BackLet non-fungible tokens prove their worth to us
They have been called illusory and dismissed as a fad. With the launch of an Indian NFT market, though, these tokens could overcome sceptics. And the concept does deserve a chance
PremiumIndian ownership of non-fungible tokens (NFTs) seems set to rise. On Tuesday, WazirX launched an online platform for the purchase of unique e-tokens, each designed to signify a specific object, work of art or digital creation (unlike fungible cryptos that mimic currency). Known for its crypto exchange, WazirX will price NFTs in its own digital currency, WRX, and has claimed an enthusiastic response from a wide range of creators, including visual artists, photographers and musicians, who could find buyers for tokens of their work if the company is able to make a go of this project. The NFT concept itself is yet another application of blockchain technology, which allows a widely-verifiable record of trades, and the new mart proposes to generate NFTs through the smart chain of Binance, which acquired WazirX in 2019. Sellers of their creations must reportedly part with a 5% platform commission on every sale, as with an art gallery. On each resale, though, they stand to earn a royalty of up to 15%. That creators are enthused by this idea is no surprise. But whether NFTs will click, outlive sceptics and last long enough for collectors to auction or bequeath them is not so obvious.
At first glance, the concept of NFTs merely represents the digitization of collectibles, another aspect of our transition to a cyberworld where binary digits can meet virtually every need involving audio-visual engagement. This is about ownership, however, and thus about value generation through the scarcity of a desired privilege. If that desire widens and expands demand for an NFT, its value would get bid upwards, and so it is meant to attract investors who keep an eye out for such objects. A key attribute of an NFT is that it is encoded to have only one owner at a time, whose identity can easily be verified, and it has a metadata file acting as its record—like sleeve notes with music sold on vinyl of yore, but open to updates. Intriguing as the proposition sounds, critics have taken a dim view of the carbon footprint implied by all the digital operations needed for a bustling NFT market to operate. Like cryptos, NFTs are alleged to be power hogs. But ambiguity over originality could pose an even bigger barrier to the concept’s success. The pitch of token uniqueness has already been compromised by multiple ‘NFTs’ available—like painting reprints—for the same artwork on the internet. Technically, anything digital can have umpteen copies, even if each bears a distinct code. Unless clarity is assured on exactly how exclusive tokens are, conceptual confusion could get in their way. There is nothing in the real world, after all, that an NFT entitles its bearer to.
The idea could yet turn out to be a fad. Some suspect NFTs are illusory, just a shade better than land titles to patches of the moon. But high-profile sales overseas do suggest incipient demand for such tokens. An NFT for the first-ever tweet of Twitter’s Jack Dorsey, for example, was hawked for $2.9 million this March. Its owner can neither conceal it from us nor destroy it, but might well find an online museum ready to buy it for even more money some day. Value lies in the eyes of beholders. If perceptions of value can create a new market, it would be welcome. Creators, especially, need wider avenues of income. If any NFT platform can enable the buying and selling of tokens in a way that results in a net gain of overall satisfaction, and do so without harming our planet, it deserves to thrive.
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