With the craze of NFTs becoming more prevalent each waking day, the question everyone may fear to ask still stays the same. What are NFTs? ‘NFT’ stands for Non-Fungible Tokens. Now, what does non-fungible mean? Non-fungible means that it is one of a kind and cannot be replaced with something of equivalent value.
How do NFTs work?
NFTs are one-of-a-kind digital items or assets bought and sold on the Ethereum blockchain. Like Bitcoin and Dogecoin, Ethereum is a blockchain cryptocurrency supporting these NFTs and other transactions. NFTs are traded on a marketplace, with the most famous being OpenSea. When trading NFTs, a certificate of ownership for the NFT is transferred from one account to another. This newly purchased certificate is kept safely and separately in a digital wallet.
If up until here, you’re still finding yourself confused about cryptocurrencies, then first read up on our ‘Guide to Cryptocurrency in Indonesia’.
From the perspective of the creator economy, NFTs are paving ways for creators to unleash their potential in more inclusive, transparent, and decentralized methods. NFTs are opening up doors to a global audience and allowing more to interact in more meaningful ways, identifying growth strategies and leveraging talent. They have the freedom to release content to supporters and on a digital platform with complete control of their work.
How Indonesia Familiarizes Itself with NFT
With the world’s digital economy going in the direction of Metaverses, Web 3, and Decentralized Autonomous Organizations (DAO), artists from all walks of life are using this momentum to catapult themselves in this free-for-all creative space. NFTs have allowed creators total freedom of their content and have pushed interaction with their ever-inclusive communities. Including local artists.
Living in a peak creator economy era, artists are unleashing their potential more transparent and decentralized way by constantly looking for new ways to grow and leverage their talent. One of the early local adopters in this space, Art Moments Jakarta, has fully supported the digital economy by taking a hybrid live-online approach to the exhibition in 2021. This event brought together a community of over 64 local and international artists, galleries, and curators.
One breakthrough for the NFT community in Indonesia was Indonesia’s first-ever NFT artwork competition called ‘NFT Art Prized Moments’ held on the ‘environmentally friendlier’ Tezos blockchain. For local NFT artists, being given a platform was an indicator of only more significant NFT based events in the future. For fellow Indonesians seeing NFTs supported by a notable community such as Art Moments Jakarta, the idea of NFTs is slowly but surely getting the attention it duly deserves, especially when moving to a more digitized world.
NFT Indonesia: Understanding The Regulatory Aspects
With the trend of NFTs gaining constant momentum, from a legal point of view, Indonesian authorities have taken an interest in examining the existence of blockchain technology. After several internal discussions, it is recognized that assets using cryptocurrency must be reported for the annual tax return.
However, Indonesia’s tax laws on blockchain technology still have no specific regulations yet. Which makes it difficult for NFTs to fall into a particular category as it adopts a non-fungible characteristic.
With Indonesian banks recognizing only the rupiah for monetary exchange, cryptocurrencies used for trading NFTs fall under a grey area of legal issues in Indonesian law. A decentralized NFT marketplace makes the applicable laws quite unclear for NFT transactions.
This opens up clear opportunities for international arthouses, artists, and any sort of digital creator to thrive in this somewhat confusing Indonesian market. With the support of proper communities, using the freedom of blockchain technology, big tech, and digital companies can conduct early activities in Indonesia, even after having to comply with several statutory obligations such as tax obligations or complicated business registrations.
Seeing the digital economy boom, it would be irresponsible not to consider the aforementioned regulations. However, considering the business potential it has for a company, having a local entity helping out in business activities would be most advisable. Using such a situation would put companies in the early adopters’ stage when setting up business activities in Indonesia.