a picture of the Mona Lisa at the Louvre Museum, do you own the original Mona Lisa? Authenticity, uniqueness and rarity mean a lot to collectors.
How do you think NFT’s will change the art world and why?
NFTs have already started changing the art world. They are giving digital artists a platform to share their work, and a way to monetize it. They are also allowing a democratization of the art world. For example, most marketplace platforms like SuperRare, Nifty Gateway and MakersPlace are giving back a certain percentage to the artist for every sale on the secondary market, something that is currently very difficult to operate if you can’t link the artwork to its creator. There was always a pressing need for better authentication, provenance, transparency, scarcity and liquidity in the art world, especially for digital art and I think NFTs are responding very well to those needs. For digital artists, it can be very difficult to thrive, because the very nature of the internet is for information to spread freely. The only financial model that worked to this point was the use of online ads. Thanks to NFTs, you don’t need that inconvenient model anymore: information can flow freely around the world while still allowing digital artists to be recognized as real artists and benefit from the sales of their work.
Beeple sold a digital piece for 69M, this opened the money floodgates in the NFT world, are we living through a bubble and irrational exuberance? OR is this going to become a standard in art?
When the first ever digital art auction was announced by Christie’s, a huge wave of new collectors entered the space. There was still a very limited number of artists on the market, producing artworks at a normal pace. This led to frenetic purchases, bidding wars and overly inflated prices. Seeing this, I think artists were motivated to create more and more pieces to benefit from the increase in demand. This grew the supply tremendously. Since Beeple’s auction, it seems like the number of collectors didn’t grow as fast as the number of artists, which has led to a drop in sales. So, yes, there was clearly a bubble. Now, there are some adjustments needed for sure. In my opinion, it is not normal to sell so fast and at such a high percentage. In a physical gallery, it can take months to sell an art piece. However, the concept and the technology are here to stay, and they will without a doubt outlive all of the uncertainty.
I believe that, at some point in the future, everyone will have digital frames in their homes to display digital art. It makes it so much easier to collect, especially if you don’t have a lot of walls to hang art at home. For that reason and many more, NFTs will become a standard in art.
How do you think cryptoart will affect the popularity of art? Will it enable it to reach more people or is this going to stay a niche interest?
I think cryptoart is already enabling this. A lot of people around me, who had no interest whatsoever in art up to now, were completely absorbed into this new space. I think to these people, digital art is just more accessible: you can view everything that exists on the market right off of your computer, you can access all the information you need to make a thoughtful decision/purchase and you can easily become a collector. The traditional art market, on the other hand, is very secluded, not accessible and slow. The thing is, young Millennials and Gen Z have grown up accustomed to instantaneity, with high-speed internet and 2-day delivery shipping from Amazon. Transparency and accessibility aren’t concepts they could imagine living without, and having been immersed in video games, computers and a constant flow of images since they were born, it only seems reasonable that digital art resonates more with them than traditional art. If you buy crypto art right now, it will be in your digital wallet in a couple minutes and you can hang it on your digital frame right away! I think that’s just awesome. So, to answer your question - yes, crypto art is still a very niche interest. But the truth is, you can’t stop innovation. Even the traditional art world itself was forced to go online in the past year. Everything around us is going digital, and I think this is where our world is going, whether we want it or not. In conclusion, I think NFTs are the most disruptive things that ever happened to the art market. The next months will be very defining for the future of this technology, both in the physical and digital worlds…