Source | Data Science Central
The above image shows how an object of value, like an artwork, music file or GIF, can be “minted” and sold via a non-fungible token (NFT). An NFT is much like a certificate of authenticity. But instead of a physical certificate, you own a token: a unique piece of data on a blockchain. NFTs work as public legers, recording each transaction associated with the sale of an artwork. When you purchase an NFT, you’re essentially purchasing a tamper-proof digital receipt.
An NFT is not:
- An artwork—digital or otherwise. The buyer doesn’t actually possess the original item at all. It is permanently stored elsewhere. A secure method is to attach the work permanently to an Ethereum blockchain—containing the work, the unique identifier, and an ownership record. However, it is possibly be stored the art on a server separate from the NFT.
- A right to copy, disseminate, or display the artwork . The creator of the artwork usually keeps these rights. The buyer’s only right is that of ownership of an “original copy.” For example, the artwork in the image above is a portrait of Diana Ross I created in 2013. I sold the physical artwork and kept a digital copy. I could sell ownership of the digital image with an NFT (but I’m not going to, because of the environmental concerns outlined below).
- An exclusive digital version of the artwork. Digital artist Beeple made history earlier this year when Christie’s auction house sold an an NFT consisting of 5,000 of his illustrations for over $69 million. However, he posted each element of the art on Instagram; Anyone can download a free copy, albeit without that prized COA.