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Voshmgir: million dollars for tweets "apparently status symbol"

“NFTs” are the new big network hype. Millions of dollars are being spent on rights to digital works that were previously freely available. But what's behind the hype, how do “non-fungible tokens” work and what can they be used for? We asked token expert Shermin Voshmgir.

We know pictures, paintings, sculptures and collect, buy and auction / auction them. What are NFTs and how are they currently changing the trade and property of and with art?

Shermin Voshmgir: NFTs is the abbreviation for "non-fungible tokens" which - among other things - can represent unique values. Examples of this are Web3 tokens, which represent the ownership of a house, a car, or a work of art. NFTs seem to have become very popular lately as many artists are making use of this new technology. NFTs can represent further authorship or copyrights (co-authorship of books or scientific texts) and manage the respective rights management. NFTs can also represent IDs, certificates, or a membership in the gym. NFTs have complex properties and are often tied to a person's identity and are therefore not transferable at all. "Fungible tokens" such as Bitcoin, Ether, dollar tokens or commodity tokens (tokens representing crude oil, KWh of energy or gold), on the other hand, represent identical and therefore interchangeable assets that can only be used as money or investments.

What's the point of owning part of a digital work of art?

You have to ask those people who are currently spending a lot of money (several million) on owning these works of art (or tweets). Often they do not own the works of art, but only buy the right to a supposed “original copy” of a digital work of art. For me personally, it is an anachronism to create artificial scarcity for a digital good that already exists on the Internet. Other people seem to find it a status symbol to spend $ 2.5 million on the right to the first tweet from Twitter founder Jack Dorsey, or $ 590,000 on the 2011 Nyan Cat Meme, which is already available for free on the Internet. I think this is the first hype phase in which everyone is doing something. Much is currently hype, the exciting fields of application will come in the future when it comes to joint ownership of real works of art, or the combination of VR and digital art (see the Museum of Crypto Art or Somnium Space VR).

What does this decentralized ownership mean for the use of memes or video clips, for example - is it even possible to simply share them online?

This is not a decentralized property. If so, then one owns (and in the case of partial ownership several). These property rights (and other possible associated rights such as concert tickets or voting rights) are managed jointly by a public infrastructure such as the Ethernet network (and not on a private server infrastructure as is the case in Web2).

Tokenization was predicted a very big future, a revolution - now it's hyping with memes and tweets. Are the big use cases perhaps not at all?

We are still at the very beginning, as I said, the exciting use cases will only come. The owner of a painting could sell shares in the work of art by means of proportional tokens in the work of art, but still retain physical control over the work of art. A museum could allow the public to buy shares in its art collection in order to raise money to buy a new piece. In this case, a museum would not relinquish control of the individual works of art, but could offer the token holders privileged access rights to the work of art in question. Other fields of application are even more complex than simply owning art, and will often take place at the interface with other technical innovations such as VR and AI.

How is tokenization developing in other areas such as real estate?

The tokenization of existing physical objects gives investors the opportunity to expand their portfolio, which can potentially also lead to more liquidity in the markets. Owners of a real estate investment could, for example, liquidate part of a real estate investment via tokenized co-ownership rights, but still control the physical asset themselves. NFTs could be programmed in such a way that they grant different token holders different rights and control options over the property (e.g. in the case of a private apartment, the contributor could issue the right that the partial investors receive a proportionate rent, but no right to sell the property itself, and also no decision In the case of a coworking space, in addition to the proportional investment and the right to rent income, voting rights for the management of the coworking space could also be assigned (if desired). Everything is processed via the NFT's smart contract (the payment of the Rent, voting rights management, etc.)

How do you answer critics who think that the big blockchain revolution will not happen because most of the current use cases can also be mapped with simpler technologies?

Time will tell. In addition, it's not about blockchain, but about the web3. Blockchain is the backbone of Web3 but not the only technology in this new token economy.

About Shermin Voshmgir

Shermin Voshmgir is the author of the book Token Economy, founder of Token Kitchen and BlockchainHub Berlin. In the past she was the director and co-founder of the Institute for Crypto-Economics at the Vienna University of Economics and Business, as well as an advisor of Jolocom, Wunder, the Estonian e-Residency program, and curator of The DAO. She studied business administration in Vienna with a focus on business informatics and attended the film school in Madrid. Born in Vienna with Iranian roots, she works at the interface between technology, art and social science.