By Namah Bose
NFTs - Non Fungible Tokens. They’ve been springing up all over the internet over the last few years as part of the increasing popularity of cryptocurrencies and digital assets. It’s swept up the art world - something we’ve talked about previously - with the most pricey piece “Everydays: the First 5000 Days” sold with a price tag of $69.3 million USD. The Indian fashion and film industry are the latest to jump on the bandwagon of NFTs. Fashion designer turned Bollywood costume designer, Manish Malhotra, is the latest entrant to the market, selling digital sketches of some of his creations as NFTs for $4,000 apiece. What does this mean? Why does it matter? Let's walk through it.
Beginning with the Basics
First, let’s understand the basics of NFTs. NFTs are a digital asset, of which the authenticity and ownership can be checked by anyone. They are generally brought with cryptocurrencies or occasionally dollars. An NFT can be anything from artwork, a Gif, sketches, collectables and even real estate and is secured by the Ethereum blockchain (a type of crypto-currency). The key difference between cryptocurrency and an NFT is that cryptocurrency can be broken down, but an NFT exists as a whole. The Non-fungible part means that it can’t be exchanged for something else like physical money can. And the token part, well, is almost like a link to it. You’re not actually buying the artwork itself, especially as much of the art is digital and not physical, but you’ve got the certificate to the ownership of it that is stored in a database known as Blockchain.
The original popularity of NFTs was that it can help artists sell digitally, opening up new avenues for smaller artists as well as those who are digital-asset rich already (this is an interesting concept in it's own right, but that's a topic for another day). Basically, this takes the hierarchy that usually accompanies the sale and valuation of art, and flattens it. And as with the flattening of any hierarchy, it comes along with a complex set of results.
For many, NFTs remove the art gatekeepers, makes art more democratic and accessible, and is could potentially lead to a sustainable income for artists, writers and bloggers.
It’s been hailed as a way to break down the barriers for female artists particularly, giving them more access to collectors. But it’s also led to a digitised version of elite art auctioning.
This might be what Malhotra intends by selling his designs or collections using NFTs. The collection was revealed during the Lakme FDCI Fashion week, with five NFT’s including gifs and sketches up for sale using Wazir X, an Indian bitcoin platform. The entire collection was sold out within 2 minutes, highlighting the remarkably high demand for digital fashion collectables.
The NFT’s included a sketch titled ‘memorable sketch’ of the iconic sari worn by Deepika Padukone during the song Badtameez Dil in the now-classic film Yeh Jawaani Hai Deewani. It sold for 2200 WRX, equal to 2,677.4 USD. A vintage photograph of Lisa Ray from a Manish Malhotra photoshoot in 1998 sold for 1600 WRX (1,952 USD). A 38-second clip that shows Manish Malhotra walking down the ramp escorted by models wearing his collection for the 8th Caring With Style annual fashion show was another, it sold for a high price. Malhotra also showcased the heritage of Indian textiles in a sketch of a dress using chikankari, India’s oldest art form, in the “Mijwan Creation” which has been adorned by Alia Bhatt in 2018.
The bestselling was the 'Illuminous Showstopper’, a custom-made sketch of the Lehenga created for megastar Kareena Kapoor Khan for the red carpet of HT’s Most Stylish Awards, 2019, which sold for 3000 WRX (3,603 USD). The whole collection was sold out in two minutes and “Illuminous Showstopper” was sold in twelve seconds. And if this were an anomaly, we'd be less inclined to pay attention to it, but these days, if you're wondering what's turning heads in the art and fashion world - the answer is usually NFTs.
Setting a new trend?
Considering that India as a country has always believed in traditional investments like Gold, this seems to be an interesting shift in events. Bollywood too has now joined the newfound obsession for NFTs. Amitabh Bachchan dropped his own collection of NFTs. His collection sold at a record 1 million dollars. The NFT that sold at the highest rate of Rs 5.5 Crore was a recording of Bachchan’s father’s poems, the renowned iconic poet Harivansh Rai Bachchan, recorded in the superstar's own voice. The collection received yet again received a stellar response within the country. And of course, if one actor is on the NFT wave, other actors will follow, which Salman Khan already has done. He’s coming up with NFTs to be sold on a platform known as Bollycoin which focuses on Bollywood based collectables. It has even touched South Indian film industries, as Malayalam movie star Dulquer Salmaan put a collection out for his film Kurup.
Sunny Leone became the first Indian Actress to join this NFT bandwagon, launching her first collectible venture - Misfitz. So, fashion, film, what next? Well, sports. NFT platform Rario has launched a cricket-based digital collectible platform along with popular cricketer Zaheer Khan. Rishabh Pant has also joined hands with the platform. Their collaboration allows Rario to sell mint collectibles from the cricketer’s iconic moments on the pitch.
And why stop at India? Pakistan’s high-end fashion wear brand Rastah has also released a token, a digital outfit. The brand THREEEYESONEMIND is an art initiative to represent Sri Lanka in the NFT market, boosting the country’s art in the scene. Vogue Singapore has also dabbled in NFTs. Their latest issues launched an NFT drop of two exclusively digital covers in collaboration with NFT artists on Opensea, a crypto marketplace.
How will India move forward with NFTs?
There’s still a lot of questions to be answered and bumps to be smoothed out before we can judge the potential consequences of NFTs growing popularity. Firstly, are they legal in India? Second, is it a safe form of investment? And the one that really racks my brain - why does a digital asset have such a hugely negative environmental impact?
There are varying opinions regarding both the safety and legality of NFTs. There is currently no separate legal framework for these tokens and that does make it slightly difficult to understand the government or the law's position on NFTs. NFTs are traded in cryptocurrencies mainly, but the legal position of cryptocurrency in India has been unstable, owing mainly to the RBI ban in 2018 which was later quashed by the Supreme Court in 2020 March.
The safety aspect of NFT’s as an investment is affected by the fact, they are incredibly volatile in nature.
Counterfeiting is just one concern. Anyone can use a certain artwork and claim it to be theirs and turn it into an NFT and this is an inherent Intellectual Property Rights problem. NFT’s also enable money laundering. Fraud is another aspect that has begun to affect the makers of artwork who claim that their work has been turned into a token without their knowledge. This creates a new problem as well, negating the one possibly good thing about them in that they open up doors for more artists. Indian creators are still mainly from mainstream media and there are very few unknown artists who are utilizing the platform. But given that all the examples from film, fashion and sport seem to be elite trading, NFTs aren’t reimaging those markets but quickly becoming just another feature inaccessible unless you’ve got money. In order to take those risky investments, let alone be a purchaser of collectibles worth thousands, you have to have money to risk in the first place.
And finally, the biggest worry, the carbon footprint of NFTs. Each transaction that records an NFT sale in the blockchain requires a very energy-intensive computer function called mining. Mining is what produces carbon emissions. Ethereum, the main blockchain for NFTs, uses about 31 terawatt-hours (TWh) of electricity a year, which is more than some actual countries. But because a lot of the steps involved in mining and NFT transactions aren’t easily recordable, it’s difficult to measure and say how much impact (or damage) it’s having altogether. One noteworthy example would be Space Cat which is a gif NFT, and its carbon footprint is equivalent to the electricity usage of an average EU resident. The environmental impact, especially during a time of severe climate crisis which needs revolutionary, green solutions, has been a criticism of cryptocurrencies generally. But when we think about the fact that more and more industries are engaging with NFTs, with many elite and rich people who already have a disproportionate climate impact, is it too little too late to push for “sustainability” here?
The question remains to be seen. But as their popularity increases, there are actions being taken to mitigate the outstanding issues so that NFTs can continue moving in the right direction, such as the US government’s Financial Crimes Enforcement Network publishing guidance on how their existing regulations on virtual currency could apply to NFTs. And as the Indian fashion, film and cricket industry, which is a very powerful trifecta and are extremely respected within the country, indulge full-fledged into the NFT craze, it increases the chances of the NFT industry being accepted as an investment within the country. While NFT’s are risky, they also bring a new wave and can lead to Indian artwork coming to the digital world. As they grow, we’ll see which industries grow with them.
About the author:
Namah Bose is a second-year student pursuing law from the Rajiv Gandhi National University of Law, Patiala Punjab. Instagram: @namahbose