[vmception]

With NFT's because the provenance and price history is so easily visible, platforms allow the NFT owner to borrow against them instantly so people can use NFT art and property as a store of value much easier than fine art collectors or other property holders can.

This alters a lot of assumptions and behavior about the market. Efficient up to the second price history of one NFT and a basket of other NFTs is always available. Removes the need for appraisals and the discretion of lenders. Liquidity pools and dynamic rates are just available.

Obvious rebuttal: "But what if the market dries up and everyone is overlevered and lenders can't liquidate the NFTs"

Okay. No different than any other art and property market. For anyone passing by, don't create a fictional higher standard just because you don't want to respect the existence of this market.

[eli]

Why would I need an appraisal of a painting I bought at an old fashioned auction? Doesn't everyone know its market price at that moment?

So compared to owning a physical painting, an advantage here is I can do fancy financial maneuvers with it more easily? And a disadvantage is that I don't actually get to own a painting.

What happens when there's a competing blockchain that also claims to represent digital ownership of this artwork? A physical painting is either in your possession or it isn't, but "owning" Nyan Cat is only valuable so long as people want Nyan Cat AND agree that the chain it's on is a valuable way to represent ownership.

[vmception]

The NFT market is only providing scarcity to digital collectibles. There is no NFT market for physical assets, markets might exist but "the market" is not choosing them because of the obvious shortcomings, so therefore that's not really an argument because we aren't talking about those. The remainder of this post is referring to digital-native collectibles:

> Why would I need an appraisal of a painting I bought at an old fashioned auction? Doesn't everyone know its market price at that moment?

Because of the structure of that market, the purchasers are not seeking liquidity at the time of purchase. The available lenders are not there as soon as a purchase occurred, and are lending to the universe of fine art not just yours, so the price history is not available. Between private sales, theft, duplicates, inheritances and liquidations, the appraisals are necessary to prove provenance and price history. If you had a banking relationship with the banker right there with you at the auction, you may be able to get liquidity for your purchase very quickly in the matter of a few business days. Such "privilege" is not necessary in the NFT market, making it faster and more efficient.

> So compared to owning a physical painting, an advantage here is I can do fancy financial maneuvers with it more easily?

Royalties to the original artist are accomplished more easily. There are a lot of NFTs coded to pay X% to the original artist upon transfer and other use cases. This is a world's apart better for artists and shifts the incentives of that whole market, and so the "market of artists" is immediately choosing that because its a new century with better options. They are also people more aligned to "support living artists", so the market is forming rapidly as artists get liquid. There are also a lot of other creative people that have been doing other things with their life, that are finding it economically viable to be a creative now.

They all inherit the same financial infrastructure.

> What happens when there's a competing blockchain that also claims to represent digital ownership of this artwork?

The earlier date proves earlier original existence. Consensus can also be managed by the market and the issuer as a fallback. And then of course the courts are a further fallback. The existing art world relies on issuers to not dilute their market and trust of it (if they say its a limited edition, we have to trust that well after the artist is dead). This on-chain world provides efficiencies that don't have to be a cure all, but will function as such most of the time any way.

[chrisco255]

This whole development of an art/creative ecosystem in coordination with a new financial innovation reminds me of how the development and adoption of double entry bookkeeping in Florence (and the rest of Italy) and the wealth created in that era helped fund and provide the foundation for the Renaissance. Artists such as Da Vinci worked for patrons.

[vmception]

I think this year will be very interesting to see how it adapts and evolves, given the network congestion. Higher value tickets wouldn’t really be affected though and need the immutable provenance more for now

[PragmaticPulp]

> platforms allow the NFT owner to borrow against them instantly so people can use NFT art and property as a store of value

Presumably the lenders are aware of the high risk of wash trading in these securities.

If someone takes an NFT and "buys" it from themselves with 100% of their crypto cash, they are now "worth" 2X: They have their original cash, and an NFT that was last priced at 100% of their original cash.

[vmception]

This is factored in the Loan to Value ratios.

[marcell]

Can you point me to some sites where I can use NFT's to get loans?