What can you do with an NFT? What is it good for? Apart from being an asset that can be sold at exchange platforms, it is a unique piece of art that never ages, never expires, and will give you forever bragging rights, an expression that gets thrown around a lot in NFT spaces.
This is because the world of NFTs works very similarly to the traditional art world. Although anyone can download or make copies of an NFT, just like there are copies from a high-value art piece, there is only one original, verified by a unique code that is immutable. When you buy an NFT, you buy “bragging rights” in the form of ownership.
In this world, the bragging rights come with the value of owning the original piece. That’s why the issuer or artist is important. An example to make this clearer is: if Nintendo issues a collection of 100 NFTs would you buy one? Probably; If a random person issues the same collection of NFTs would you buy one? Probably not.
The one who makes the NFT matters; that’s why many new artists are looking to make alliances and partnerships with successful or new hyped NFT projects.
Back to Basics
Let’s go over some basics. In economics the term fungible is used for things that can be exchanged for items of precisely the same kind. For example, the U.S. dollar is fungible because if you trade $1 with a friend, each will have the same spending power.
Objects in the physical world, at least most of them, like cars and houses, are non-fungible; this means they have unique qualities, and you cannot exchange them for others of the same type. For example, you might be willing to swap a car for another one of the same brand and model, but they wouldn’t be exactly the same.
In crypto speak, tokens are units of value stored on a blockchain. Cryptocurrencies like bitcoin, dogecoin, and ether are tokens, but not all tokens are meant to be used as money. They can be attached to tangible goods. Nike is currently experimenting with crypto tokens linked to the ownership of shoes, and they can also represent intangible goods like storage space on a cloud server or access to a private chat room.
Then, non-fungible tokens (NFTs) are sort of like cryptocurrencies, except that they have unique traits and are not necessarily used as money.
This is very important to know because until recently, there were no non-fungible goods on the internet.
The internet as we know it works like a giant copy machine where any digital file can be duplicated infinite times, and every copy is the same as the original.
The infinite compy-making characteristic of the internet was great because it made digital objects abundant. However, it was bad for people looking to profit from the scarcity of what they produced. If you are an artist that wants to make only 100 first editions of your digital art, the internet wasn’t the place.
Some years ago, people realized that blockchains could be used to create unique, uncopyable digital files, files that were entries on a public database so anyone could verify who owned them or track them as they passed from one owner to another.
That realization prompted the creation of NFTs and is the base of their value. This is where bragging rights connect with a crucial NFT characteristic: Ownership.
What is Ownership in the NFT World
When you buy an NFT, the most valuable thing you receive is a certificate of authenticity. That means that NFTs are a way to claim ownership of a digital file.
This might not sound like a big deal, but it is; because it gives NFTs the scarcity value that, until now, only some physical objects had. NFTs have, in fewer words, unlocked a whole new market for scarce digital goods.
That’s why if you have the luck of being able to buy an NFT from an exclusive, high-value collection, you have universal bragging rights because you own a very scarce good, with a proof of ownership attached to it.
Copyright and Ownership
Let’s talk about copyright in the NFT world and why when a buyer buys the NFT; they don’t buy the copyright.
The user who bought the famous Nyan Cat NFT doesn’t own the copyright to the Nyan Cat image or the rights to make Nyan Cat merchandise. Its creator, Chris Torres, is the only one who has those rights. What the NFT buyer got, in essence, was an “official” copy of the image that Torres cryptographically signed.
NFT creators can decide tif they include additional rights when the sell an NFT sale, but they don’t have to. There are high-profile copyright disputes over NFTs, such as the lawsuit filed by Miramax against Quentin Tarantino last year after Tarantino announced he would be auctioning off unpublished excerpts from the “Pulp Fiction” screenplay as NFTs.
Surely the NFT ownership, copyright discussion will evolve in the following years. What can be said is that digital scarcity is a genuinely important concept that has opened up an entirely new economy of one-of-a-kind digital goods.