Are NFT’s Art Even Valuable?

Photo by Howard Bouchevereau on Unsplash

What Makes an Artwork Valuable?

First, we have to understand what makes art valuable. The factors that contribute to the value of fine art are:

  • Originality: Reproductions or copycats are worthless to an art collector. In the art market, buyers look for signs of originality in artworks. These signs can include the signature of the artist and the date of completion.
  • Condition of the Artwork: Undamaged Pieces are valued higher.
  • Technical Details: dimensions, materials that made the art, date of production.
  • Artist’s fame and reputation.

Compare this to digital artworks:

  • The artist has the original file. However, it can be downloaded by thousands of people once uploaded to the internet. Originality ceases to matter because anyone can technically own digital artwork.
  • The condition of digital artworks is immaculate. No physical factors can damage the quality of it.
  • Dimensions of digital art solely regard the digital file size and orientation. The date of production can be written by the artist on the digital artwork but has the possibility of being tampered with by editing tools.

What is an NFT?

Non-fungible Token (NFT) uses the same blockchain technology as cryptocurrencies but it is non-fungible. NFT is the digital certificate that represents ownership of physical and digital assets.

  • Non-fungible: every NFT is different from each other. For instance, a dollar note is equivalent to a dollar note, but one NFT is not the same as another NFT.

How NFT Makes The Ownership of Digital Assets Worth It

  • The original file of the digital artwork is in high-definition (HD) format. The date of NFT creation is stored in the blockchain and the date of production can be signed by the artist. Originality is maintained. Investors can track the chain of ownership via the blockchain.
  • The condition of digital artwork cannot deteriorate.
  • Artist fame and reputation can be examined by the digital presence in NFT Marketplace or social media presence.
Photo by Tanya Pro on Unsplash

Criticisms on the value of NFT digital artwork

NFT Can Be Viewed by Anyone and Screenshot by Anyone

NFT Has No Intrinsic Value

  1. Fanbase
  2. Scarcity

Problems with NFT digital artworks

I am ecstatic for the future of NFT. However, there are still some underlying issues to be addressed.

Technical Problems

NFTs themselves do not contain their corresponding digital files. Instead, it points to an address where the digital asset is stored, usually to an InterPlanetary File System (IPFS). Files that need to be accessed via the Internet need to be hosted by a server. If the URL breaks or the server has issues, the investor would not be able to access their digital asset.

Cybersecurity Risk

NFTs, like cryptocurrencies, faces digital security risks. If you lose your private keys to your wallet that contain NFT tokens, the token is forever lost. If your wallet has been hacked and accessed without permission, your NFT can be transferred out of your wallet. Every transaction is permanent and irreversible. Since there is no central authority to “reverse” this process, investors risk losing their valuable NFT.

Possible Fraud

NFT certifies the ownership of the digital assets. However, no one is stopping people from screenshots the digital art pieces and trying to sell their own NFT version of them. Investors have to be cautious and only buy from certified artists. Artists can include their own unique signature on NFT as well.

Environmental Issues

Environmental issues should not be a huge problem, as more cryptocurrencies are favoring the proof of stake mechanism (PoS) than proof of work (PoW) to validate transactions.

  • PoW mechanism validates transactions by solving mathematically complex cryptographic algorithms. New blocks are added to the blockchain once the algorithm has been successfully solved and the miners get rewarded respectively. It consumes large amounts of electricity as computer hardware has to run loads of complex mathematical calculations.
  • PoS mechanism validates transactions by using the concept of “validators”. Validators lock up their crypto as collateral to verify transactions. PoS consumes very little energy compared to PoW.

Conclusion

NFT provides ownership of digital artworks. This changed the game for digital art, which was deemed as “worthless” due to “infinite supply”.

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Adelene

Adelene

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Crypto enthusiast. Privacy and security advocate. Obsessed about productivity, self-development, and finance. Learn about crypto on comprehend.substack.com