The rise of cryptocurrency is revolutionizing how payments are executed, while at the same time building an entirely new class of investors. Crypto is also creating a world of finance and financial transactions that are free from government regulation in ways that have never before been possible. With the value of digital tokens like Bitcoin hitting middle five figures, even entities that had been skeptical of the utility of cryptocurrency (or who had downright called it a scam) are now changing their tunes and rushing to invest.
Stepping back for an even wider view, blockchain—the mechanism that underpins both cryptocurrency and NFTs— is advancing the technology used to verify who created something, who owns something (digital or otherwise), and where that something came from. With blockchain, the ownership history of a piece of currency is baked into the currency itself, and is accessible to anyone who examines it.
Imagine you could take a dollar out of your wallet and immediately know every person who had used that dollar, the nature of every transaction it’d been used for, and that you could see back to the very moment when the bill was printed.
In the real world, you can exchange a dollar bill with your friend for another dollar, and the contents of your respective wallets will be—for all practical purposes - essentially unchanged. Neither of your dollars is going to be more valuable than the other. And the history of both dollars essentially remains a mystery. You don’t know where it came from, or how it has been used. And you probably have the same chance of being able to guess if the dollar is real, or if it has been counterfeited. But not so with NFTs.
This is the “NF” part of an NFT. It’s non-fungible. That means you can’t exchange it for something like it somewhere else, and have everything be exactly as it was.
Many things of value are fungible, especially cash or coin money. But with the rise of crypto, that is going to change— for currency, but also for artworks, for collectibles, and for digital items of all sorts.
An NFT is value because it is an utterly unique item, and this fact is verifiable. An NFT is a custodian of its own uniqueness. It can self-verify as a one-of-a-kind work of art. (Like a counterfeit detector can show that a bill is authentic, an NFT does this for itself.) An NFT can “tell its own story,” and it can do that for as long as it exists.
In the art world, the problem of fakes would disappear completely. The owner of a work could sell that work at any time, and have full faith in the transaction. Buyers would enjoy a new level of confidence in the authenticity of their new asset.
Purchasing artwork in the form of an NFT would create a deep and powerful level of ownership never before available to an art collector. The person purchasing a work of art as an NFT would have full claim not only to the work, but to its entire past, back to the moment of inception. Furthermore, that collector would always have an irrevocable place in the work’s history regardless of who might come to own it in the future. Their name would be on its blockchain forevermore, and old notions of curation and custodianship would turn entirely on their heads.
If NFTs could work in the world of fine art, then what about the world of sports imagery, or fashion photography, or music, or important historical documents? The list goes on and on.
It became clear that anything that was bought, sold, collected, or inherited stood to be impacted in a positive way by NFTs. Artists and photographers were about to find remarkable new revenue streams, and previously unimagined incarnations for their work. Brands were going to find new ways of connection with their customers. Entertainers and video game developers were going to immerse fans in ways never before dreamed of.