The Simple Question of Ownership
A dear friend of mine kept asking the questions: “What do I get when I buy a Non Fungible Token? How do I know that I bought it? How do I prove that I am the owner?”
He is a skeptic.
And he is very right to ask these questions because unless there are clear and somewhat easily comprehensible answers to these questions, why should anyone spend their hard earned cash on digital art or collectibles.
The good news is that there is a very concise answer to the question. The bad news is that it is basic but technical and involves exploring Ethereum blockchain transactions. This article will get down to going over couple of examples to prove the point.
So if you are interested in the idea of digital art and its ownership on the blockchain, keep reading on. To make it a bit juicy, I’ll give you some closed transactions where the art pieces were not only created but sold as well.
Minor Detail of ERC 20 and ERC 721
Most people know about ERC 20 standard of the Ethereum blockchain which produces a variety of tokens on the network. For our purposes, it is important to know that these tokens are fungible. Just like money, 1 ETH equals 1 ETH and 1 USD equals 1 USD.
However, if you’d like to tokenize your art videos, this is not the ideal solution even though there are workarounds. First of all, tokenizing your art videos does not mean that you put the item on the Ethereum blockchain. Neither the blockchain is that big and nor is the cost would be reasonable.
Instead, the Ethereum blockchain stores the contract that creates the token. It is the contact that stipulates the rules of the token to come. These rules can include among others ownership, transfer, editioning, art description and royalty among others.
The actual art is usually stored somewhere else and generally on the Interplanetary File System (IPSF network). The transaction itself is an identifier and contains characteristics (attributes, attestation that the rules mentioned above create).
Under ERC 721, every token has a different id. This makes up the non-fungible aspect of the general ERC 721 specification. Thus each video, art, collectible or else which is linked to a token can be minted stand alone and with a different id. This different id provisioning de facto makes ERC 721 a more relevant standard for the art and collectibles market.
(If you are wondering how multiple editions are handled most recently, I refer to Rarible (app.rarible.com) as they use ERC 1155 which is a bridge between fungible ERC 20 and non-fungible ERC 721 by providing editioning i.e. multiple copies of the same item among other improvements.)
Let’s get to some real life examples!
ERC 20 / Example-1: From Fractions to Riches
Let’s wind back the clock to the spring of 2018. Crypto bubble has burst, everyone is confused and SuperRare (www.superrare.co) has started operations.
The first listing as depicted below is AI Generated Nude Portrait #1 by Robbie Barrat.
The date is exactly April 5 2018.
And the transaction can be found here: https://etherscan.io/tx/0x14958e3c5607ef5e97604f79664b2f7c49edbc3753692f52bc926702ccde6c4e
Note that the Tokens Transferred section mentions the first creation address that transfers the item to the artist’s wallet. There is a mention of “For 1 SuperRare” in that line. As this is an ERC 20 token, this is the ingenious workaround to create a token ID. As such for every next item created with the SuperRare contract (as well as with other contracts), Token Transferred will indicate a figure that de facto is the token ID (which will come with ERC 721).
Note the Interacted With (To) field — that is the underlying contract that does the minting. By its specifications, the above art piece’s ownership is minted as the Token 1 on SuperRare.
Other items are visible under the Transaction Details are the ETH involved in the transaction, fees, block identifier and such.
Now if we switch to Event Logs section on Etherscan, we see the owner as in 12 — Topics 2 address. The contract is the first Address mentioned. The only custom metadata at the time was tokenID and in this case that is 1.
Well this is where we switch to the story mode..
Just 30 minutes later, @artnome steps in and buys the digital art for 0.46 ETH (USD 176 at the time). Here’s the transaction: https://etherscan.io/tx/0x33617dab26e80ab035e3fa18f941ebfdd9b489a464888f3fa62fa406633ac7e0#eventlog
If you examine the Event Logs, then you will the ownership has changed with the initial address transferring to the purchaser.
Now time passes..
Really around 20 months pass with multiple offers that are rejected by the collector.
Then on the historic day of January 18 2020, @curiousnfts buys the item for 75 ETH (13,265 USD)!!!. Here’s transaction: https://etherscan.io/tx/0x45f62fe5031446e97f13e3884011ca2361c016303ed4451f50180d4e721406f8
Watch here for a very specific benefit of smart contracts. Notice the split of 75 ETH. 10% goes to the creator address, 3% goes to SuperRare and 87% goes to the selling collector. This is fully automated due to the specifics of the contract. Thus parties are ensured the enforcement of the agreement by the power of the underlying code. Simply, the transaction will only take place with these parameters. (Except if the owner gifts the item which is essentially to transfer for no monetary return.)
So please be aware that you have witnessed history in the making with this transaction. Bookmark it, keep it, talk about it.. Please..
Off to the next example..
ERC 20 / Example-2: MakersPlace has a better design..
MakersPlace (makersplace.com) is one of my favorite curated digital art sites. Its artist base is extensive and boasts around 30,000+ (editions included) items. Both the types of art, styles and prices are so numerous, it caters to different needs with one stop.
As for our example, MakersPlace sadly is still dealing with ERC 20 tokens. However, they have improved upon the basic design of the early stage SuperRare structure.
Below is a great piece by BitError — Water over Manhattan on MakersPlace and sold out recently.
This is the https://etherscan.io/tx/0x4789e8ec5c5b417ab64f2e6715fce808d8302e7f6c4420d45bc6ac41eedb3b01 transaction that marks the minting of this item. You can follow the link when you want to. For the purposes of this article, note that MakersPlace with its MakersToken has marked 31172 in the Tokens Transferred section. Recall that this is the de facto id just as in example 1.
The improvement comes with the Logs and with the additional hashed information this contract provides: https://etherscan.io/tx/0x4789e8ec5c5b417ab64f2e6715fce808d8302e7f6c4420d45bc6ac41eedb3b01#eventlog
In the section 272, the creator contract is specified followed by the owner (creator). Total number of editions are mentioned as well. Something new is the metadataPath which points out to the IPFS hash. What this means is that the item is stored on the IPSF network and this is the address to get to the storage and view the file. In the following sections token ID and IPSF media ID are also specified.
This improved ERC 20 contract is close to how it should be but let’s now move on to an ERC 721 example to compare.
ERC 721 / Example-3: Coffee in the morning, art at night.
Let’s switch to KnownOrigin (knownorigin.io) website that sells rare art and look at an ERC 721 example.
The painting below is Coffee in the Morning by Voke and it sold out.
This is the creation transaction: https://etherscan.io/tx/0x59228a1ba781809e5e192400fd616fc23ab755e0507765d5c1657f5909623443.
It is the same layout as with ERC 20 examples.
Its structure is customized for Known Origin’s contract but essentially similar to others as well.
This is the transaction where the artist sells the painting: https://etherscan.io/tx/0x59228a1ba781809e5e192400fd616fc23ab755e0507765d5c1657f5909623443#eventlog.
Here again everything is the same as per ERC 20 contracts except for one important detail. Notice that Token Transferred section mentions “For ERC-721 Token ID 173751”. This means that the 0.1 ETH transaction is one which the sender receives the token ID-ed as 173751 which is the art piece Coffee in the Morning.
Recall that the ERC 20 contracts used the amount of tokens transferred as a proxy to mimic the ID such that they would transfer 173751 tokens (worth nothing) in this example. Though both structures would have the Log data referring to the token ID explicitly.
ERC 721 / Example-4: InfiNFT at its best!
For a remarkable ERC 721 example, let’s look at the infiNFT’s (infinft.com/#mint) artist contract that I use myself as well.
This is Infinitum Novum Ekaitza. It was sold for 5 ETH on May.
This token was minted via a custom ERC 721 contract with the following log file: https://etherscan.io/tx/0xaedeaf527c9cc425b9d5fc55c583af08398aae13d25205e75a86bfd5122e3a94#eventlog
Note that infiNFT’s contract has important improvements over the other contracts we have reviewed. It allows for additional metadata regarding item description, art title and artist name in section 91 above.
Furthermore in Section 92, the digital art is being written to both IPSF and also to Arweave blockchain. Both hashes and the token ID can be found here.
Finally in Section 93, token ID is repeated and royalty figure is specified followed by the artist address.
InfiNFT’s contract has some improvement needs such as multiple images and custom metadata that the team will be addressing soon. However it is by far one of the most sophisticated ERC 721 contracts in the market. The downside? It costs a bit more to mint as the data supplied is greater than the other contracts.
So did you find your artwork out there?
Actually we did.
We not only have shown the provenance and scarcity contained in the hash, we also traced ownership and sales prices. We witnessed contract governed fee splits and IPSF & Arweave backed-up art pieces.
For the everlasting skeptic, this is not a system to prevent unlawful copying. No system prevents it. This is a system for proving who the rightful owner is and what that person owns. Moreover, the information is written in an immutable blockchain. What else?
(This article is the English version of the article that will be published in Turkish language on the BTCHaber.com website.)
- Top DeFi Projects
- The Best Crypto Trading Bots
- The Best Bitcoin Hardware wallet
- The Best Crypto Tax Software
- Best Crypto Trading Platforms
- Best Wallet for Uniswap
- Best Crypto Lending Platforms
- Bitsgap review — A Crypto Trading Bot That Makes Easy Money
- Quadency Review- A Crypto Trading Bot Made For Professionals
- 3commas Review | An Excellent Crypto Trading Bot
- 3Commas vs Cryptohopper
- The Idiots Guide to Margin Trading on Bitmex
- The Definitive Guide to Crypto Swing Trading
- Bitmex Advanced Margin Trading Guide
- Best Crypto APIs for Developers
- Crypto arbitrage guide: How to make money as a beginner
- Top Bitcoin Node Providers
- Best Crypto Charting Tool
Where the Heck is MY Digital Art? a.k.a. Reading the Blockchain for Proof of Ownership was originally published in Coinmonks on Medium, where people are continuing the conversation by highlighting and responding to this story.