NFT stands for “non-fungible token” and is a unique digital asset with proof of ownership and verification of authenticity held on the blockchain. Bitcoin, the quintessential cryptocurrency, is fungible because it is also intended as a medium for transactional payments, but since each work of art is unique, each NFT is unique and its irreplaceable nature is absolute. absolutely essential.
NFTs can be digital art, real estate, collectibles, event tickets, website domains, or tweets. Comparing NFTs to dematerialized (demat) stocks may not be an oversimplification. These shares exist, but they are in digital form, out of the reach of counterfeiters, and cannot be tampered with.
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Demat stock has changed the way people invest. They enabled quick buying and selling on the stock market and prevented the loss of shares due to theft, damage, etc. Can NFTs offer similar benefits for people investing in art, real estate, etc.?
art but not art
On March 11, 2021, the BBC reported that auction house Christie’s had sold a digital-only artwork for $69 million. Far from ordinary sculptures and paintings, new owners of works of art have acquired unique digital tokens. The underlying assets of NFTs are, of course, works of art.
While this is an example of art collectors diligently protecting the safety of their collections and keeping scammers and charlatans at bay, the trivialization of NFTs in the hands of megalomaniacs and narcissists could be expected to begin soon. increase.
“just set twttr— the first tweet by Twitter founder Jack Dorsey was put up for sale as an NFT, fetching a staggering $2.9 million. However, it bottomed out at $132. Selling his baby to Elon Musk may have accelerated the descent of his first tweet. More importantly, the wisdom that attaching such high ratings to nonsensical tweets is a gushing fiasco has probably become apparent to avid NFT enthusiasts.
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Former US President Donald Trump has joined the NFT bandwagon by posing as a superhero, an astronaut, a NASCAR driver, and more. He promoted the “limited edition card” and said it “could make a great Christmas present for him”. He had 45,000 cards and could buy them for $99 each. Even Republicans weren’t amused by Trump’s antics.
Closer to home, our very own Amitabh Bachchan, the superstar of yesteryear and eternal celebrity, transformed the work of his father Haribansh Rai Bachchan madushala He joined NFT by recording the poem in his own voice, which reportedly made him $420,000 in November 2021.
doomed to plummet
Cryptocurrency’s fortunes plummeted after initial euphoria. The fate of crypto NFTs is similar. Legal experts need to examine whether the blockchain technology that underpins NFTs can give coin owners unshakable rights and ownership of the underlying works of art. In other words, there is currently no guarantee that NFT purchasers will not be betrayed by challengers under copyright law.
It was a time when antiques, paintings, sculptures, and other artifacts had an astounding and staggering appreciation on the art market. Cynics have always questioned such assessments, and have suspected that ill-gotten money was ultimately laundered.
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Mamata Banerjee, leader of TMC, became the subject of such irony when he got Rs. 900 crore for 300 paintings. Similarly, Yes Bank founder Rana Kapoor was coerced into buying his MF Hussein painting by then Oil Minister Murli Deora for his 20 million rupees, making the money worth Sonia Kapoor in the United States. It caused ripples when it was revealed that it was used to treat Gandhi. Even with Bitcoin at the height of its overvaluation, she was reviled as the handmaiden of a fraudster laundering her ill-gotten wealth.
vulnerable to attack
While NFTs arguably democratize art ownership, prevent tampering, and create a vibrant market for their underlying assets (i.e. paintings, sculptures, and even silly tweets), It has left its flanks open to attack. While the dematerialization of equities has worked wonders in the market, the dematerialization of antiques is sadly causing some weirdness in the scarce world of NFTs.
With this in mind, investors in NFTs should keep their eyes wide open and hedge their risks well.
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