NFT's and Provenance
What adds to the value of NFT's
|sam g||Mar 13|
When you pay millions of dollars for a piece of art, you want to be sure it is authentic. There are a number of chemical ways to authenticate the art, but there are also superficial ways. These include having critics familiar with the artist come and review it, or check the provenance. In art, provenance is a word that roughly means "ownership history". It can also be a way to ensure that piece of art was ethically transferred between custodians.
Above is a fake Rothko painting. The con artist that sold this painting to the Knoedler Gallery gave a vague provenance that sprinkled in just enough real details that the transaction closed. These details were hard to verify by non-experts, served by the fact that the people involved were largely long since deceased. Of course, artists typically live eccentric lives, and in some cases that eccentricity lends itself to a very interesting provenance that will add to the painting. If I can validate that a painting I own was formerly owned by Philip II of Spain, that is valuable in-and-of itself.
Enter NFT's: they are just tokens, sitting on a blockchain address. Blockchains "enforce scarcity" as @mattgcondon explains,
but they can also be used to show a network of connections. I can go on any blockchain explorer and see a list of transactions for any address. If I add attribution to those connections, I can make-shift my way into a history of provenance for any NFT1. I can also confirm without a shadow of a doubt that those transactions are accurate.
What happens when you have a near flawless2 history of ownership for an NFT? My assumption is that it will become just as valuable as to *who* owned the NFT as *what* it is. The provenance becomes a visible part of the NFT itself. Then, buying from people who you value itself becomes valuable. It becomes a literal signature from the prior owner, and we all know how valuable signatures are.
I used to work at Chainalysis, which derives a great deal of value out of adding attributions.
Technically you know who minted, or authored, that NFT. It just may not be the original artist. You could also obtain someone's private key and sign for them, or misattribute.