The blockchain allows us to track the history and origin of all assets created on it. Because of this, NFTs are a common way for artists to mint works that, among many other features, can be easily authenticated.
The authenticity of an object is something of great controversy in the art and collectibles world. Physical objects have foggy chains of ownership, and “experts” can spin up stories to make something real; as much as 20% of art in public museums may be fake. The blockchain solves the problem of provenance by recording every transaction, forever. If an artist mints an artwork, it is trivial to record and then verify the token at a future date.
Why do people care about authenticity? People are enthralled by stories. If they can be convinced that an object (physical or digital) has really experienced the events it is claimed to have experienced, it is imbued with this magical property, first through the individual and then through the social network of people who have their imaginations captured the same way. This is why people desire the real thing instead of an identical faux replica; this is how, through NFTs, a digital image can have value.
This on-chain use of provenance is mostly utilised by artists making art and brands making collectibles. The concept can of course be expanded further. It makes the most sense that digitally native objects and stories should be recorded this way. The most obvious example of this would be memes. While memes have many tokens named after them, the vast majority have no link to their origins; #Dogecoin was created by fans of the image of Kabosu, with no actual link to her; the recent $PEPE has no link to Matt Furie, despite him already creating NFTs.
Provenance Coins combine the markets of art and memecoins into one asset. They disrupt the current memecoin paradigm by creating indisputably legitimate tokens, underpinning it with a substance that existing tokens like Dogecoin are devoid of. For example, $DOG is backed by the original photo taken by
@kabosumama. This photo is globally recognized and, for more than ten years, has been used endlessly as a format for conveying ideas. This image can be owned collectively through fractionalization.
Fractionalization works using a smart contract that splits the original NFT into tokens, which can be redeemed proportionally for the sale price of the #NFT if it is won by auction through the same smart contract. The token holders can vote on the reserve price of the auction.
The success of the fractionalized tokens in turn pushes up the value of these 1 of 1 NFTs, benefitting their creators. This transformation of the memecoin market also appeals to more sceptical and outside investors, especially when the subject is something they may recognize, by giving them a trusted vehicle. Greater respect for truth encourages reciprocation of the same – it will draw in those who care about history, and make them comfortable through verification.
A combination of treasury and LP mismanagement in the bear market meant that DOG saw a significant price slide, wth holders losing confidence in the concept. Many similar assets saw the same mispricing. I took this as an opportunity. DOG is currently valued at $40m FDV. Gigachad sold for just $50k. Compare this to other famous images and works of art; the value discrepancy is huge. The Mona Lisa is hard to value, but would be upwards of $20b. This discrepancy is also true when compared to other popular memecoins. It is not difficult to imagine that the authentic examples of these ideas should be worth far, far more than they are now.
Traders and collectors alike like to signal status through veblen goods. This is an idea shared by many large traders. NFTs are an obvious digital example of this, but Provenance Coins have the potential to capture some of this demand through clever use of Dapps. Prints allow the tokens to be converted to a format that can be displayed, just the same as any other NFT, while still carrying the authenticity of the original token as it can be traced back through the contract. This can make a single image much like a pfp collection; it can be worn by many owners, without the same divisibility and liquidity problems faced by 10k collections.
Illegitimate namesakes can be mass produced. We see countless tokens spun up, with many bought instantly by insiders and promoted through pseudonymous networks. Authenticity creates a more reliable scarcity. If there is a verifiable creator or piece of art you enjoy, you should rally behind it. This sincerity gives rise to a long term care for culture and does away with tiring, stressful musical chairs that give the industry the image it has today.