Li Qiwei: What is the true value of NFTs?

This article was published on Chain News, author: Li Qiwei, founder of Litecoin, translated by Lu Jiangfei.

Collectibles are always "unreliable" because many artworks can be easily, cheaply, and perfectly replicated.

Imagine if we had a technology that could perfectly replicate artworks down to the last detail, so that even the most skilled experts could not distinguish the replica from the original artwork. Then we could replicate the "Mona Lisa," and everyone could hang a perfect replica of the "Mona Lisa" on their wall—what would happen? The value of the "Mona Lisa" hanging in the Louvre would certainly plummet because no one could prove it is the original.

But this problem can be solved by NFTs, which are digital certificates of collectibles and proof of authenticity. For the "Mona Lisa," this NFT could be signed by Da Vinci himself, thereby proving its original value. Unlike artworks, NFT digital certificates cannot be copied or forged, which raises a new question: how much is this NFT (or the authenticity certificate of this artwork) actually worth?

NFTs certainly have their own value, but does that mean the entire value of the "Mona Lisa" artwork has transferred to the NFT? I don't think so. If everyone can perfectly replicate the "Mona Lisa" on their wall, it means that most people actually don't care about having a so-called "certificate of authenticity."

For collectors, part of the value of owning collectibles can only be described as a form of prestige—"I own and can display my collection," and "I am unique; no one else can do this." NFTs have diminished this value to—"I own the certificate of authenticity for this artwork, and it is unique; no one else can do this."

Once the ownership of collectibles is transferred from the actual collectible to the authenticity certificate, most of the value of owning that collectible will be lost. For example, NBA Top Shot NFTs are a typical case; NBA Top Shot is a digital certificate showcasing video clips of NBA stars, which anyone can download. Indeed, with NBA Top Shot, you can point to an exclusive nbatopshot.com link and proudly tell others, "I own that moment of this star player's highlight." However, this value may quickly disappear because the value of the NFT actually comes from the NBA brand, not the token itself.

Without the NBA's support for Top Shot, the NFT itself would become worthless. For example, if the nbatopshot.com website went down, it could significantly impact the value of Top Shot NFTs because the connection between the digital certificate and the "artwork" (i.e., the highlight moments of NBA stars) would be disrupted/broken.

Traditional trading cards are completely different from NBA Top Shot; even if the trading card manufacturers and the NBA league went bankrupt, the physical cards would still retain their value. For instance, if the trading card company Fleer went out of business, the value of their 1986 Fleer Michael Jordan rookie card would not be affected at all, and it could still sell for over $500,000 today.

Finally, I would like to conclude with an image I saw on the Reddit forum.

This image is interesting because it reflects the reality that anyone in the world can spend $1 to download a song and enjoy beautiful music, but what value does an NFT of a song have?