From gold, silver, shells, gemstones, even livestock, various objects have served as currency over the centuries, with the Mesopotamian shekel being one of the oldest acknowledged forms of currency.The rule of thumb was simple – assigning a value that can acquire tangible assets is how currency gets its strength. This is why bitcoins, which are not assigned a value by conventional banking systems is still a topic of debate. Now, adding to the challenges of virtual currency are NFTs. Non-Fungible Tokens are built on the same principles as cryptocurrency, but are fundamentally different. An NFT is defined as a unit of data stored on a digital ledger, called a blockchain, that certifies a digital asset to be unique and therefore not interchangeable.

These digital assets could comprise anything from digital works of art to musical compositions or viral videos or GIFs, or even virtual goodies found in video games, such as properties, weapons, power-ups. These assets are represented using NFTs and can be traded online using cryptocurrency. NFTs make them unique, give them a value and are increasingly being viewed as feasible investments. Auction house Christie’s was part of a record-breaking art sale where digital artist Mike Winkelmann, who goes by the title ‘Beeple’ sold a compilation of 5,000 daily drawings titled Everydays for a staggering $69.3 million. The deal was done via cryptocurrency. But why spend millions on a digital asset that can be copied, saved, downloaded virtually? After all, anyone can view these images or watch a video or enjoy a piece of music for free. So what’s the lure? ‘Bragging rights’, say collectors. There is always just one original artwork, but there can be many imitations and the value of the original is not comparable to the copies or the prints. When a buyer owns a digital asset, it can be authenticated by an NFT. But, ownership of an NFT does not inherently grant copyright to whatever digital asset the token represents.  

NFTs have been around since 2014. Estimates show over $150 million have been spent on NFTs that range from art to video clips from iconic NBA games to even popular viral videos in circulation for years. Charlie bit me, a video posted on YouTube 14 years ago and racked up over 800 mn views was sold as an NFT for £500,000. The clip of baby Charlie biting his brother Harry’s finger will fund both the boys’ college education. Another decade-old GIF that minted millions is an animated cat called ‘Nyan Cat,’ which sold for around $600,000 a few months back. Twitter co-founder Jack Dorsey also sold his first-ever tweet as an NFT for more than $2.9 million. But there’ always a catch. Most NFTs relate to digital assets that have been doing the rounds of the internet for so long that it is very difficult to establish ownership. Most creators opt for creating an original piece of art or music or electronic data and signing it with their signature in an NFT format.

NFTs could herald a new era of creative rights, with the potential to end the complicated royalty sharing rights that have been the bane of many content creators. But no rules govern these transactions yet. Global transactions of this nature usually come under the Foreign Exchange Management Act, 1999 (FEMA) in India and there are ongoing discussions around RBI guidelines regarding cryptocurrency. Content creators across genres have seen a new lease of life in the pandemic era of virtual transactions, remote working and distance education. Could NFTs provide them with the value and authenticity they seek? With the right regulations and the hope that the hype won’t outweigh its benefits, there could be real value in NFTs as a means of legitimising digital assets going forth.