Frontier Observation| NFT digital artwork is another kind of "Bitcoin"?

With the emergence of NFT (Non-Fungible Toke) digital artworks, people see new business prospects triggered by blockchain + digitization of artworks. But at the same time, there is a lot of discussion, and there is no consensus. Among them, there are both capital speculation concerns with artworks as gimmicks, and praise words that encourage artistic creation and the prosperity of artistic careers.

Although NFTs are currently mainly concentrated in the fields of games, encrypted artworks, card collectibles, etc., and the use of them is mainly online payment code skins, the degree of market attention and the hot momentum of transactions are no less than the business model innovation led by the "sharing economy" in previous years. As an industry report in 2021 shows, the NFT market has over $340 million in trading volume, with NBA TopShot accounting for the largest share, with more than $225 million in trading volume.

Perhaps because digital currencies such as Bitcoin and Ethereum are more eye-catching, people describe NFTs as new electronic currencies. However, from the perspective of the commercial practice of NFT artworks, they are essentially highly personalized encrypted digital products, and each NFT is not an undifferentiated equivalent in value, so NFT artworks are also called non-homogeneous digital tokens.

However, in the author's opinion, NFT artworks are essentially a special form of art digitalization, but in the process of digitization, the blockchain encryption has a code authentication nature that cannot be tampered with, so the non-human code that first obtained the blockchain encryption is given uniqueness, and thus obtains the scarcity nature of the commodity, which is the fundamental reason why it can buy and sell transactions.

From this point of view, the token theory is indeed unreliable, and NFT artwork is a credible proof of ownership that expresses the uniqueness of digital artwork. It should be noted that because works of art involve copyright and ownership as goods, to discuss whether NFTs can promote artistic creation, it is necessary to answer the question of the legal and economic relationship between the certificate of title and copyright in the work of art.

In a legal sense, we must first clearly explain the relationship between copyright and ownership of works of art. Generally speaking, copyright (or copyright) is a natural right owned by the creator of a work of art, including the right to sign the artwork, the right to modify it, and the right to license derivative use. The so-called ownership of works of art includes the right to possess, use, and distribute proceeds of works of art. Since digital artworks are referred to as works of art, whether they have offline artworks or not, they can be regarded as a form of artistic expression, so the above definition of rights also applies.

On the basis of this understanding, the author believes that among the many expression carriers, digitalization is only one of the forms of expression, and once the digital artwork is NFTed, the purchaser will obtain the ownership of the native digital artwork, that is, the encrypted digital artwork. The so-called NFT digital artwork ownership refers to who owns the digital native artwork, including the right to study and appreciate it, resell it for profit, and give it to others, but does not include the ownership of the copyright of the artwork and the disposal of the derivative use of the artwork. It is precisely for this reason that the ownership of NFT digital artworks is not directly related to the subject matter of the artwork, and the subject matter of ownership here is only a unique mark that cannot be copied after encryption through blockchain technology, of course, this mark has the uniqueness that cannot be tampered with, which makes the ownership have the possibility of commercial value development.

In an economic sense, we also need to figure out the characteristics of the distribution of benefits arising from the separation of NFT digital artwork ownership and art copyright. The author believes that the basic premise of NFT digital artworks is digital artworks, including digital objects formed by digitizing physical objects through technical means and uploading to the Internet, as well as new digital products that were originally copied from digital products many times. However, in terms of commercial value, this kind of digital artwork lacks uniqueness, the technical difficulty of obtaining is low, and the difficulty of preventing its transfer benefit is also small, so the market demand is very narrow, and the commercial value that can be developed is not high, and in most cases it is a means to promote the offline transaction of real goods.

However, the most critical step in NFT digital artwork is the blockchain encryption link, and the resulting personally identifiable, network-wide consensus, and immutable encoding, which produces a completely exclusive economic value, that is, the exclusivity of NFT digital artwork. As a result, digital artworks have commercial value due to new technologies. In addition, in the process of commercial operations, people will also decompose the digital artwork, and partial ownership of the complete digital artwork will appear, such as the left and right eye parts of a portrait work. While commercial interests will inspire the creation of artworks, the drive to work on the NFT of artworks will become stronger. Therefore, in the era of NFT art creation, the aroma of wine will really be afraid of the deep alley!

In extreme cases, any category that can be digitized can be NFTed, even if the digital product is originally worthless, such as a graffiti painting or a few words that are too crude. Obviously, the commercial value of the copyright of a digital artwork is far less than the commercial value of the ownership of the technical cryptographic token for it, because the ownership of the uniqueness token is a prerequisite for NFT transactions.

In the face of the rising NFT digital art fever, people from all walks of life need to calm down. For consumers, we must maintain a rational cognitive attitude and adopt cautious trading behavior, neither to mistakenly regard NFTs as a new type of "digital currency", or even as a recurrence of bitcoin wealth opportunities, let alone to equate it with stock-like financial products. For technology developers and art creators, NFT digital artwork is a result of the commercialization of blockchain technology, although its production has indeed brought great profit returns to itself, but how to build a risk warning ability that meets the objectives of rational trading at the technical level, how to strengthen the gene of art on digital art, I am afraid there is still a long way to go. For the relevant management departments, it is necessary to adhere to the basic idea of actively supporting and standardizing management, and while encouraging the healthy development of NFT digital artworks, it is necessary to establish a supervision mechanism that eliminates the intervention of large-scale capital operation forces.