Non-Fungibility enables the exchange of real world objects, and concepts, upon blockchain technology. I believe that the non-fungible token (NFTs) is amazing technology that has momentarily confused the world of art.
The Non-Fungible Token (NFT) frenzy of February and March 2021 definitely proved that digital art is valuable; but it also showed us that this new concept is yet to be fully grasped not only by the general public, but also for those who had been working on NFTs for several years.
Metapurse’s once exciting bundle of artwork NFTs called ‘B.20’, marks the first major short term NFT failure.
B.20 is now, rather conveniently, labelled as an ‘experiment’ by Metapurse, enabling people to invest into a fraction of the bundle containing 20 original Beeple NFTs, and also multiple pieces of digital land.
I even bought some B.20 tokens during the frenzy myself at near $10, they now trade at 75 cents at my time of writing (25/06/01). Heartbreaking.
It is due to a misunderstanding of NFT technology that lead to this dramatic rise and fall. Whilst I do not think that the end for B.20 is clear, I do hold that they, along with countless other NFT projects are still misunderstood today.
NFTs were commonly understood to symbolise full ownership of an artwork.
This is far from the truth.
The NFT token one buys only points to a URL on the internet, or an IPFS hash. It is common that they merely reference an IPFS gateway on the internet run whichever startup you bought the NFT from.
I then delved into what it meant to have ‘ownership’ to understand a fundamental issue with NFTs. Consider this example:
- An artist develops a work of digital art. Therefore, he/she is the founder, and first ever owner of this artwork. It is important to note that its value, as a work of art, is entirely subjective.
- The founder, therefore, has the right to fully transfer ownership of the artwork for a fixed price, or even for free.
- This full transfer of ownership is not realised through minting the work as a NFT. Why?
- Because what you have purchased is no longer a valuable, individual work of art with the intellectual property, or demonstration of skill/technique unique to that piece of art. It often can be completely replicated by a screenshot.
- While other replications may not exist on the NFTs original blockchain, this does not matter. Why?
- Blockchains can facilitate the transfer of value, they do not give or increase the artwork value. It may at times, during these extensive runs of value appreciation in crypto communities, be hard to forget that all art (even digital) transcends the blockchain.
It seems plausible to conclude, then, that identical copies of an artwork (exceptions may involve authentic, historical works) devalue the original. Thus a component of an artwork’s value is scarcity which is totally removed when you mint one as an NFT.
I do think NFTs are valuable, but certainly not artwork NFTs. In regards to dynamic, in game or similar idea NFTs they are super awesome.