NFTs are business keys of the future “metaverse”. The Non-Fungible Tokens (NFT) indicate a digital certificate of authenticity to uniquely identify a digital product created on the internet. Each NFT contains a unique serial number, known as a hash. This cryptographic key is generated from a specific digital file and makes NFTs traceable and incapable of duplication.
However, while technological progress advances, a review of the protection system is required to follow digital development and to guarantee legal protection, even to NFTs.
The market sales of NFTs surpassed $40 billion in 2021 just on the Ethereum blockchain, the most popular for NFTs.
Ethereum can be used for payments and its programming language supports Smart contracts to facilitate blockchain transactions.
NFTs are recorded on a blockchain and powered by Smart contracts.
The first-ever published tweet authored and posted by Jack Dorsey, was sold in 2021 as an NFT for $2.9 million. Being the author, Dorsey was able to verify its authenticity and avoid any claim of copyright infringement.
But it is not always that simple and legal implications are the crux of the NFT trend.
NFTs raise some interesting legal considerations:
- Transfer of an NFT alone does not transfer the copyright of the linked work
- NFT copyrights are separate from the linked content
The creator of an NFT would need permission from the copyright owner of the work before offering it on sale, to avoid occurring in copyright infringement, exactly like when we try reselling a counterfeit book.
If the NFT represents ownership of a specific copy of a work, the ownership of the copy must be “legal” not to commit any violation of copyright.
Considering the NFT is a link to content, it may contain no copyrightable content itself.
When we own a copy of a digital book, we usually have only a licence to access those digital products and not their ownership.
If we are not the creator of a work and we wish to own its copyright, the rights must be transferred to us by the copyright owner, clearly expressed and “in writing”.
Copyrights can be also divisible by contract. Artists could sell fractional ownership of one of their exclusive rights.
In many NFTs transactions, copyright is not mentioned at all, bringing out further legal issues.
Tracking NFT copyright gets complicated in theft and fraud legal cases. To be added to the blockchain, NFTs must be “signed” by the uploader in a process known as “minting”. Sometimes minters lie about their identity.
To minimise fraud and for stronger copyright enforcement, international compliance would allow a tokenized copyright exchange within the blockchain itself.
Blockchain technologies features, such as trust, transparency, decentralised public records, and Smart contracts, might make this technology accordant with the fundamentals of copyright.
Trakti is the most advanced contract negotiation and management platform to support blockchain and Smart contract capabilities. As the blockchain provides the building and maintaining of registries of works, data is safe and nearly impossible to be replicated.
Relying on these registries, Trakti Smart contracts support the automation and standardisation of transactions related to copyrights, to verify ownership of works through the use of tokens, wallets, and other cryptographic tools.
Any kind of information may be expressed virtually as a token, using a cryptographic signature, to represent works, ownership metadata, licensing terms, and remuneration.
Our Smart contracts are legal codes that generate transactions if the conditions encoded in them are met. The code can be processed or stored on a blockchain, and any changes will result in the distributed registry.
By automating the process via blockchain, NFTs might allow the copyright owner of the original work to transfer copyright, keep track of what they have sold, and collect payments.
Once the NFT is created, the digital asset can be offered for sale to buyers. Purchasers of NFTs must have digital wallets capable of receiving and storing these digital assets.
When a Smart legal contract is signed by both wallets, the transfer of copyright or payment is automatically activated by the Smart contract, which governs an NFT via blockchain technology.
By connecting a certificate of originality to the Smart contract, you might verify the identity of the artist who created the work and of the seller of the NFT on the blockchain.
As a neutral player, Trakti Smart contract follows the rules agreed in the Smart legal contract, in our unique, compliant, and secure platform. The terms and conditions of NFTs transaction can be laid out on a Smart legal contract to avoid any legal disputes that might arise.
Furthermore, Smart legal contracts can facilitate the agreement on the state of the rights and scope of an NFT, by improving collaboration among the parties. Thanks to the power of the blockchain, Trakti Smart contracts automate your contract and make your agreement self-executed and controlled.
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