Note (opinion)

The subject of NFTs; Why would anyone be willing to pay millions for a JPEG file?


When one first notices the existence of proverbial tokens, or NFTs, the first question that probably arises is, “So what?” “Why should anyone pay for this?” If this problem still persists for you, read on.

I will answer this question with a question. If the board «Mona LisaLeonardo da Vinci’s masterpiece to be sold today, what offers will be offered for it? 10 thousand dollars? 100 thousand dollars? $ 10 million? Much much higher than these figures.

Is the Mona Lisa painting useful except for wall mounting? You might say:

«Mona Lisa It is a beautiful physical painting that you can see and touch.»

If it was just a matter of physicality and beauty of the image, you can now download the image of the Mona Lisa painting from the Internet and implement it professionally on the painting.

The subject of NFTs;  Why would anyone be willing to pay millions for a JPEG file?
Mona Lisa picture board is sold in Digi Kala at a price of 13,000 Tomans!

So apart from how beautiful the Mona Lisa painting is, there are other reasons that make it valuable:

  • Artist of the work: Leonardo da Vinci, this famous painter, even if he painted his hand and painted it on canvas, his painting sold for millions of dollars.
  • The uniqueness and rarity of the workThe fact that there is only one example of a Mona Lisa painted by Leonardo da Vinci makes it unique and rare, and that adds to its value. The special smile in the image also distinguishes it in terms of features.
  • OwnershipEventually everything ends up in ownership. A billionaire buys the Mona Lisa painting because he gets real ownership of a work that Leonardo da Vinci created with his own hands a few hundred years ago and he can be proud of it. He will become famous. The buyer of this work will own it, and as time goes on, its value will probably increase.

Another example to better understand this: After enduring a lot of hardship, you will receive a gold medal after winning a sport. However, this gold medal can be easily made or bought from anywhere. The main difference between the two medals is the registration of your championship, which was won by competing with several other people. It is a matter of uniqueness, something that has a special value for everyone, and someone is willing to acquire ownership simply regardless of price.

The same is true for NFTs, but because we are dealing with digital items, it is a little harder to understand. Here you might say:

«I can download a video that sold for $ 6.6 million with two simple clicks.»

The subject of NFTs;  Why would anyone be willing to pay millions for a JPEG file?
Download a video of Beeple, the famous artist whose NFT sold for $ 6.6 million.

Yes, you can download the video to your computer, just as you can take a photo with a Mona Lisa painting in a museum, but you are not the real owner of the work.

When you see an image selling as an NFT token for $ 100,000, it sounds ridiculous at first glance, but when you think about it, the same principles apply to this token:

  • Artist of the workThe person who created this work is probably famous or has a lot of followers. If Elon Musk draws a line on paper right now and puts it up for sale, people are willing to pay thousands of dollars for it.
  • Uniqueness and rarity of the work: There is only one sample or a limited number of samples of this work, so it is rare. An artist like Beeple, for example, creates just one example of his work. Sometimes the work also has attractive visual features that distinguish it from others.
  • Ownership: You can easily save the NFT image on your computer or phone with a few clicks and laugh at the image buyer, but it ‘s like saving the Mona Lisa image on your computer. As a rule, with the purchase of an NFT, your ownership is registered on the Blockchain in a decentralized manner and no one can deny that history on the Blockchain; Especially on a large blockchain like Ethereum. With this technology, you can save an NFT on your personal wallet and transfer ownership to someone else in less than a few seconds. The artist of the work may even provide you with the highest possible quality; Something you can’t find on the Internet.
Christie's innove in place of an NFT's |  Art Newspaper FR
The work sold as NFT for more than $ 69 million. Called “Every Day: The First 5000 Days,” created by Beeple, it features 5,000 digital images created by the artist over the past 13 years. The original quality file is also donated to the owner.

The main thing that makes sense for an NFT is ownership. If we want to explain this issue with a simpler example, when you have an item in a computer game, on paper that item belongs to you, but in fact, the creator of the game owns the item and can delete it from your account at any time. . If the same item is an NFT, you are the real owner according to the Blockchain records, and you will have access to it on your personal wallet outside the game, and you can exchange it outside the game.

«But does the court recognize NFT ownership?»

Not yet, but it will probably be recognized in the near future. For example, in March 2021, the state of Iowa passed a law recognizing records registered on valid blockchains (including Ethereum) as ordinary contracts.

Of course, I also acknowledge that the NFT field is at the beginning of its path and sometimes smells of madness, insanity and “ignorance”. One of the main challenges for NFTs right now is that they are not yet recognized by the judiciary, and the likelihood of fraud in this area is very high.

Once this area matures, the legal and fraudulent challenges are fully resolved. With the proliferation of Blockchain records, the legislature will have no choice but to formalize these records. In the not-too-distant future, an artist may sue you for commercial use of NFT‌ content without the owner’s consent.

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