- A piece of digital artwork tied to an NFT sold for just shy of $70 million last week.
- But what happens to that digital artwork if the servers hosting it go offline? Does it lose value?
- Due to the nature of NFT-based tech, the answer is largely no – but there are some technical issues.
- Visit the Business section of Insider for more stories.
In a record-setting sale hosted by Christie’s auction house last week, a piece of digital art from Mike “Beeple” Winkelmann sold for just shy of $70 million.
There is no canvas for “Everydays: The First 5000 Days,” and no frame, because it’s a digital collage of thousands of images created by Beeple. There is a physical package tied to the auction, but that’s not what the mysterious winner paid $69 million to buy.
More than the artwork itself, the value of “Everydays” is tied to the NFT that’s associated with the work.
The art itself can be reproduced – here is Beeple’s “Everydays” in full:
The NFT (non-fungible token) associated with the work is a digital certificate, broadly speaking, that signifies ownership. It acts as a kind of digital provenance for artwork.
It also contains metadata that cannot be edited by its owner, and that metadata points to a place on the web where the associated artwork is hosted – like a hyperlink that connects the token to an artwork.
So, what happens if the server hosting that artwork is no longer in operation? Does the artwork disappear? Does the NFT drop in value because it’s no longer associated with a hosted artwork?
Those questions were at the heart of a widely circulated Twitter thread this week by software engineer Jonty Wareing: “Right now NFTs are built on an absolute house of cards constructed by the people selling them,” he said. “It is likely that every NFT sold so far will be broken within a decade. Will that make them worthless? Hard to say.”
The issue is a technical one, and one that can’t simply be repaired – even the artwork (and token) owner is unable to alter the token’s metadata if it becomes corrupted. But that doesn’t mean it’s an unsolvable issue.
“It’s just a technical detail,” an engineer who works on related technology told Insider. “The owner of the NFT could even potentially say, ‘I’m destroying the Beeple NFT and reissuing it as a new NFT because the image metadata is broken.'”
Put simply: The existing token could be replaced with a new token without such issues in a process that’s relatively simply for the token’s owner.
The value is tied to the token acting as provenance to the digital artwork, and that value can be transferred to a new token with new metadata that points to a new location for the digital work. That new version of the token would transfer “ownership” of the $69 million artwork, and could circumvent the potential hosting issues.
Critically, the new token would retain the value it carries as provenance of the artwork.
But the reality is that, regardless of where the metadata points, the token is the actual object of value here. The art itself is almost secondary to the proof of its origin, and a resale of the work would actually be a resale of the token tied to the work.
That isn’t a problem for Beeple, who freely shares his artwork on social media.
“We sort of value things like, well, if everybody wants it, it has value,” Beeple told Insider in a recent interview. “It’s sort of like saying, ‘Do you think a webpage is valuable?’ Well I don’t know. It could be!'”
Got a tip? Contact Insider senior correspondent Ben Gilbert via email (email@example.com), or Twitter DM (@realbengilbert). We can keep sources anonymous. Use a non-work device to reach out. PR pitches by email only, please.