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What are NFTs and can they be for physical artwork?

You might have heard of 'NFT artworks' in the media which are going through a popular phase with stories of digital pieces of art being sold for tens of millions of dollars and lots of artists producing NFTs for their artwork. This is an explanation of what NFTs are, whether they are for both digital and physical artwork, questions I have on using NFTs for proving artwork ownership and if I would consider using NFTs for my artwork.

 

What does Fungible mean?

To start off, we need to know that 'fungible' means that something is 'interchangeable' and a quantity of something can be exchanged for a different quantity of the same thing and it won't affect it's value. For example:
  • If you replaced the notes in my wallet with different notes adding up to the same amount, it wouldn't matter and wouldn't change the value.
  • I can swap $100 of gold for a different $100 of gold and it's worth the same amount

 

What is an NFT?

NFT stands for 'non-fungible token' and is a digital certificate of ownership of an artwork. Just like a piece of real-world art, different pieces aren't fungible - each piece of art has different value and can't be replaced by another piece of art because they all have different values and all have different qualities that makes the owning of the artwork desired - an art collector may own a piece of art because they like the artist, the colours used, the medium or the story behind it and even if it was replaced by another artwork with coincidentally the same dollar value, it wouldn't be a fair trade because it won't be 'valued' the same by the collector

Because digital artworks such as photos, animations, digital drawings, etc can all be duplicated an unlimited amount without any quality loss, the NFT was invented which is a certificate of ownership of a digital artwork that says "that artwork belongs to me and only I have the right to sell it on to someone else in the future" (although not to make copies and sell it as your own as the copyright still remains with the artist - just like owning physical artwork in the real world). This means for the first time digital artwork can be unique, can be traded and provably owned (at least the 'ownership' can be these things can be).

The NFT is a digital 'token' stored on a blockchain that can be transferred to someone giving them ownership of the token. Unlike the digital asset that the NFT represents, once an NFT is transferred to someone the previous owner no longer owns it. For example, if I send you a digital photo, now there are two copies; one on my computer and one on yours. If I send you an NFT you now have it and I no longer do.

 

NFTs for physical artwork

NFT's seem to be an interesting way to prove that a digital piece of artwork is owned by certain person, what I'm more interested in is can an NFT be used as a 'digital certificate of ownership' for a physical piece of artwork?

If someone buys a piece of art that was created in the real world like a sculpture or a painting, it's fairly safe to assume that it's real and not a counterfeit just by looking at it because it would take a lot of work for someone to copy it. The difference is that these days photography starts off as a digital file which is the equivalent of what a film negative was for traditional film cameras. Unlike film though, the digital file can be copied millions of times without losing any quality and then printed millions of times. This means that it's a lot harder to have scarcity of photography even if they're bought as physical framed photos.

One way of trying to limit copying of the photo is by guarding the original high resolution file and letting anyone have access to it so it can't be printed from the high res original file. Someone could get around this by finding a large version of the artist's photo that someone had already purchased and taking a high res photo of it and printing it to the same size. Although the quality technically wouldn't be as good as the original, it would be close enough that most people wouldn't be able to tell the difference.

This means that there is a level of trust that has to be given to the photographer that when he or she says that "there are only 20 editions available" that there in fact is only 20 editions that will be sold.

NFTs for physical artworks could be created but that would mean there is still only 'trust' linking the NFT with the physical artwork which brings me to the following point of my issues and questions about NFTs for both digital and physical artwork.

 

Problems and questions of NFTs

The main problem I see is that there is a weak link between the NFT and the scarcity of the artwork itself - who's to say that there is only one NFT of the artwork? NFTs rely on there being a central entity saying "this NFT relates to this artwork and this NFT is the only NFT that represents the ownership of this artwork". This central entity could be a company, website or person and if they disappear, what happens to the value of an NFT? If the central entity does disappear, someone who bought and owns an NFT (that might be worth a lot of money) might say that their NFT
    • What's to stop someone from making multiple NFTs of the same artwork?
    • What happens if you make an NFT of a digital image and you delete the original as well as all of the copies? What would happen to the value of the NFT?
    • What happens if an NFT represents a physical piece of art and the physical piece of artwork is destroyed?
    • What happens if an NFT represents a physical artwork and the NFT and the artwork are sold individually to different buyers?
      I'd love to see a provable method that:
      • proves the artwork genuine
      • proves the artwork is unique
      • let's someone verify how many editions have been made so there aren't more than is stated

      Conclusion

      Although this new NFT technology is interesting, at the moment I'm sticking to the old-fashion method of displaying the edition number and my signature on the artwork itself. My photos are limited to 20 editions each and once 20 are sold no more are available for sale and they all have my signature and the edition number (eg 'edition 8 of 20') displayed on each piece. There is still a level of trust that the artist isn't selling multiple '8th editions' but this could be easily proven if someone was to find someone else with the same edition as them and I'll continue to look into new ways of proving that each piece I make is limited in edition and genuine.

      I'd love to hear your thoughts on this topic either in the comments below or on Instagram and check out my artwork here. I think that NFTs are an exciting technology and it'll be interesting to see how it turns out in the future.

      Below are my free phone wallpapers which are a good example of something that isn't scarce and can be downloaded and duplicated as many times as you'd like 😀

      Update

      Recently I've also heard a great segment on NFT's on the 'Lightning Junkies' podcast that explains the drawbacks of NFT's. You can listen/read it here and here's a snippet of some relevant parts.

      "I think tokens are"..."frankly unnecessary If you have a centralized party that's backing the asset. That's a perfect candidate to just host a database like mySQL in there and call it a day"

      "In theory this works but in practice there's all kinds of fragmentation like rare Pepes turned into Ethereum tokens and then there's 18 different platforms that are incompatible where you you know issue these assets And there's also fraud where people will take the art of a certain artist and like reissue them as tokens and make money"

      - From the Lightning Junkies podcast
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      2 comments

      • Hi Edmund, the link doesn’t seem to work, do you mind resending. I actually have a similar thing on my photos where there is a small logo on the back with a qr code that when scanned brings people to a digital online certificate for the artwork but it isn’t an NFT.

        Ben Williams
      • Interesting idea. Would a QR code on the physical art to the NFT be considered a provable method? That’s the case here, https://opensea.io/assets/0×495f947276749ce646f68ac8c248420045cb7b5e/91460852397779861866701705488969492691006445337131937172795563448686499332097/

        Edmund

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