NFTs and Authenticity (Part 1)

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The problem of verifying the authenticity of an artwork is not solved by NFTs. But they helpfully front-load the problem to the initial step in the artwork’s chain of custody.

Photo by Matthieu Comoy on Unsplash

Certificates of Authenticity are traditionally required in art sales, yet are largely ceremonial. They might be attached to an artwork by any number of actors along its journey — the artist, dealer, gallery, inheritor, auctioneer. But a certificate does not provide “provable” authenticity; it is merely an assertion of it by some authority, whose value derives only from the reputation of that authority.

Authenticity is more than a certificate, it is a judgement formed from the sum of everything that is knowable about an artwork and its history. For a conventional work this may be repeatedly called into question as it is sold, resold, lost, found, inherited, etc.

Whatever you may have read about NFTs or blockchains, they don’t solve the question “is this work authentic”. But they do completely change how you go about answering it.

An NFT focuses the entire question of the artwork’s authenticity into the initial step in its history, and ensures that you don’t have to worry about whatever has followed as the work then changes hands. (This is at least true for digital art NFTs; non-digital NFTs may retain some of the existing challenges depending on how they are structured. More of which in a later post).

Note first that in the digital realm “forgery” — in the sense of “making a indistinguishable copy” — is meaningless. Digital distribution is essentially copying combined with a delivery mechanism. Every view of a web-page delivers you a perfect new copy of the images it contains, for instance. Technically, NFTs are nothing to do with pixels. Or file formats, copy-protection, watermarks, or rights management. NFTs don’t change anything about images themselves.

Here’s all that an NFT is, in essence:

  • the association of an account (a cryptocurrency wallet address) with a URI (a reference to a description somewhere, of something, eg. an artwork)
  • this is recorded in a registry (called a “smart contract”) created by another account, itself stored in a global public ledger (a “blockchain”).

Whether this “association” implies actual ownership of the thing described is an interesting question. Courts and jurisdictions are coming around to the idea that it does, and NFT applications are succeeding in establishing rights over property, both digital and real-world. The legal matter remains outside of the scope of the NFTs themselves, which are “just data”. What’s important is that everything on the blockchain is public and anyone with the right knowledge can fruitfully investigate it.

What is owned — at least in the unequivocal opinion of those buying NFTs — is the record itself, i.e. the statement “account A is associated with URI B”. It is these records that are sold, traded, or auctioned. The account associated is simply updated whenever ownership is transferred, usually following a financial exchange on an NFT marketplace. The digital artwork itself does not change hands or move in any sense; digital art does not even exist in a form that can, being “everywhere” already.

Back to authenticity. Just as it is with conventional art, a critical question is: which NFTs are legitimate and which are not. For NFTs, it turns out to be a better-defined question, but not one that is magically solved by the technology itself.

In conventional art markets, an artwork’s entire chain of custody is potentially murky: forgery or ambiguity can enter at any point. For NFTs, the only murky place is the very beginning of that chain.

The blockchain retains the historical sequence of transactions that have transferred the ownership of an NFT. At the beginning of this chain must be the artist themself. Exactly how that is manifested will be discussed in Part 2 (there is more than one way) and is the core data-point that a concerned buyer needs to focus on. Every subsequent transfer of ownership is fully deterministic: it cannot introduce any additional ambiguity about the authenticity of the work.

Who started the chain of custody? Did they do so legitimately? These questions are not solved by NFTs or the blockchains, and this is where due diligence is required. More specifically:

  • Identification: is the cryptocurrency account of the NFT’s “artist” actually controlled by the purported artist, or by an impersonator?
  • Attribution: is the item described by the NFT actually the work of the artist? Or at least something they have the right to sell?

To illustrate, imagine some fraudulent scenarios. Importantly, these can only be identified forensically. The blockchain cannot flag these as dubious because the fraud is the result of human actions and human decisions, not technical malpractice.

  • Identification fraud: you impersonate Damien Hirst by creating NFTs based on images of his legitimate work;
  • Attribution fraud: Damien Hirst finds your childhood doodles and creates NFTs based on them;
  • Combined fraud: you draw some pretty dots, pretend they’re by Damien Hirst, pretend to be Damien Hirst, … etc.

There is no general method for unambiguously spotting such scenarios. But there are specific risks to be aware of, and some best practices to follow:

  • The creator of the item described by the NFT should be expected to publish their cryptocurrency account (or accounts) in reputable places, such as their social media profiles, artist websites, gallery websites etc. Ideally, in multiple places. This helps a collector to be confident that they know the true artist’s true account, and to cross-reference it with what’s recorded in the smart contract that holds the NFT.
  • More generally, the collector should be confident that any statement purportedly made by an artist (e.g. about their account) is not in fact being made by an impersonator. Sounds obvious, but this is the most easily exploited weakness. It’s the phishing of crypto; we are easily fooled by anything that just “looks right”.
  • The initial step of the chain of custody should be checked by the collector, to be sure that this step was indeed made by that artist (using their published account). There is more than one way in which the artist may have done this; Part 2 discusses them in detail.
  • Proving that the described item is attributable to the creator of the NFT is almost impossible. Documentation of the artist’s process in making the work can certainly help, but has its limits. A video of the artist producing the work does not prove that the work described by the NFT is indeed the one in the video. (There are advances in this domain by certain tools, but coverage will inevitably be incomplete given the diversity of ways by which artworks are produced).
  • Reverse-searching of an image on Google may help to flag if its purported originality is dubious, eg. if there are other artists also claiming it as theirs.
  • Value in art is almost exclusively derived from the reputation of the artist (also the auctioneer, gallery, etc). For both the question of identification and attribution, reputation is something that is relied on by default and in the absence of other information, as a reputation’s fragility ensures that its owner is incentivised to avoid any public suspicion of malpractice.
  • In the case of artists that do not (yet?) have a reputation, the problem is more acute. NFTs are egalitarian only in the sense that they allow permission-less entry into the marketplace for art; they are not a magical leveller of reputation and the value that derives from it.

Summary

Many misleading claims have been made about NFTs. In particular, NFTs do not authenticate anything other than a sequence of ownership transfers. The artwork itself is not “authenticated” by an NFT, any more than it might be by a signed piece of paper. NFTs are a new mechanism (see Part 2 for technical best practices) and a fascinating progression, but understanding clearly what they are not is critical for anyone with an interest in them — be it financial, technical, or aesthetic. Caveat emptor.

(These best practices are implemented in NFT Surface, a smart contract and NFT art sales gallery for Ethereum and compatible bockchains.)

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NFTs and Authenticity (Part 1) was originally published in Coinmonks on Medium, where people are continuing the conversation by highlighting and responding to this story.