Why Are NFTs Valuable?
January 24th, 2022

When you buy a house/car/etc you sign a piece of paper and this guarantees you ownership over that property.

If it is something of high value, like a real state, the property is ensured using a contract and registered on a Registry.

If it is a simpler good, only a signed receipt or invoice already gives you the property right.

And this is not just bureaucracy. It is one of the most important social technologies ever created. Ensuring property rights over citizens’ assets is one of the most powerful weapons against poverty and injustice.

When a family can buy a piece of land and build a little house, they are actually accumulating patrimony, even if small, that will be inherited by the next generations, slowly breaking the poverty cycle.

GDP per capita, 1000 to 2018
GDP per capita, 1000 to 2018

Furthermore, it is a weapon against tyranny and human rights violations, because property rights (although it fails badly outside liberal democracies) help minorities defend themselves from oppression.

And, In the physical world, the solution to that lies in Governments and Law. They are the ones who ensure the property rights (poorly, but they did).

However, before Bitcoin, there wasn’t any technology to keep a record of digital data ownership. There wasn't a place to register that you owned a specific digital file. 

Once you created a text, vídeo, picture, and published it, there was no reliable way of proving that that data was yours.

But now, with Web 3, you can.

Web3 is a new class of applications that are built on top of a digital public “Property Registry” but rather than only register physical properties, also register native digital data.

For instance, everyone in the world can see the public records in the Ethereum Blockchain, and check who (pseudonymously) has ownership over some random digital asset.

Bored Ap Yacht Club #4471
Bored Ap Yacht Club #4471

But, why digital ownership is important after all?

Well, for the same reason property rights are important.

It’s a Human Right (at least in most liberal democracies).

There is no utility needed here.

If you buy a cardboard clock, it is Yours. The signed document proves that. Doesn’t matter if the clock has utility or not.

So, why would be different in the digital realm?

If you create a text, you have the right to register it as yours. If it values something on the market, is a completely different conversation.

Blockchains - global, public, and digital “Property Registry” - have exactly this function. You digitally sign a piece of data and a record, on a specific timestamp, is created assigning the ownership of the asset to you.

If someone else copies your digital data (right-click-save) and also puts it on-chain, you can easily prove that the asset actually is yours, because you registered it at an earlier time.

Timestamp of transaction of registration
Timestamp of transaction of registration

Ok, but this does not justify the value of these digital assets, right?

So, why tf someone in his right mind, will ever buy an Ape JPEG or Book or Video that can be seen, read, or watched for free?

Because, in most cases, the value is not due to the CONTENT.

The value is due to its possible UTILITY, which was not possible before.

Think of someone in the past who released a new video on youtube and also published it as an NFT (which means the person has signed and put it on Blockchain, thus the person is the owner). Days after, the video was sold for $100 to someone else (who became the new owner of the video NFT).

Turns out that this video was the first one ever published online by Beyonce when she was unknown and had just a few local fans.

Now, with fame and millions of fans, she announces an intimate show JUST FOR THE OWNERS OF HER 200 FIRST NFT VIDEOS. Only those who prove ownership of one of the videos will enter the house, watch her show, and take a picture with her.

How much do you think these NFTs are worth? How much would you pay for them? Maybe you not so much - if you are not a Beyonce fan - but others would be willing to pay probably millions.

Millions for a video that everyone has for free?

Gosh, no!

Millions for the proof of ownership of that digital data that now has a valuable utility.

Rare and legendary arts can fit in the content value category, even without any Utility, but will not happen in 99% of cases.

While token-gated events are a great example, NFTs (and other token assets) obviously are not limited to this case.

Think about courses certifications (non-transferable nft), digital platform access (admin nft), digital art and automated shared royalties (creator automatically earns 1% of every future deal), domain names (pedoispe.eth), and million other ideas we can’t even fathom right now.

That is the digital ownership economy.

That is the revolution on the creator economy.

That is NFT.

That is Web3.


Save this article and send it to everyone who says NFT is just a JPEG.

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