here are two weird words that you've probably never encountered if you're not involved in
cryptocurrency fungible versus non-fungible they don't come up often in conversation but when it
comes to crypto like bitcoin and tokens like nfts they are important non-fungible tokens that's what
nft stands for are unique and cannot be directly exchanged for another unit of the exact same thing
cryptocurrencies on the other hand are fungible tokens you could trade one bitcoin for any one
other bitcoin or break a bitcoin down into smaller units called satoshi's but an understanding
of how art and certain nfts have value might indicate that crypto could in some cases become
non-fungible could certain bitcoins one day be worth more than other bitcoins to find the answer
let's look at a parallel case valuable artworks sometime in 18th century england a con man called
william sykes bought an authentic 15th century flemish painting of a bishop being enthroned in
a cathedral but no one knew who had made the painting who the bishop was or who had owned
the painting previously so sykes added a fake inscription to the back in which he indicated
that the painting had been made by john van ike a hugely famous 15th century flemish painter whose
work sold for more than any other artist in 18th century england that the painting had been owned
by british king henry v of shakespeare fame and that it depicted the most famous british saint
thomas beckett being enthroned as archbishop of canterbury all three aspects of the painting's
provenance were falsified but the perception that they were the case led the painting to be
purchased for a fortune sykes's forged inscription on the back of the painting ultimately meant
that it was bought for so much money but had blockchain been available in 18th century england
then william sykes would not have been able to pull off such a con the value of art is linked
to its non-intrinsic value most art if you break it down to its basic parts is of minimal value a
painting is just pigment canvas and wood a drawing may be just charcoal and paper but if that drawing
was made by picasso then its price soars for non-intrinsic reasons in parallel one bitcoin is
just one bitcoin right that's a question we will explore here if a pencil had been owned by picasso
it would be more valuable than the same pencil owned by a non-famous person so might one bitcoin
owned by someone famous with the ownership history called its provenance stored in the blockchain
be worth more than just one bitcoin like art the value of cryptocurrencies is non-intrinsic there
is no gold or silver standard that cryptocurrency can be exchanged for crypto is a series of numbers
stored on a blockchain you cannot break a bitcoin down into its constituent parts and resell it for
anything remotely approaching its value as a whole as one bitcoin when we're talking about
the numbers behind it unlike with art however crypto is built on blockchain technology which
guarantees authenticity because it is transparent immutable and has a documented digital history
the value of an nft like cryptocurrency or art is non-intrinsic nfts are made of computer code
nothing more but could an nft's value increase based on its providence as is the case with art
consider also the nft of the very first tweet ever sent on twitter created and sold by the founder of
twitter jack dorsey this is of no artistic value and certainly of no intrinsic value its value
instead is based on the perceived demand rarity and authenticity but also due to its ownership
and the role in cultural history it was created and owned by someone famous
and it was a historical first this is why it sold for 2.5 million considering the value of crypto
in the context of the value of art one wonders whether there might be a future in which a single
unit of cryptocurrency for instance one bitcoin may be worth more than one bitcoin on the open
market if its ownership history as recorded in the blockchain includes a past owner or transaction of
cultural or historical significance for instance if one bitcoin had been owned by satoshi nakamoto
the pseudonymous founder of bitcoin might its value increase due to this non-intrinsic reason
one could envision a collector offering more than one bitcoin for one bitcoin that can be
demonstratively proven to have been mined by the founder at some point a unit of cryptocurrency
which is essentially technically a fungible token meaning that it can be exchanged for
any other unit of the same type may become non-fungible if its history on the blockchain
indicates something remarkable enough to make that precise coin more desirable