NFTs – Another Catalyst In The Evolution Of Equal Finance

By Danny Toe, ADDX Founder and CEO

We live in an age defined by the way we view all things digital.

A news story is reliable only if you can share its link – whereas two decades ago, people wanted to see it in print. Online money transfers are now more common than physical cheques. And the first step to assessing a company these days involves observing how well-built their website is and their social media footprint, not just how well-furnished their physical office is.

In a strange way, we have come to think of the online world as more real than the offline one.

NFTs, or Non-Fungible Tokens, are a natural extension of this phenomenon.

VERIFIED AND TAMPER-PROOF

These unique, non-interchangeable digital tokens represent a form of artwork – such as a photo, a video, or a song - or any other form of digitised intellectual property. The blockchain network storing the NFT ensures its ownership is verified and tamper-proof.

Because the digital identifier embedded in an NFT cannot be duplicated, the owner’s rights to the artwork are safeguarded, which in turn captures value for the artist or creator of that work and establishes the basis for a marketplace where people who admire the work can buy and sell it with confidence.

Anyone online may be able to watch a video you own the NFT to. The NBA marketplace Top Shot, for instance, allows fans to own NFTs to NBA video highlights. The NFT for a LeBron James dunk video recently sold for more than US$200,000, even though same video was uploaded on YouTube by NBA. What, then, was the point of that NFT?

Just as a copy of a Monet – no matter how good a copy – has little value because people recognise it is not the same thing as a real painting by the French impressionistic artist, the existence of online copies of the artwork you own does not change the fact that you are the only verifiable owner of the original. NFTs protect that. You can think of the LeBron James YouTube video as a Monet poster by the museum that owns the actual Monet.

In recent months, NFTs have featured heavily in the news. A Christie’s auction facilitated the US$69-million sale of a collage by digital artist Beeple, titled “Everydays: The First 5000 Days”. Twitter CEO Jack Dorsey sold the NFT to his first ever tweet for US$2.9 million. And in April, two employees of Coinbase exchanged NFT rings instead of physical ones at their wedding ceremony – a sign that NFTs can be important not just economically but socially too.

The NFT market grew by nearly 300% last year and is expected to rise further, according to the NFT Report 2020 by NonFungible.com.

UNDOING THE INEQUALITIES OF THE ART WORLD

Despite the headlines about multi-million dollar NFT sales, NFTs don’t just benefit famous, well-to-do artists. They hold enormous potential for the democratisation of the world of creative work, which currently suffers from structural inequalities.

Many artists and creative professionals struggle to find a viable market for work that they spend a significant amount of time, skill, intellect and emotions producing. Some get day jobs that may or may not be tangentially related to their artistic interests, and choose to work on their art at night and on weekends. Others may have built a community over time, which can help partially resolve the problem of monetisation.

In the pre-digital world, the community that supported an artist needed to be geographically concentrated. Think of a theater group staging plays or painters selling their pieces through a local art gallery.

The onset of the digital world has been both a boon and a bane for creative professionals. On the one hand, going online means artists can develop a much larger global community that appreciates their work. On the other hand, if the work is freely transferred as a digital file, with no notion of ownership rights, then the path to monetisation continues to be fraught with difficulty – potentially making artists even worse off than they were in the pre-digital world.

NFTs may well be the answer to this conundrum, since it resolves the issue of digital ownership over an artwork. What NFTs offer an artist’s followers are a reason and a possible avenue or channel for them to provide monetary support. They now have a chance to verifiably own something that came from the hands of the artist that nobody else in the world owns.

Thinking further, NFTs could be used beyond the creative industries. Unique data, intellectual property and even the Metaverse could have their own digital rights encoded.

BLOCKCHAIN POWERS ACCESS FOR ALL

The rise of NFTs illustrates the ingenuity of humankind in somehow always finding a way to bring an unequal or unfair system back on an even keel. The NFT story is also another example of how the power of blockchain technology is enabling mass participation in the benefits of growth and development.

At ADDX, we built our private market exchange on the blockchain in order to give more investors direct access to previously out-of-reach opportunities – in funds, bonds and equity. The exchange serves accredited investors today but will eventually be open to retail investors.

In addition, we were determined from the inception of ADDX to be fully regulated, because regulation builds trust and helps non-expert investors to invest with greater assurance.

The same reasoning applies to NFTs: the creative world deserves a regulated NFT platform that helps them avoid bad actors.

As the ADDX team begins thinking about an NFT solution that will serve artists well, we are single-mindedly motivated by the mission that drives all our projects: We want to use technology to open up fair and equal access for all.

ADDX is your entry to private market investing. It is a proprietary platform that lets you invest from USD 10,000 in unicorns, pre-IPO companies, hedge funds, and other opportunities that traditionally require millions or more to enter. ADDX is regulated by the Monetary Authority of Singapore (MAS) and is open to all non-US accredited and institutional investors.