If you’re just getting into the NFT scene, you’re probably wondering what the answer is. Why are people spending so much money on NFTs if they’re just a JPEG image that you could easily save or screenshot? Further to that, why are so many vocal skeptics questioning their value? To answer this question, we first need to understand the Technology Adoption Cycle.
The Technology Adoption Cycle
You see, NFT technology is in its infancy. It will take time for the masses to fully comprehend and accept - as does any new innovation. In fact, this period of time has been extensively studied, systematised, and is referred to as the ‘Technology Adoption Cycle’.
As you can see in the figure above, we’re still at the early stages of the cycle - and a particularly challenging stage at that. Many people have heard about NFTs, but only the early adopters have started to use the technology - the rest are grappling with understanding its practical applications.
The general public’s understanding of why digital art is valuable if they could simply “take a screenshot” brings a core value proposition of NFT technology into question; its ability to prove ownership.
Let’s examine that.
Provenance and the art world
The value of NFT technology becomes easier to understand when we take a step back to examine how art dealing operates in the real world.
Firstly, the art world is full of forgery. Though it is becoming more challenging, fake Picassos, Rothcos, and Monets slip through the cracks and sell for millions at auctions from time to time. Auction houses do their best to combat fraud. The first port of call is to examine the provenance of the piece.
Provenance is a form of documentation that commonly accompanies art pieces. It details the ownership history of a piece. If the verifier is lucky, the list will trace right back to the original artist. Once a believable ownership history has been established, the examiner will proceed to test the artwork using a laundry list of methods - from examining the makeup of paint pigments to compare it with the paints commonly used at the time, to testing the age of canvas fibres. Many testing mechanisms are used because it is easy to fake any single one (even provenance), but challenging to get all of them right.
Verifying an artwork is a long and expensive process - so why is it done? The answer seems obvious - because art buyers want to know they’re getting the real deal. A copy, no matter how perfect, is not enough. Buyers pay for more than just the artwork - they’re paying for a spot in the chain of ownership of the piece - its provenance. Provenance is what makes owning an original Picasso (and not just a print from a museum gift shop) so special.
Now back to NFTs.
At their core, NFT technology enables trackable, transparent ownership. Each time an NFT is transferred to someone else, it is recorded on the blockchain - for all to see.
From the moment an NFT is created on the blockchain, future owners of that NFT will have a provable chain of ownership leading right back to the Creator.
Digital Provenance was never possible before NFTs came onto the digital art scene, and is precisely why the art world is going crazy for it. NFT technology gives a file (in this case, a JPEG) an irrefutable ownership history - something that even real-world provenance documents cannot do.
Further to that, because NFTs aren’t fungible (are unique and cannot be replaced), the buyer has proof that they are the sole owner of an art piece, issued by the artist. That means that NFT technology could place digital artworks in the same spot of cultural significance as real-world art: many people can see and enjoy them and they can even get ahold of free copies of them, but we know that the original copy linked to the artist is owned by an individual.
Question: Are NFTs valuable?
No, NFTs are not inherently valuable. They’re only as valuable as the creation they’re tied to. NFTs are simply a technology to verify and track ownership of a file.
Is it worth buying an original vs a copy in the digital age? That’s completely up to the individual.
A Supreme Hypebeast will tell you that buying Supreme shirts isn’t just about owning an expensive branded shirt to them - it’s about supporting a culture they care about. At the same time, a fast-fashion fan will tell you that they prefer to buy counterfeit ‘Subpreme’ shirts at the local Chinatown because they’re cheaper.
Ultimately, NFT technology gives you a way to support your favourite creators, enabling them to continue making cool things that you enjoy. Who knows, maybe that NFT you buy from a creator you caught early in their career will be worth millions one day.