Why is the original worth so much more than a replica?
And ultimately, it comes out to the same reason why NFTs have value today when we can say you own, the original digital Mona Lisa versus own a replica, you own just say right-click saved version of that Mona Lisa. And so why does that art have that much value? Let’s dive into that a little bit more.
Why art is so valuable?
So let’s talk about why any piece of art in the real world can be worth hundreds of millions of dollars. Specifically, let’s talk about the Mona Lisa. The Mona Lisa is interesting because if you talk to anyone in the world, chances are they know it. If you go to Africa, Asia, to Europe to America and you say, hey, do you know the Mona Lisa? Chances are a random stranger on the street is going to say yes. And then, if you ask them, hey, do you know why the Mona Lisa is worth $850,000,000 or a billion dollars? They might give you a variety of answers. They might say, oh, it’s because it’s the best painting ever made. It’s the most technical masterpiece painting that’s ever been painted. Maybe they’ll say it’s because it’s so famous. Maybe they’ll say some other reason, but they’ll probably try to give you some reason to justify why the Mona Lisa is worth as much as it is, based on something like its technical merits or its fame. But let’s think about that. Yeah, The Mona Lisa is a really good piece. But is it really the best piece ever drawn? Well actually, Leonardo da Vinci made a lot of pieces. The Mona Lisa wasn’t even the piece that he spent the most time on. It wasn’t even finished. He spent about 19 years of his life trying to make the Mona Lisa. And in the end, when he died, he still didn’t complete it. He didn’t even get to sign the piece. There are other pieces that he’s finished that aren’t even worth anything close to the Mona Lisa. And if you say, well, the Mona Lisa is worth so much money because it’s famous. Well, that’s interesting because why did it become so famous? So actually, the Mona Lisa wasn’t even known outside a small group of art intelligentsia until 1911. So what exactly happened in 1911 to make the Mona Lisa blow up into the worldwide phenomenon that it is today? Well, in short, it was stolen. It was stolen from the Louvre, and that became such an overnight sensation, that people who had never heard about the Mona Lisa all suddenly became aware of it. It was published on the front page of every newspaper across the world. Mona Lisa stole from the Louvre, then people started talking about it. People start seeing this piece. They started recognizing it, and then something magical happened. The Mona Lisa became a meme because so many people knew about the Mona Lisa. People started making fun of the Mona Lisa. They started parodying the Mona Lisa. So there’s a very famous initial parody where someone drew a beard on the Mona Lisa. They put a little vulgar phrase in France at the bottom of it, and that also spreads like wildfire, just like you know, the memes today spreads like wildfire. People like these parodies, they laugh at it, they tell it to their friends, they share with other people, and then people start making more memes of it. And so then that starts becoming a flywheel effect. And before you know it, everyone in the world knows about the Mona Lisa.
So then maybe that starts to make you question, Is the Mona Lisa really worth $850 million? If no one realized that was worth that much money for 400 years and it only got that kind of fame because of an accident. It’s not because of any fundamental merit that Mona Lisa has. Well, arguably, yes, it is still worth that much money, because here’s one thought experiment, the former art director of the Louvre said that, arguably, 80 percent of people who come to the Louvre and they pay, you know, 20 dollars of admission to come, and there are 11 million people who come every year.
They come only to see the Mona Lisa. That’s it. Just this one painting that they know about. Because if you’re trying to think of other paintings that the average person might know about, what else are they going to say?
The Mona Lisa is one of those things that jumps to mind first. if you ask what paintings are in the Louvre, people say the Mona Lisa. That’s what they come and see. So if you even just run some numbers on that right, Let’s say you have 11 million people coming, they’re all paying you $20 million dollars. Let’s do that math, say 80 percent of them. let’s just say eight million of these people are coming just to see this piece. What’s $160 million every year that you’re making from ticket revenue from people who are just coming to see the Mona Lisa? That’s actually a pretty good deal. If you can get this piece of painting for $850 fifty million. And people are going to pay you $160 million every year, you’re going to make your money back and like, you know, just a few years of time, actually. And so any real estate investor will tell you that’s a fantastic deal. That’s a cap rate of over 15 percent. So that’s a pretty great investment. If you can buy something for $850 million to make $160 million a year off that. Well, any investor can tell you that’s a no-brainer. You should take that deal. And so now we can see there is value in just being famous. Regardless of why something is famous. Maybe it’s because of technical merits. Maybe it’s just because of luck. Maybe it’s a combination of both, which it often is. Regardless of why that happened, That fame has value. Okay, so now we’ve established that something being famous can give it value in that fact itself. And so maybe that gives us some insight into why internet memes are taking off today and selling for hundreds of thousands of dollars. So you’ve probably seen Side Eyeing Chloe.
She’s totally famous on the internet. She was a meme that went viral. She was just a Youtube video. But then people started loving just how unimpressed she was, and they started making memes of it. They started captioning her, just making her unimpressed about random things. Hundreds of millions of people have now seen her. In fact, arguably, maybe for a certain generation, she’s even more famous than the Mona Lisa. And now, knowing that the Mona Lisa is actually so valuable. They can capture so much mindshare. There is a world in which it is worth $850 million.
You might understand that Side Eyeing Chloe selling as an NFT for just $75,000 is actually worth it. But you also might not. Maybe we haven’t made that totally clear yet. You might be thinking, wait a minute, how could this, in that video that was just, you know, filmed for five minutes in the random car and uploaded to youtube. How could that possibly be worth $75,000? The fact that everyone is sharing this doesn’t give it that much value. It’s still just a random video on the internet. And you know, in fact, I can download this video I have it. Why do I need to pay $75,000 for it? Well, that’s interesting, because let’s, let’s take that thought experiment, and let’s move back to the physical art world and see if that actually maps to the analogies that we have there. Would you be excited to go to a museum where every single art piece there is just a replica, it’s just a fake? You might not know the difference. In fact, you almost certainly wouldn’t, because these replicas museums came and tell them apart. 20% of the art in a real museum is already fake.
What’s the difference if 100% of it is fake. You know, real professional authenticators of art can’t tell the difference. Chances are, I’m not going to be able to tell the difference. You’re not going to be able to tell the difference. But there is no museum in the world that just has 100% fake replica art. And why is that? Well, for some reason, there’s something just not as exciting about knowing that you’re not seeing the original. So we understand intrinsically that in the real world, the original has more value than the replica. For some reason, when I go into a museum, I feel so much more moved knowing that I’m looking at the original versus the replica. Even if there is no difference between the two. Even if I can’t tell a difference. The original has power, and that is ultimately the reason why no art piece online, no meme, and no video has ever sold for real money before, because before there is no way to tell the original piece apart from the replicas. They’re all identical, and NFTs changed that, and that’s why NFTs is such a groundbreaking concept. So how exactly does and then NFT prove that something is the original? Well, ultimately it’s the exact same way that something is proven to be the original in real life. How do you know that this is the original Mona Lisa? There is no real way for a random person to understand that this is the original Mona Lisa. Why do we believe that the Mona Lisa and the Louvre are the original Mona Lisa? Well, in short, it’s because we trust the Louvre. We trust that this museum has done the work to make sure that this is truly the original. We trust that it’s been authenticated. There might be a certificate next to it stating that this is an authentic, real, genuine article and that this has been proven by people with real certifications, professional backgrounds in telling fake are from real art. And those are all the social proof signals that we use to trust that a piece of work is the real thing or the fake thing. When you buy artwork in real life, it usually comes with a certificate of authenticity. Maybe it’s signed by the original painter. The original artist. They say, Hey, I certify this is the real deal. This is not a forgery, and that’s what gives us this trust. Now, that is actually still something that, again, as we know, is easily forged. Anyone can make the certificate and no one can put a little signature on it. so the real world is actually a little bit less trustworthy than what we have now with NFTs.
So what exactly is an NFT? Well, we talked about it’s a non-fungible token, but we really haven’t dug into the details. The NFT isn’t actually a piece of art in itself. The NFT is just a certificate. It’s just that certificate of authenticity that points to an image that points to a video to meme to any other digital asset. And it says, Hey, this is the real deal. This is the original piece that we have made, and this is not like any other replica, even if they’re identical, you know, the bits that are stored on your computer. That’s not the original. This is the original. So NFTs have allowed artists for the first time any content creator, anyone in the world to create a certificate of authenticity to say that this is the only true original piece of this digital asset.
is that NFTs are the first time it’s ever been possible to create true scarcity and a record of ownership on the internet for a digital asset. And that is powerful because that allows digital assets for the first time to hold value in the same way that physical art piece like the Mona Lisa has been able to hold value.
Thank you for your reading. You can find the previous post here. What is a token?