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In: Economics
This comes down to what is meant by *fungibility*. Basically, when we describe something as *fungible*, what we mean is that you can readily replace it with something equivalent and that’s fine for everyone concerned. Take a dollar bill, for example. We say it’s fungible because if someone rips up a dollar bill in your wallet, they can replace it with another dollar bill and you’re no worse or better off: both of those dollar bills spend the same. Similarly, one share of Apple stock is worth the same as any other share of Apple stock. It doesn’t really matter which one you have, because from the perspective of being able to get value from it, number 304 is the same as number 3,539. One 1kg lump of pure gold is functionally the same as another 1kg lump of pure gold, if you’re using it as a store of value. They’re designed to be equivalent and interchangeable.
However, now imagine the lucky dollar bill you have that you saved from your first paycheck — the one you believe brings you good luck, [Scrooge McDuck style](https://disney.fandom.com/wiki/Number_One_Dime). If someone rips up that bill, then replacing it with another dollar just isn’t going to cut it. It’s no longer a *fungible* item.
So now imagine something like a book. You can have a fungible copy of a book (any mass-market paperback is pretty much interchangeable with any other, after all; if all you’re buying is the text, you’re fine). However, you can also have *non*-fungible copies of a book — like, for example, a first edition with a limited cover and a signed bookplate from the author. Once those are all sold, you’re out of luck if you want to get one. They’re just not making any more. This has been a big selling point for physical media for decades, with collectors — and people willing to pay a premium — paying more to get that unique extra, even if they’re not *technically* getting more out of it. (It’s not like byuing a special edition of a DVD with extra commentaries and special features, for example.) This is the reason why an original Picasso costs so much more than even the most skilled reproduction. You’re not just paying for the look of the painting, but for its history and provenance. You’re paying for the fact that it’s a Picasso.
But how does that work with the shift towards electronic media, such as digital art and ebooks? After all, the whole *point* of digital media is that (in theory at least) it’s infinitely reproducible. My copy of an ebook is quite literally an identical copy of your copy, right down to the same ones and zeroes. You can’t really have a collector’s edition of an ebook, right? How do you have something *special*, given the technology that allows you to create an exact copy in the time it takes you to press Ctrl+V?
This is where [blockchain](https://en.wikipedia.org/wiki/Blockchain) comes in. Remember how, with cryptocurrency like BitCoin and Ethereum, the whole point is that you can use what’s basically a giant list to keep track of where the money is, and who owns what? You can use that same technology to ensure that you own a ‘limited edition’ version of a creative work that, because it’s digital, would otherwise be infinitely reproducible. Just like the person with the limited-run edition of their favourite novel on their bookshelf, or an original painting by their favourite artist, you have a token that says (effectively) ‘I bought one of only 200 limited edition versions of this piece, and no matter how many times the piece itself is copied, there will only ever be 200 of these tokens. As a result, it is special.’
For some people, it’s for bragging rights. For some people, it’s to support their favourite creators by buying a ‘premium’ version that’s unique to them (or certainly more unique). For other people, it’s an investment; as with any good where only a limited number exist, they may expect it to increase in value over time, so it can be sold on.
In short, it’s a way of applying some of the limited edition value of physical objects to the digital marketplace by creating an artificial scarcity.
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