Do you remember when a jpeg file was sold for 69 million dollars in the form of a non-fungible token or NFT ! Yes this happened in 2021 and this is just the start in changing the art world. NFTs in the world of art is a game changer, now everything can be valued and it can be valuable too. You have something original and that’s money.
While going through the term ‘NFT’ you may come across certain terminologies that may need a different search altogether. Let’s just simplify those terminologies here.
What is blockchain?
Let’s say Pooja borrows 1,000 rupees from me. She is supposed to return it in a week, but doesn’t. I remind her but she has conveniently “forgotten” about it. What can I do? Nothing, except never lending her anything ever again! True story.
Now suppose, at the time of lending the money, a few friends are present. They all clicked a pic or shot a video of me lending Pooja the money and her promising to return it in a week. And each of these friends posts the pic / video on Instagram, Facebook etc. Now that is solid evidence. And Pooja can’t really delete all these videos / pics from the Internet. Now that’s something like a blockchain.
A blockchain is typically a bunch of computers (nodes) connected to each other. All of these computers contain the same information (e.g. a ledger of transactions). To “hack” this information, you will need to “hack” most of these computers at the same time. And that’s a pretty tough thing to do!
There are many blockchains in the world. The Bitcoin Blockchain is the first and oldest one. It records all transactions of the bitcoin cryptocurrency. Anyone can run a node of this blockchain. All you need is a computer with a large hard disk and a strong Internet connection.
By the way, a cryptocurrency is like money but not issued by any Government. The Indian Rupee, US Dollar, Euro etc. are all issued by Governments (and Central Banks). We call them “fiat” currencies.
Bitcoin is not issued by a Government so it’s called a cryptocurrency.
What’s a non-fungible token?
Consider the balance in your mobile wallet (say Rs. 10,000). Is there any difference between each of these rupees? No, there isn’t. So we can say that this digital money is “fungible” – every rupee is exactly the same as another rupee.
Is every 500-rupee note identical in value? Most people would say yes. But it’s not! An older 500-rupee note is worth zero – remember demonetization? So, we can say that physical currency notes are “non-fungible”.
To understand what a non-fungible token (NFT) is, let’s take an example. Sanya is an artist who creates a bunch of manga ink on paper drawings. She sells them online as well as at a physical art gallery. But she can sell each drawing only once because, hey, it’s a physical drawing.
She can also create multiple reprints and sell them. Each reprint is identical. So if there are very few official reprints, the price can be high. If there are many reprints the price will be very low. That’s the law of scarcity at work. We are usually ready to pay more for things that are rare.
But how would a buyer know how many reprints are in existence?
That’s where NFTs come in. Sanya can release digital copies of her drawings on the blockchain in the form of non-fungible cryptocurrencies. Because of the blockchain’s inherent transparency, any buyer can see how many digital copies are actually in circulation. And anyone can see who owns how many digital copies.
Wait, there’s more. When you “buy” a digital version of a manga from an artist you only get the right to use it for personal viewing. That’s because the artist holds the copyright over the manga. But in an NFT, the artist can grant you special licenses e.g. the right to print the manga on t-shirts and make money by selling those t-shirts. Now, isn’t that cool?
How is selling through the blockchain a better idea?
Some of the benefits for artists using NFTs are:
- Artists are ensured their share every time their creations are re-sold.
- Anyone with a smartphone can verify the genuineness of art in a few seconds.
- NFTs bring transparency in art pricing and ownership history. This converts art from an expense to an investment.
Are NFTs only for artists?
NFTs can be of many types, including:
- art
- collectibles (trading cards, sneakers)
- domain names
- financial instruments
- Intellectual Property assets like trademarks, patents, designs, etc.
- music
- photos
- tokenized assets (cars, land, oil)
- videos of iconic events
- virtual game items (avatars, skins, weapons, etc.)
Did you know that the first tweet of the Twitter CEO Jack Dorsey was sold for almost 3 million dollars?
Let’s take another example. When you buy a book, the only thing you can do is read it. With an NFT, the author can give you the right to translate it into another language and make money by selling the translated version.
What if many copies are made of my digital art and uploaded in places that I have no influence on? How can I have my copyright/ rights reinstated?
Remember, there are 2 sides to art. One is the actual art (oil on canvas, ink on paper etc.) and the second is the license to that art. So, while someone can “copy-paste” or duplicate the digital version of your art, they can’t “steal” a copyright license. Plus, most countries have tough laws to protect copyright. Penalties include jail and fines.
Can you sell physical art through the blockchain?
The NFT that relates to your art can be sold through the blockchain. But the actual physical art will need to be sent separately to the buyer.
What does an NFT look like?
There are many ways to create an NFT. Let’s take an example of creating an NFT using cargo.build.
Title: Sanya’s vision of “To the lighthouse”
Description:
Digital image of an acrylic on canvas painting titled “To the lighthouse” by Sanya Nagpal
Price: 0.0065 Ether (10 US$)
Collection Address:
0x728d21f7373eE21268F793dCC6F65cD993b49dA2
Token ID: 718
Unlockable content: Yes
Public URL:
https://lnkd.in/d4BsbHg
https://media-exp1.licdn.com/dms/image/C4D22AQGqezW5vmP5sA/feedshare-shrink_800/0/1614853335761?e=1621468800&v=beta&t=7X46T9eVKdUfVqrQf-B4Yt3gaLsshjNy49majE3azSo
Can the entire gallery experience be totally blockchain driven? Will such a gallery survive?
Yes. The cost of running a virtual gallery is a fraction of the cost of running a physical gallery. Plus you can reach a global audience through a virtual gallery – even during time of lockdown!
