Digital representation of art is easily copied and shared. Blockchain technology solves this problem by allowing digital ownership through Non-Fungible Tokens (NFT).
First, you must understand blockchain and cryptocurrency.
What is a Blockchain?
In the most basic description: Blockchain technology confirms ownership of assets. It is cryptographically secured (hacking a blockchain is close to impossible) and decentralized (not owned by any central authority).
Blockchain is very complicated technology and was first created by an anonymous group of people in 2009.
Blockchain is used for many different things. Examples:
- Cryptocurrency: Bitcoin, Ethereum, etc.
- Games: CryptoKitties, Decentraland, online trading cards
- Owning and Selling Digital Art
Blockchain confirms ownership of digital art pieces, which then allows for monetization. Through blockchain technology, you can now buy and sell digital art pieces using cryptocurrencies.
What is Cryptocurrency?
Cryptocurrency is a digital currency that uses Blockchain technology to secure online transactions.
Most cryptocurrencies are decentralized. This means cryptocurrency allows a secure exchange of goods in the digital sphere without the need of a third party like big banking or sites like PayPal.
Bitcoin is popular because it is the first cryptocurrency ever created, but there are other types of cryptocurrencies as well.
Ethereum, the second largest cryptocurrency
While Bitcoin is used mostly as a way to store value, Ethereum was built to be used for more applications.
Ethereum supports “Smart contract”, an advanced and complicated transaction which enables applications like stable coins, currency swaps, and NFTs.
What is a Non-Fungible Token (NFT)?
Fungible vs. non-fungible
“Fungibility” is the ability of a good or asset to be readily interchanged for another of like kind.
Example: Currency. If I lend you a $5 bill, you can repay me with a different $5 bill, or five $1 bills.
All cryptocurrencies like BitCoin and Ethereum are fungible tokens.
“Non-fungible”: Goods that are not interchangeable
Example: Irreplaceable items like cars, houses, or paintings.
Examples of Non-fungible tokens are: trading cards, digital art, or even digital representations of real life objects.
Historically, digital art has been impossible to monetize. You can’t ship your digital painting to a customer, and you can’t hang it up in a gallery. It’s also easy to replicate a digital piece by taking a screenshot or downloading it off an online gallery like Instagram.
If the digital piece is turned into an NFT, the token can always be traded. Each trade will be viewable on the blockchain so you can trace it back to the original creator.
Whenever you create an NFT on a blockchain, the NFT will appear in your digital wallet.
You can sell the NFT for Ethereum. Once it is sold, the token is sent to the buyers wallet. Everyone can see the transaction and through blockchain technology we can confirm this transaction has occurred.
So while anyone can screenshot the or download the image or mp4, only the people who have the NFT in their wallet, truly own it.