Following the meteoric rise in popularity of non-fungible tokens (NFTs) among collectors, a new trend has emerged: fractionalised NFTs (non-fungible tokens), which allow someone who owns assets on the blockchain to divide ownership into smaller chunks.
NFTs are digital assets with a unique fingerprint that can be detected even if the files are duplicated (to oversimplify). As a result, someone who purchases an original piece of digital art retains ownership of it, just as if they had purchased a real artwork. Prints can always be made by others, but the original can always be identified.
With the increasing value of NFTs (rapper Snoop Dogg, for example, revealed earlier this week that he’s been calling NFTs under a pseudonym and has over $17 million, or roughly Rs. 125 crores worth), it’s no surprise that people are looking for ways to divide these purchases among groups, for NFT projects where people believe the value will increase over time.
“It is very much as if the Louvre decided to fractionalise the Mona Lisa and distribute a portion of it for the public to own. However, unlike at the Louvre, collective ownership of art is really only possible using crypto art,” Jamis Johnson, a chief pleasant officer of PleasrDAO, which represents member NFT collectors, explained the notion recently.
Fractionalised NFTs is a concept that aims to allow retail art traders to benefit from dabbling in the crypto realm. Fractional NFTs are also thought to play a key role in democratizing crypto culture.
Any NFT may be broken down into millions or even billions of pieces, allowing a large number of people to acquire and own bits. Holders can sell their interest at a later date for a greater price and profit on their initial investment.
The meme underlying the famous cryptocurrency Dogecoin was sold as an NFT for $4 million in June of this year (roughly Rs. 29.5 crores). When the Dogecoin NFT was fractionalized into 17 billion bits and placed up for auction later in September, its value skyrocketed to almost $220 million (Rs. 1624 crores).
According to research, if NFT owners are considering fractionalizing their assets, price discovery, asset liquidity, and diversification investment are the three key benefits. “NFT fractionalisation is most likely destined to disrupt not only the world of fine art and gaming, but potentially even that of Decentralised Finance (DeFi) and investing as a whole,” the CoinBureau report declared.
Fractionalisation of NFTs is majorly done on Ethereum – which is the world’s second most valued cryptocurrency.