Proof of Provenance: Why NFTs Can Be Valuable

Nyan Cat was recently sold as an NFT by its creator Chris Torres for nearly $600,000. Credit: Chris Torres.

Imagine if the Resolute Desk in the Oval Office was an NFT. The desk was commissioned by Queen Victoria in 1880 as a gift to then U.S president Rutherford B. Hayes. Since then, it has been used by every subsequent U.S. president in the White House. As an NFT, it would have the names of its original owner, Queen Victoria and every U.S. president’s name for the last 140 years etched in the desk permanently; unquestionably verifying its increasingly remarkable provenance.

This is why some NFTs can become valuable: it’s built-in, blockchain-based proof of provenance.

I’ve read several articles about what NFTs are and how they work, but none of the literature has yet succinctly addressed why NFTs are able to command such high prices for what appears to be non-unique digital assets.

People are quick to point out that NFTs represent a new era of ‘art for the masses’ — or — an upending of the art industry that has traditionally been operated by the ultra-rich.

But we’re still puzzled as to why someone would want to pay thousands of dollars on a digital asset that can be downloaded, copied, and owned by anyone for free. This is in contrast to a traditional piece of art such as Veronese’s `The Wedding at Cana,’ a painting that is inherently unique and priceless.