As evidenced by the increase in coverage across all major news outlets, the groundswell of support for NFTs in a wide variety of verticals seems to be gaining momentum very quickly. Some, like The New York Times seem hesitant at first when trying to wrap their heads around the concept of perfectly authenticated memorabilia, but the more they cover the NFT market, the more they seem to comprehend its long term potential.
Recently one times reporter rhetorically asked her readers “Why an Animated Flying Cat With a Pop-Tart Body Sold for Almost $600,000” but perhaps the better question to ask would have been, did that buyer get it at a very low price compared to what they may earn from it selling the entire NFT or shares of the recurring rights revenue from everyone who purchases it further down the blockchain?
The old adage remains true, always, an object or service is worth exactly what someone else is willing to pay for it. Discussions of whether an NFT should be worth 600K are moot because this one did sell for 600K and therefore that was exactly what it was worth at that time. Some might suggest 600K will be the all time high price for the item, and in a traditional art world that might be a bad outcome for the buyer, but because an NFT can be segmented automatically on the blockchain, the owner of this NFT doesn’t ever need to find a single buyer willing to pay more than 600K to earn a profit. How is that true? Let’s look deeper:
Let’s say you buy an NFT for $100 with the full rights to the entirety of the content. You might later sell it for $110 and earn a $10 profit, or you might sell it to someone for $105 while you retain 50% of the future resale value of that same NFT. That secondary buyer can then sell the NFT for any amount they wish, but any amount they get for it will automatically be recorded in the blockchain and the smart contract built into the code will immediately send 50% of their resale price to your wallet as per your original agreement with them!
If that $100 NFT sells for $105 to a second buyer and you retain 50% resale rights, a third buyer paying $300 for it is worth another $150 to you. A fourth buyer at $200 would earn you an additional $100 and so on down the line whether the NFT rises or decreases in each resale transaction price, because you retained 50% of the resale rights when you sold it originally,
NFTs are better than royalties because the money goes directly to you as part of each transaction. There is no possibility for anyone to “shave” your earnings or for anyone to withhold money from you and make you chase after it. Nobody can forget to pay you or pretend you won’t come looking for you money. It doesn’t matter what country the new buyer or seller reside it, as part of the transaction your payout is recorded in the blockchain and the code itself segments your payout so that it goes directly to your own wallet!
The ramifications of this are extraordinary for things like affiliate marketing, syndicate collaboration amount a group of buyers, and so many other means of sharing costs whole accelerating values. When The New York Times finally figures this all out they will stop asking of anyone can resell that NFT for more than 600K and start asking the more meaningful questions like what is the lifetime value of that NFT, is the new owner better off selling it in its entirety or retaining a fractional amount of the resale rights, or would the owner be better off leveraging the value of their NFT by trading it to another collector for an assortment of other NFTs.
The story here isn’t the cat with a pop-tart body. The story here is that there is finally a way to seamlessly assign values and sort payouts among an ecosystem of collectors in the most frictionless and simple to authenticate manner ever conceived of at any point in human history…. and for the record, yeah that cat with a pop-tart body is way freaking cute!