Museums and NFTs: what’s the opportunity, who’s doing it best and why question marks remain

Taking a closer look at whether museums and NFTs are a match made in heaven or if there’s good reason for institutions to remain cautious about their value.

Two years ago many of us were still asking what the acronym NFT stood for (it’s Non-Fungible Token, in case you’re still unsure). In 2022, the chatter in museum corridors is less about what an NFT is and more about whether it really is the golden egg that many are claiming. Or is it perhaps simply the latest fad that risks sending museum professionals on a wild goose chase.

Certainly, there’s a conversation to be had in terms of museums and NFTs. After all, cultural institutions possess a wealth of assets that need to be digitised in order to service a growing online audience and meet accessibility responsibilities.

It’s also important to note that while some art traditionalists may prefer to see art on canvas hung from a gallery wall, there’s a groundswell of digital artists making waves right now. We need look only at Beeple’s record-breaking Everydays, which sold at auction for $69million in 2021 to realise that the cultural landscape is shifting.

That kind of demand for NFT artworks has caught the attention of everyone from the British Museum to the Universal Hip Hop Museum – institutions well aware that virtual experiences are on the rise. And with the much-heralded term metaverse also ringing in museum professionals’ ears, understanding how online spaces will be curated, consumed, commodified and traded in years to come is a task that none of us should ignore.

In many ways, NFTs sit at the heart of a perfect storm in digital transformation. As has been well-documented, the Pandemic accelerated the growth in online activities across everything from communication to cultural events, retail to healthcare. This has created an environment in which the potential of blockchain technology and decentralised digital currencies have come to the fore.

Indeed, NFTs were estimated to be the fastest growing industry in 2021 with sales of $23bn up from $200m in 2020.

But as MuseumNext recently discussed with founder and CEO of Iconic Moments, Chris Cummings, such an explosion has created an “arena of speculative markets where people start to believe that simply minting (creating) NFTs and selling them via a platform will immediately make them huge sums of money”.

Chris’s take on museums and NFTs is: “I think an NFT should be something that you approach in the same way you approach an exhibition and it’s focused on creating or driving a story, driving impact and doing something that should stand on its own two feet.”

The alternative, as Chris vividly puts it when discussing the process of sifting through NFTs on one of the leading platforms is: “There’s no curation. It’s like going to Walmart on Black Friday.”

He continues, “The other problem is that when you see an NFT, all you are seeing is the price and the history, that’s it. It’s literally, ‘Here’s the digital item, sell the digital item’. And for us that misses the point of what a museum is and what our responsibility is.”

Taking a more curated, authentic approach to the curation and trading of NFTs in line with the values of the museum is, in the view of people like Chris, the best way for cultural institutions to navigate this brave new world.

This approach has been exemplified by the likes of the Institute of Contemporary Art in Miami which incorporated NFTs successfully into their permanent collections in 2021.

Creating something different for Museums with NFTs

One of the key considerations for museums when looking to create NFTs is what those works should be. Are they simply digital replicas of physical artworks – like to the prints sold in the museum shop – or are they there to do something distinct and different.

Augmented reality specialist, Perception Codes is one tech company working with museums to create unique, immersive digital works with a clear point of difference from the source asset or material. Their “Holo-NFTs” can turn 2D artworks or 3D photogrammetry recreations of sculptures and installations into extended reality experiences.

Already, this approach has proved successful for Perception Codes, with the likes of the Imperial War Museum and Science Museum Group teaming up with the deep tech company to deliver holographic experiences into school classrooms – an approach that is both more engaging and inspiring than would be possible using simple photographs.

A reasonable question here would be: Why make an immersive experience into an NFT?

There are a number of answers that proponents of NFTs can put forward here. The first of these comes down to ownership. One of the many benefits of digitisation is that museums can reach audiences anywhere in the world at any time. But that means that the likelihood of copyright infringements and Intellectual Property issues can increase dramatically. One of the in-built benefits of NFTs is that ownership for a digital asset is documented on the blockchain ledger and this imprints an important “watermark” of ownership that both institutions and artists find appealing.

By their very definition, blockchain protocols serve to make ownership transparent and, as a result serve to authenticate art.

Another key consideration is revenue. The Covid-19 pandemic understandably made museums around the world fearful for their future. With a recession looming, would their funding streams and donations dry up?

From this perspective, the commercial potential for licensing NFTs and generating revenue is an appealing one. Whether it’s selling an NFT to a private collector or charging small fees to schools and universities for access to immersive exhibitions in the classroom, NFTs serve to put this business model on the table.

Proponents of NFTs in museums say that the growth of the metaverse is now inevitable and that as part of this new digital ecosystem NFTs will help to ensure that the arts can be funded and enjoyed by a truly global audience in the future. Furthermore, these advocates suggest that the decentralisation of power and control created by blockchain technology helps to bypass the traditional gatekeepers to the art world and redress the balance so that everyone might access and enjoy cultural assets.

It is certainly true that digital curation and the development of digital exhibitions in the metaverse can be agile and reactive to cultural trends in real time in a way that physical collections housed in traditional museum spaces cannot. After all, digital museums are not bound by spatial restrictions and their associated cost barriers.

Yet, whether this speed and trend-based approach is beneficial to the arts long term is something that is clearly open to significant debate.

Not everyone agrees that Museums should use NFTs

For those who have reservations about the value in creating NFTs from museum assets there are a few prime examples that can be pointed to. In Italy, the government has recently stopped the sale of NFTs of Italian Renaissance paintings. After a number of museums including the Uffizi Galleries made limited profits from NFT sales and a number of controversies around legal ownership, the government called a halt to any further NFT sales until the metaverse landscape and the role of NFTs becomes clearer.

Environmentalists and museum professionals conscious of the future sustainability of their institutions also point to the carbon emissions associated with minting an NFT and the associated costs of Ethereum transactions. For those uninitiated in the environmental arguments against blockchain and particularly cryptocurrencies like Bitcoin, the contention is that the computing power required to manage digital currencies and retain the ledger is substantial in 2022.

However, these fears have been somewhat alleviated by the recent Ethereum Merge. This shift to what is known as a “proof-of-stake” blockchain system is thought to have reduced the cryptocurrency’s energy consumption by as much as 99%.

To put that into context, estimates suggest that this will save the equivalent annual energy consumption of the Netherlands – about 0.2% of global electricity. Conversely, Ethereum’s bigger crypto brother Bitcoin (which is not the currency of choice for NFT sales) still burns through more energy each year than Belgium.

Prior to the Merge, museums may quite rightly have had reservations of the computer power required to support this emerging industry. As Senior Lecturer at Northumbria University, Dr Pete Howsen put it: “If you watched 20,000 hours of YouTube, you would generate less CO₂ than if you bought or sold an NFT once.”

On that basis, the Merge is nothing short of remarkable in the way that it has tackled a genuine environmental dilemma. By reducing the energy used to create and register an NFT on the blockchain, many are depicting the Ethereum Merge as the most important software update in decades.

So, what about the hype around NFT trading and transactions?

Well, while some of the headline purchases made in recent times have attracted attention for their high sale prices, it’s worth remembering that payments made in Ethereum (or any other cryptocurrency) may suffer from the volatility currently being experienced in the crypto world. Indeed to take the British Museum’s Hokusai NFT sold in November of 2021 as an example, the equivalent value at time of purchase was $20,000. As of June 2022, that same sum in Ethereum had plummeted to a little under $5,000.

That slashing of value will be particularly worrying for those museums wanting to explore NFTs as a viable, long-term revenue stream.

Examples of NFTs in the Museum space

So, who’s already delved into the NFT world with the intention of revenue generation to date.

Well, as mentioned above, the British Museum and Uffizi Gallery are amongst the first entrants into this space with the intention of raising funds. Other recent examples include the Whitworth Art Gallery which, in collaboration with Vastari Labs, have minted an NFT of The Ancient of Days by William Blake with the intention of raising funds for community organisations in the local area.

Another eye-catching example of museums and NFTs in action can be found at the Universal Hip Hop Museum. The Bronx-based museum partnered with blockchain platform NEAR Protocol to create a series of NFTs called Hip Hop Heads featuring famous artists from the genre’s history.

By giving music fans the opportunity to own a little slice of cultural content the project is not only engaging an invested audience but also giving artists scope to showcase creativity, whilst protecting intellectual property.

It’s worth noting that some museums are taking the more conservative but intelligent step of using their role as forums for cultural and intellectual debate in order to explore NFTs as intriguing subject matter in seminars – rather than diving in with their NFT programmes in earnest. The New Museum, Los Angeles County Museum of Art and Smithsonian’s Hirshhorn Museum offer just three prime examples of this.

In conclusion

Ask 100 technologists and museum professionals what role NFTs will play in cultural institutions over the next decade and there’s a good chance you’ll get 100 different answers. While some areas of the museum community are hugely enthusiastic about the potential of incorporating the technology into their business model others believe that NFTs represent nothing more than the latest bubble, ready to burst museums’ and artists’ dreams at any moment.

What we can say, though, is that anything with the potential to support effective digital transformation, grow accessibility and help to generate funds for an arts and culture sector suffering from the hangover of a global pandemic should not be dismissed out of hand. Indeed it warrants further investigation – one that MuseumNext will be watching with interest and documenting as we go.