The copy/paste problem
Naysayers often bring up the fact that NFTs "are dumb" usually alongside a picture of them screenshotting an NFT artwork. "Look, now I have that image for free!" they say with a grin on their face.
Well, yes. But does googling an image of Picasso's Guernica make you the proud new owner of a multi-million dollar piece of art history?
Ultimately owning the real thing is as valuable as the market makes it. The more a piece of content is screen-grabbed, shared, and generally used the more value it gains. Owning the verifiably real thing will always have more value than not.
Characteristics of an NFT
NFT´s have some special characteristics that you cannot get by just “right clicking” and saving.
If you own an NFT
You can easily prove you own it. Proving you own, an NFT is very similar to proving you have ETH in your account or Euros in the bank. For example, let’s say you purchase an NFT, and the ownership of the unique token is transferred to your wallet via your public address. There are 3 parts that verify your holder status:
- The token proves that your copy of the digital file is original.
- Your private key is proof-of-ownership of the original. (Never give your private key to anyone; usually signing with your wallet proves the ownership of the private key connected to the wallet)
- The content creator´s public key serves as a certificate of authenticity for that particular digital asset.
Another way to think about proving you own the NFT is by signing messages to prove you own the private key behind the wallet address. As mentioned above, the private key is proof-of-ownership of the original. This tells us that the private keys behind that address control the NFT. A signed message can be used as proof that you own your private keys without revealing them to anybody and thus proving you own the NFT as well!
- No one can manipulate it in any way. Think of the blockchain as a fly stuck in amber. If you see a fly in amber, and it´s got a millimeter of amber around it, well, then that could have been done yesterday or a year ago. But, if you see the fly is trapped in a huge block of amber, you know it´s been there for a long time – it´s been accumulating. So, a blockchain is a series of blocks. Each block is a series of computations done by computers all over the world using serious cryptography in a way that´s very very hard to undo.
- You can sell it. On existing market places connected to the blockchain. Difference with stock markets is for example that you can buy an NFT on platform A and then sell sell it on platform B which is not possible in with your stock broker. Only thing to make sure is that the NFT broker is supporting the blockchain.
- You can hold it forever, resting comfortably knowing your asset is secured by your wallet.
If you create an NFT
- You can easily prove you are the creator. The creators public key is essentially a permanent part of the token´s history. The creator´s public key can demonstrate that the token you hold was created by a particular individual, thus contributing to its market value (vs. a counterfeit).
- Your determine the scarcity. The creator of an NFT gets to decide the scarcity of their asset. For example, consider a ticket to a sporting event. Just as an organizer of an event can choose how many tickets to sell, the creator of an NFT can decide how many replicas exist. Sometimes these are exact replicas, such as 5000 General Admission tickets. Sometimes several are minted that are very similar, but each slightly different, such as a ticket with an assigned seat. In another case, the creator may want to create an NFT where only one is minted as a special rare collectible. In these cases, each NFT would still have a unique identifier (like a bar code on a traditional "ticket"), with only one owner. The intended scarcity of the NFT matters, and is up to the creator. A creator may intend to make each NFT completely unique to create scarcity, or have reasons to produce several thousand replicas. Remember, this information is all public.
- You can earn royalties every time it is sold. Some NFTs will automatically pay out royalties to their creators when they're sold. This is still a developing concept but it's one of the most powerful. Original owners of CryptoPunks earn an 8% royalty every time the NFT is sold on. This is completely automatic so creators can just sit back and earn royalties as their work is sold from person to person. At the moment in the real world, figuring out royalties is very manual and lacks accuracy – a lot of creators don't get paid what they deserve. If your NFT has a royalty programmed into it, you'll never miss out.
- You can sell it on any NFT market or peer2peer. You are not locked into any platform and you don’t need anyone to intermediate. Similar to when you own an NFT, you can mint it on platform A into your wallet only then to sell it on platform B.
I hope this article helped you to understand why you cannot just right-click and save an NFT.
Also, I hope you learned something today and would love you to consider following me on my twitter @0xCryptonite if you like more recent updates about the space.
Recommended sources: https://ethereum.org/en/nft/