The viral internet clip known as ‘Charlie Bit My Finger’ was sold as （Non-Fungible Token）(“NFT”) for more than USD760,000 (approximately HK$5.9 million).The famous digital artist Mike Winklemann, also known as “Beeple” crafted a composite of 5,000 drawings creating perhaps one of the most famous NFT for now, “EVERYDAYS: The First 5000 Days,” which sold at Christie’s for a nearly USD69,000,000 (approximately HK$540 million). Furthermore, even tweet can be sold as NFT. Twitter co-founder Jack Dorsey sold his first tweet ever as an NFT for over USD2.9 million (approximately HK$22 million).
The purchaser of NFT digital artwork does not obtain physical copy of the piece. Furthermore, in most of the cases, people can easily download copy of the digital piece for free. What are the values of the NFT? Why people spent millions on something others can easily screenshot?
A non-fungible asset is a unique asset that cannot be exchanged equally for another similar assets. A common example of a non-fungible asset is collectible or memorabilia. Empowered by blockchain technology, NFTs is reshaping the landscape of digital art.
NFTs are usually transacted via cryptocurrency but it is different from cryptocurrency. One Bitcoin is equal to another Bitcoin. However, each NFT has a digital signature that makes it impossible for NFTs to be exchanged for or equal to one another (hence, non-fungible).
How do NFTs establish digital scarcity and ownership? The reason we refer to these assets as non-fungible tokens rather than non-fungible assets (or even digital non-fungible assets) is because they are uniquely made possible by blockchain technology.
NFT allows the buyer to own the original item. It contains built-in authentication, which serves as proof of ownership. NFT represents ownership recorded in blockchain and hard for others to tamper with. The NFT owners can owns the original artwork and sell in secondary market while the creator of NFT can retainer the copyright and reproductions right.
There is tremendous influence in artwork market in future. Artists no longer have to rely on galleries or auction houses to sell their art. Instead, they can sell it directly to the purchasers as an NFT, which also enable them to retain more freedom and profits. Furthermore, artists can program in royalties so they’ll receive a percentage of sales whenever their artworks are sold in secondary markets to a new owner. This is an innovative and attractive feature as generally artists cannot receive future proceeds after their artworks are first sold.
Essentially, NFTs are like physical collector’s items, only in a digital format. Instead of getting an actual oil painting hanging on the wall or a physical piece of artwork, the buyers obtain digital files instead. NTF is new, and therefore investment in NFT might be risky and the future of which is uncertain. Nevertheless, on the other hand, as blockchain technology continues to evolve, the NFT ecosystem is evolving alongside, growing not just in size but in complexity and opportunity in many aspects.
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