Articles on: NFT and ART

What is NFT?

NFTs or non-fungible token is unique and non-interchangeable unit of data stored on a blockchain, a digital ledger. Traditionally Blockchains have been associated with Cryptocurrencies or Utility Tokens, which are interchangeable in nature, i.e., they can be replaced one for the other as they have the same characteristics and value. With the coming of NFTs, there is a massive extension to the Blockchain utility to associate real-world assets over the blockchain.

To understand NFTs, we need to understand what fungibility means

Fungibility or Interchangeable

The term may appear complicated, but it can be very well associated with real-world scenarios and everyday lives. At its basic level, fungibility means something that can be interchanged or exchanged 1 for 1 with another item with the same classification or properties. Each fungible unit is essentially the same so that it can be exchanged.

In addition to interchangeability, fungible goods or assets are divisible and can support addition/ subtraction /division without changing the fundamental nature of the item.

Non-Fungibility or Unique & Identifiable

Things that are not directly interchangeable or replaceable are known as non-fungible. Unlike fungible assets like Currency, Crypto-currency, Show Tickets, etc... non-fungible items are characterized by their Uniqueness, Verifiable Identity, Scarcity, and Indivisibility.

Differences in appearance, rarity, utility and many other properties directly affect a unit's identity, and in turn, its value.

While in recent times, NFTs have been associated with Digital assets, be Art, Memes, Videos, Games, etc... however, by definition, NFTs can represent ownership over both digital or physical assets and constitute the below and beyond.

Physical property — houses, unique artwork
Virtual collectables — unique pictures of kittens, collectable cards
“Negative value” assets — loans, burdens, and other responsibilities

In general, all houses are distinct, and no two kittens are alike. NFTs are distinguishable, and you must track the ownership of each one separately.

What it means to Artists

With NFTs, every Artist can stamp their signatures on their works in a tamper-proof manner, thus avoiding any misrepresentation or future issues of creative rights over their works. Further, it also supports them to know the sale history of their works and track provenance for any unclaimed royalties for the created works.

More importantly, for Digital Artists, it allows them to mark their original creation without compromising its true value potential given its medium of display.

What it means for Collectors / Buyers

Buyers or collectors can establish the uniqueness of the work supported by a verifiable ownership history and transaction values. This allows them to make a more informed decision on the Artwork on display, including its user interest in an open marketplace. Having a verifiable and tamper-proof ownership record would also mean better resale opportunities without being constrained by re-establishing the work's authenticity. Few points of consideration include but are not limited to.

Verifiable Ownership of Artwork
Financially support the Artists you like
Track of historical transactions to validate the value
Provable provenance of the Artwork (Physical or Digital)

Updated on: 20/02/2022

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