Welcome back to our series of blog posts on the history and philosophy of the economy, bankruptcy, and debt – today let’s talk again about a more current topic: cryptocurrency. This post will continue to merely skim the surface of current cryptocurrency issues, for what it is worth. Today, let’s introduce the topic of non-fungible tokens, also known as NFTs.
Philosophically, an NFT is an attempt to create a “true digital object” – that is a digital object that has the strict uniqueness of a physical object. For example: if you buy a physical copy of your favorite album on vinyl, it is strictly unique. Your copy is singular and different from all the other copies. On the other hand, a digital object is infinitely and lossless-ly replicable, so copies are generally not unique. NFTs exist to bring these seemingly disparate qualities together. Let’s skip over the content of NFTs for now and get back to how they relate to cryptocurrency: you buy NFTs with cryptocurrency.
In a bankruptcy, an NFT is an asset that will need to be protected. One potential issue concerns the valuation of NFTs, for which there is no settled method at the moment. It is also worth noting that the transfer times for cryptocurrency transactions, and the rapidly shifting valuations of different cryptocurrencies might also make the actual valuations vary over short amounts of time, further obfuscating the value of one’s NFTs.
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We will continue our discussion of cryptocurrency next time. If you are interested in the history and philosophy of the economy, bankruptcy, and debt, stay tuned for my blog posts. And, if you are thinking about filing, reach out to us at www.lifebacklaw.com.