Non-Fungible Tokens (NFTs): Revolutionising Digital Ownership

No longer a niche concept exclusive to the tech space, the strange and wonderful world of NFTs has expanded way beyond the online space since they were first introduced in 2014.

Non-Fungible Tokens, often referred to as NFTs, are rapidly shifting our understanding of ownership and value as their continue to leave a lasting impact in the art, music and gaming industries. 

You might wonder how you could have possibly overlooked the supposed value of a pixelated ape selling for $3.4 million in April of this year. Or maybe, you’ve questioned the mechanics (and reasoning) behind Logan Paul’s small fortune spent on a hand-drawn image that shortly plummeted to be worth $10. 

With the NFT market worth a staggering $41 billion in 2021, the market for non-fungible tokens is catching up with the total size of the global fine art market. 

In this article, we’ll ask what an NFT is, uncover the nuances of NFT ownership and explore the relevance of NFTs in the world of art.

An NFT is a unique, one-of-a-kind digital asset that represents ownership of physical or digital items. 

In short, ‘non-fungible’ means that the asset cannot be replaced, one for another. Think of a concert ticket or a rare Pokemon card that only comes into circulation once in a blue moon, garnering value from their scarcity, uniqueness of specific attributes and information.

For a more in-depth overview of NFTs, check out this article here: What is an NFT and where can I get one?.

In the world of crypto, owning an NFT means that you are acquiring a unique piece of data linked to one blockchain address. Each token can only ever have one owner, which is secured through ownership information that is available publicly. 

Returning to our ape example, the Bored Ape Yacht Club is a collection of 10,000 cartoon NFTs may look like a bunch of primates on the surface, but each has features that make them unique as a stand-alone asset potentially worth millions of dollars. 

To grasp the concept of NFT ownership rights, we should consider: 

The blockchain provides unequivocal confirmation of NFT ownership – each NFT corresponds to a specific blockchain address, with the current NFT owner the individual controlling that address. 

Every NFT is unique, with specific attributes that set it apart from other tokens such as cryptocurrencies like Bitcoin or Ethereum. These examples are unlike NFTs since they are designed to be fungible and identical – they can be traded as equivalents. 

An NFT owner can buy, sell or trade NFTs on a wide range of platforms, with each transaction recorded on the blockchain. The blockchain offers a clear record of the token’s ownership history. 

Verification of NFT ownership is relatively straightforward due to the permanent and transparent nature of blockchain records. The transaction history of the NFT is available, offering a crystal-clear record of ownership.

Since most NFTs are Ethereum tokens that are securely stored on the Ethereum blockchain. You can verify ownership using Etherscan by entering a public wallet address, transaction hash, block, or token and then viewing the transaction data. You can see who currently owns the token where it reads: ‘Tokens Transferred From and To’.

NFT fractional ownership allows multiple individuals to own a share in a single, high-value NFT. 

Th idea of fractional ownership has ushered in a new era of digital asset management, making ownership more accessibility and affordable for a wider pool of investors to own these digital assets. 

Fractional ownership also has a role in enhancing market liquidity as the increased volume of transactions facilitates price discovery and can offer a more accurate picture of an asset’s value. 

As an NFT owner, you can expect the following:

Indisputable proof of ownership backed by blockchain technology. The blockchain provides an NFT owner with a transparent and permanent record of ownership, leaving no room for disputes.

While it is notoriously difficult to predict, NFTs have a potential for profit through sale and trading on the market. These assets can value simply when someone is willing to pay more for them than the previous owner. When considering their long-term value and sustainability, their utility and added perks or feature for NFT holders can increase the value of these tokens over time.

Becoming an NFT owner offers you a unique opportunity to engage in the emerging digital economy. This new landscape is characterized by decentralisation, transparency, and the ability to monetise digital assets.

NFT art is digital artwork transformed into NFTs. 

Through blockchain technology, the uniqueness and ownership rights over these digital artworks are preserved, with the token representing a kind of ownership deed much like a traditional art dealer who would authenticate a physical piece of art.

In the realm of art, an NFT represents irrefutable proof of ownership that cerfities authenticity – it cannot be duplicated, replicated or destroyed. (Although, it seems that the value of art knows no bounds, with the dramatic destruction of art, at times, leading to a further increase in sale price, as seen in the case of Banksy’s shredded painting).

This concept not only ensures artists’ rights over their creations but also offers art collectors an avenue to invest in digital art with verifiable provenance. 

Needless to say, NFTs are opening up the art industry to new opportunities for expansion, for artists and investors alike. 

To truly grasp how NFTs are redefining the art world, there are several case studies that prove just how powerful this concept can be. 

For instance, notable works such as Beeple’s “Everydays: The First 5000 Days“, which sold for an astonishing $69 million at a Christie’s auction, placing NFT art firmly in the mainstream. 

Many collections like the CryptoPunks are certainly at the top of the most popular tokens of all time, selling for record-breaking prices again and again. Launched in 2017, this project was inspired by the London punk scene and music artists like Daft Punk. The CryptoPunk #5822 token sold for $23.7 million to Deepak Thapliyal, the CEO of Chain.

For more examples of the most valuable NFTs of our time, see our article here.

Navigating the burgeoning world of NFT ownership can initially seem complex and overwhelming, but with understanding and appreciation of the potential these digital assets hold, the journey becomes significantly more rewarding. 

In the new digital economy, understanding NFT ownership is more than just being ahead of the curve—it’s about participating in an unprecedented technological revolution. 

As more sectors recognise and embrace the potential of NFTs, it becomes increasingly clear that we are just beginning to tap into the vast possibilities that NFTs can offer to the digital world. 

This publication is for informational purposes only and is not intended to be a solicitation, offering or recommendation of any security, commodity, derivative, investment management service or advisory service and is not digital asset or cryptocurrency trading advice. This publication does not intend to provide investment, tax or legal advice on either a general or specific basis.