virtual worlds are changing our sense of place and now
we're looking at how virtual art is changing our sense
of value. Meet the N.F.T. Or non fungible token. A
digital certificate of ownershi for a piece of art,
music or other online content. The market for the
technology as of last year has skyrocketed to $41
billion. People are paying money and in some cases
millions of dollars for a certificate of ownership that
only exists as a computer code. Jason Bellini ex
why to understand N.F.T.S. Let's start with Blockchain.
That's the technology that N.F.T.S rely on. A
Blockchain is a digital ledger that tracks everyone who
has ever owned a digital asset for a traditional piece
of art. A museum or auction house generally
authenticates the piece and who owns it. But N.F.T.S.
Don't rely on a central authority like that. Th
certificates of ownership that are instead
authenticated on the Blockchain The blocks are stored
as a permanent record of ownership across millions of
computers. N.F.T. Stands for non fungible token token
is what digital assets on a Blockchain are called non
fungible just means each one is unique. Almost any
digital item can be made into an N.F.T. Last year
twitter founder Jack Dorsey sold his very first tweet
as an N.F.T. For a whopping $2.9 million. Musici
including grimes and the Rolling Stones have issued N.F.
Earning millions in this new revenue stream. But most N.F.T.
Are digital artworks. An early sale was by an artist
named people. He sold digital N.F.T.S. And some
physical tokens and made $3.5 million at an auction.
Even extremely common images have sold as N.F.T.S. The
beloved neon cats has been copied millions of times and
text messages, tweets and instagram messages. But last
year someone bought an N.F.T. Of the iconic animation
for $580,000. Now you might be wondering why do
artworks of N.F.T.S. Go for millions when anyone can go
online and screenshot or download a copy of the
original piece. It's a good question but people wonder
about the appropriate value of physical art too. In
2017 a Japanese billionaire bought an untitled painting
by jean Michel basquiat for 100 and $10.5 million. But
anyone could download a digital copy of the painting
for free, right, buying an N.F.T. Means you're the
confirmed owner of a digital item and in an
increasingly digital world, som people are willing to
pay millions to have that privilege even if others
think it's ephemeral. So digital artists who might have
previously struggled to sell their work online now have
a whole new way to make money when they create an N.F.T
Some N.F.T.S. Even give artists a small share of the
subsequent sales so if the item gains value in the
future, the original artists can make more money.
Meanwhile N.F.T.S offer fans creative new ways to buy
art. They like some N.F.T.S allow shared ownership
Digital artist pack sold individual shares of a digital
artwork called merge to nearly 29,000 collectors. Each
buyer received one or more share of the piece pack
earned a total of $92 million on the sale, which
explains why so many artists are now flocking to get in
on this new unpredictable market for Newsy I'm Jason
bellini, our next guest wrote the guide on N.F.T. Law
for creators and collectors. She's also a penn state
Dickinson law professor Welcome to the show, Tanya
Evans, we're glad you're here with us. Thank you so
much. I'm really excited you're talking about my
favorite topic, so I'm happy to be here. Okay, so our
show is about understanding and the why behind the
headlines. N.F.T.S are in the headlines that recently
started gaining momentum in more mainstream ways and I
want to bring up this example to you because just las
week I logged onto twitter and before I could see my
own feed this notice popped up asking me if I wanted to
choose an N.F.T. Option for my profile picture and I
just kind of went, wait what and I can only imagine how
many people got that same type of notification.
Thinking what is an N.F.T. So you're the expert how I
understand this is kind of like Picasso had his
signature that we used to authenticate that his art is
an original. So we can now have our own work
authenticated with an N.F.T. To copyright our own stuff.
Do I have that right Like break that down for us. You
have a lot of good stuff in there. But let's let's
let's make it all make sense. Um I like your example of
physical art because I think it's a really important
way to understand how this digital art revolution is
really starting to materialize. The non fungible token
is what N.F.T. Stands for in order to really understand
at a very Um plane level. What that means is to
understand fungible itty if you have $1 it doesn't
matter which dollar actually have even though they all
have serial numbers because they all have the same
value. Your example with a Picasso. The Picasso is
unique. And even if you have 1000 prints of it, that
original is the original. It's unique. It's one it's
the only it's the same thing like a house or land. Um
And so that makes it really really important to
understand the value of N.F.T.S. Is being unique and
therefore not interchangeable. Non fungible taking that
to the next level is also understanding that the tok
is representing uh some connection either ownership or
some rights over something else that is attached to and
referenced by the token. So the token in and of itself
isn't the art but it is referencing and um showing t
you are connected that you are the owner or you have
certain rights to it. What does that mean That's a
rough analogy is the deed to a house. The deed is not
the house but it's my ability to to evidence my
ownership and our connection to it. Or maybe if I had
at least some rights attached to it. And so we can
start to unpack what all that means. That is a final
point separate. And apart from this idea of copyright
which protects the actual artwork Not the token itself
but the artwork in the same way that we have physical
art or any literary or artistic work that is original
and capable of being copied. And so hopefully that
starts to unpack the difference between the token, t
art that it's connected to and referenced with and also
the separate rights attached to a creative work that
aren't necessarily transferred someone buys a non
fungible token. So why do we nN.F.T.S. It's the
difference between this is the perfect question because
so many people are like it's a jpeg. Right So why do I
need an N.F.T. If I can just go online and download a
Jpeg And the point is well made. I liken it back to the
real estate example. You can either take a picture of
my house or you can own my house and the choice is
yours. You can drive by. I prefer that you're not. But
you can drive by, you can take a picture of it, you can
take your picture and put it on a mug and t shirts and
all of those things. Or you can have the value of the
thing that is being referenced by the token in the same
way that again the deed would be connected to a home.
And also with Blockchain technology which ess
is just a record, a record that cannot be destroyed
replicated. Well that cannot be destroyed. Uh that
shows who the owner is at any given time when somethin
was created. Who the subsequent transfer or is and all
the way down the line in the same way that the record
of deeds is recorded. But in and what we call immutable
fashion. So it can't be undone. So that's really
powerful evidence of who owns what at any given time.
And also final point the value that is subscribed to
something that is rare. Something that's rare and in
demand. The value necessarily goes up. And so that's
some part of the difference between vulnerabilit
non fungible it as well. So let me get to blocked in
here in a second. But let me ask you for the average
person like you and me when when and how does this come
into play in our everyday lives. It's interestin
because so many brands are starting to get into the N.F.T.
Game. They have this rich um you know, treasure trove
of copyrighted information. We it in the in the
context of the um NBA top shot, I've seen all sorts of
brands starting to get into the game in order to um
really create whole new value stream for things that
are really sitting on the proverbial digital shelf th
maybe people don't have access to our interest in, but
now they can reframe it and resell it as uh either a
one for one or a limited edition. Another thin
another way that we as average people can engage with
With brands in particular is the fan engagement that is
coming from, for example, a company like a ticketmaster
that wants to cut down on scalping. They have an
immutable record a one for one for a ticket. And when
you hold the N.F.T. To a ticket, it gives you entrance
into a venue. For example, it may also give you a
unique fan experience behind th scenes if you have the
first One of 100 for uh for example. And so it really
opens up this idea of collectibles and value fan
engagement and added experience over the lifetime of
that token. Okay, you mentioned Blockchain earlie
let's talk about that a little bit. It is very
complicated for a lot of people to grasp what
Blockchain is and then how it's used with N.F.T.S.
Black chains are literal digital, what we call ledgers
or records of transactions and balances. That's all it
is and it's a way that instead of having centrali
information, let me use the example of a bank just to
go to regular cryptocurrencies, not N.F.T.S. If I and
to take a step back to dollars and cents, I have um a
check, remember those I'm not sure everybody does. But
this thing we're a little physical thing right down the
money and send it to someone evidently um If I had $100
in the bank And I sent you a check for $100 and someon
else to check for $100, the first person to actually
cash it Cashes, it wins right. Um you can't do that
with Blockchain because it's a one for one record that
can't be changed. It cuts down on what we call the
double spend problem a problem where you have $100 but
you send Two checks for $100 out. So block chains are
really just digital records, digital ledgers, my bank
has a digital ledger that it says this is what Tonya
has in terms of her transactions and balances t
your bank has the same thing. Now. Instead of a bank
running it and have a centralized record of informa
it's a record that is maintained digitally via sof
by a network of computers. Um That makes people nervous
because they're like what happens if a computer goes
down, If a computer goes down the information still
persists and that's part of the power and the promise
of Blockchain technology that maintains records of
transactions and balances. And it is verified across
the network of computers. So in the case of a natural
disaster or a rogue actor at the government level for
example they can't overtake the network in the system.
And that is very very empowering. And it's a differen
way from the Web. that we're used to. I'm curious
whether you think this is just the absolute game
changer. A young artist can create an N.F.T. To offer
their digital work at a price they choose, right. What
impact does this have at large Such a game changer. In
the same way that cryptocurrencies have upended t
financial system to really leverage peer to peer
technology so that you and I can exchange value without
what we call an intermediary the bank or someone else
that gives us permission to um exchange value. And also
charges a premium for the privilege of trusting them
because we may not trust each other now. Instead we
just trust the code that can be verified that happened
in the financial realm and the same impact is happening
on the artistic side. Where now think of so many quote
unquote starving artists that who don't have access to
um the financial side of art because of this
distinction between fine art and commercial art and um
the ability now for an artist to go directly to this
whole new world, not just where they live but anyone
around the world who sees value in their art can
actually pay them directly. That is a game changer.
Okay Tanya Evans, your insight is so valuable on this
topic. Thank you so much for helping us understand and
break down what I think a lot of people are still
trying to wrap their minds around. Thank you for coming
on the show tonight. Thank you up next on the Y. We'll