2021 was a landmark year for the popularity of NFT and it seems that this trend is going on and becoming greater and greater. But not without huge legal implications with respect to copyright, ownership and contractual liabilities, just to cite a few.
What you do and you don’t own, when you buy an NFT.
Let’s start from the beginning, trying to bring some light to this innovation.
What is it a NFT?
An NFT is a unique and non-divisible digital asset that does not have an interchangeable value.
They are not like other digital tokens or currencies.
An NFT is not the digital asset itself, but an electronic record representing ownership of the asset: owning an NFT does not mean that you own the asset underlying the NFT.
This type of tokens are verified and powered leveraging blockchain technology.
The content of your purchase: what you do and don’t own when you buy an NFT
|Right to claim ownership of the NFT itself||Ownership of the digital asset|
|Right to exclude others||IP of the asset|
By default, the NFT doesn’t transmit any right but the right to claim the ownership of the NFT itself. Beyond that, it will depend on what terms and conditions govern the NFT. Parties can (I would say should) set out in a smart legal contract the conditions of their transaction to avoid uncertainties and disputes.
Doing so, would be much easier to transfer for example the copyright ownership from the author to the buyer of the NFT.
Smart legal contract can play, also in this field, a huge role in governing the relationship between parties. Upon sale of the NFT, parties can determine and specify clearly the rights and scopes upon sale: how property rights, including copyright, are transferred, what uses are legitimate and the like.
Nft creation process in simple words
An NFT can represent ownership over digital assets like virtual or physical assets like art, music, in-game items and videos. The owner of a NFT can transfer the ownership of the NFT.
NFT keeps record of the owners wallet address and unique identifier of the asset. In addition it can also store additional metadata of the asset. The owner has to provide the unique identifier of the asset to create an NFT. The work done by the owner is recorded permanently and ensure the evidence of provenance, authorship, price, time and others properties or functionalities associated.
In general, NFT marketplaces provides a way for the asset owner to upload the digital representation of the asset (image, video, music, etc.). The marketplace then generates unique identifier and other metadata of the asset and records it in the blockchain using smart contract.
List of application
|Art||artist can develop a digital form of art and sell it on platforms like Rarible, Nifty Gateway|
|Luxury goods||brands can tokenize and authenticate their products avoiding the risk of counterfeit. Bulgari, Prada and Louis Vuitton are joining NFTs industry|
|Real estate||tokenize properties help owners to gain liquidity, lower barriers to real estate investment and can help owners to claim their assets|
|Real world assets||art pieces, real estate, any type of real-world asset can be converted to NFTs|
|Licenses, certifications, identification||i.e. educational institutions can verify the authenticity of the certifications, individuals and enterprises can register their identity and have secured storage for all the personal data|
|Collectibles||i.e. Cryptokitties. Single users can own and breed a new type of NFTs based on the rules of the NFT project|
If you like to jump aboard the NFT train, exploring whether and how they can help you to increase your business or generate a new stream of income contact Trakti.
Click here for further info: https://www.trakti.com/why-trakti-en/