Friday, December 10, 2021

Thoughts on Non-fungible Tokens

 I am not a fan of NFTs – at least not yet.

When we buy physical things, we typically have complete control over the item such as a book, cup, or car. It becomes less clear when we buy things like stock or real estate.

After an IPO, when you buy a publicly traded stock, the money you pay (invest) never actually goes to the company. Rather, the money simply goes to the person you bought the stock from. But you do get a say as a shareholder since you are a partial owner of the company.

Another way to think about NFTs is similar to a property deed. You can purchase property (land), outright, without a mortgage. But you can't move it just like Jack's first tweet can't be moved. And, even though you physically own the land you bought, you don't really own it. Stop paying your taxes and then see who owns the land.

Perhaps the best way to think of NFTs is as proof of intellectual property ownership.

So, while I'm not yet a big believer in the future of NFTs, I understand that they could become a deed for digital property... if they're widely adopted. Perhaps the future of NFTs, as digital property, will require a tax to be paid to keep the servers running – just like I pay property taxes to keep the streetlights lit and the roads maintained.

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