I have to keep looking up the definition of NFTs. The concept is straightforward – ownership of the intellectual property associated with a digital thing1. The confusing part is what the value of an NFT is based on. It could be the digital thing, the tangible thing behind the digital thing (if it exists), ownership of the thing, or the token (the T in NFT) specifying ownership.
I’m not for or against NFTs, just trying to understand what they are. I’m excited if they are a novel way of supporting the arts and thinking about property and ownership. But if they’re a variation on a concept we all know, and may not like because it’s called capitalism, I’m less enthusiastic.
The NF in NFTs stands for non-fungible. This means unique, original. But which part of the many NFTs bought and sold recently are non-fungible?
Embracing the concept of intellectual property, the non-fungible value, makes perfect sense. Of course if you own an original painting its value is unique. Or non-fungible. Meaning the value is based on the unique painting, not that it is a painting. There is no basic value of a painting (unless you’re hiding a hole in the wall), unlike the value there is a a car tire or a roll of toilet paper or a 737 airplane build in 1993 . These objects, are useful, respectively for making a car roll, wiping stuff off, and transporting people long distances. The value in each individual work of art is unique, as it derives from the aesthetics, expression and evocativeness of the piece.
To explore non-fungibility some more, I want to propose a new class of asset: The NFO. Non-fungible object. This thought experiment explores if uniqueness makes sense for a broad range of things. It takes the digital steam out of some NFTs but preserves the concept of the right of the owner to a unique thing.
In this category, I own:
- from my local Chinese food restaurant, a paper takeout menu made redundant by the UberEats, or similar competitor, app. It features 2017 prices and a grease stain from the spring rolls I ordered at the time.
- my first Apple laptop, purchased in 1995. It’s 3 inches high and about 6″ x 8″ wide/long, grey and plasticy. While it will no longer start up, it cost a relative fortune in modern day dollars.
- a wisdom tooth extracted from my mouth when I was in my 30’s. It’s unusual, what’s called peg tooth, because it’s shaped like a peg, rather than the usual four point squarish tooth construction. I suppose it has my DNA embedded in it, so I could be cloned from scrapings.
- a number of paperback books signed by the author.
I could go on. As I imagine you could, if you wander around your home, among your belongings, and see things that are one of a kind. And by definition, non-fungible. Or, have something unique about them that may be valuable. My wisdom tooth is only valuable to me. The takeout menu may have a bit broader appeal, to the owners of the restaurant and its patrons over the years. I suspect the original Apple laptop could command a price among tech-collectors. As for the signed books, the value of any given title depends on the book, and author.
This is definitely the point. Value to an individual is individual. But value in the marketplace depends on how many individuals are interested in the same thing. Returning to the concept of NFTs, it seems to me that the market has gotten far too involved in the non-fungibility of the value of digital rights. That’s how prices get bid up to five or six figures for a single image, audio snippet or video clip.
Interwoven in the NFT hype is the support of creators. Various societies have long struggled with how to support artists who create works that are of profound importance but difficult to monetize in a way that allows the artist to earn a living wage. It seems like NFTs are a way to support these creators. Except that they are getting lost in the noise of every cool sound/video/visual/shoe design offered for ownership rights, for the sake of ownership rights.
Yes, that was my point with the NFO’s. We, and by we, I mean every legal person, including those that are mega-corporations, minor deities, and the rest of the citizens of earth, have non-fungible things. They may be tangible, intangible or about to be imagined.
Another way of looking at this is that unique part in NFTs is the ‘T’ – the token. The use of blockchain technology to create a token ensures the digital rights are unique the select object, the value of which is established in the open market. This is a unique approach to establishing clear ownership of digital creations.
Could NFT’s support artists transparently and in a way that allows them to be their most creative? They are a way to transfer wealth from those who have the means and desire to support those creative observers that can translate their impressions of the human condition into understanding through the senses.
I hope this is how NFTs find their role in the economy.
Otherwise, I’ll bandwagon: I have a floppy disc drive and a cat’s baby teeth that I’m willing to sell to an appreciative buyer.
1 That this digital thing can be converted into a physical thing, for example a physical print of an artwork, only makes the concept more mind-boggling.