Symbols that are not mushrooms seem to be an idea whose time has come. NFTs were originally designed for use in card games and can represent almost any unique asset. Outside of a player’s context, it could have been CryptoKitties, the first NFT to hit huge hits, released in 2017.
RELATED: CryptoKitties’ Dieter Shirley on Ethereum and NFT Hack
CryptoKitties have become so popular that CryptoKitty trading has suddenly littered the Ethereum network, setting a record for the volume of transactions. Since then, NFTs have grown in popularity and are now being developed for a variety of in-game assets, digital collectibles, unique artwork, and more.
On the subject: Not Just Gamers and Fans: Why Investors Should Take NFTs Seriously
The 2020 No-Innovation Annual Report shows the explosive growth in NFT transactions and shows an increase in the market capitalization of NFT from $ 141.5 million in 2019 to $ 338 million in 2020.
This commentary focuses on NFTs related to creative art. Currently best known is Every Day: The First 5000 Days, created by a digital artist known as Beeple. The work was auctioned at Christie’s in NFT form for an incredible $ 69.3 million on March 11, 2020.
On the subject: storming the “last citadel”: worry and anger as NFTs claim high cultural status
However, cheaper NFTs are also featured in photographs, panels, photographs, songs, videos, and other creative works. As a modern example, somewhat less visible than Beeple’s sales, renowned artist Grimes raised around $ 6 million and sold NFTs based on 10 pieces, some of which are available in thousands of copies. The sale included an NFT of 700 copies of two pieces of short video and original music for $ 7,500 each, plus one NFT for the unique video and accompanying original song, which sold for approximately $ 389,000.
But before anyone decides to step in and start selling or buying artwork in the form of NFTs, it is important to have a basic understanding of what these transactions actually entail.
The information provided here is very general and this commentary is governed by US federal law. The laws of other countries and some states (especially California) may more or less restrict what an NFT buyer can purchase, as well as the relative rights and obligations of the buyer and seller. You should of course understand that this general information is not a substitute for one-to-one legal advice, which is still a good idea.
What is NFT?
First, it may be important for the parties to any NFT-related transaction to have at least a basic understanding of what they are dealing with. Firstly, NFT is indeed a cryptocurrency, but it is not the same as Bitcoin (BTC), where every BTC can be exchanged for any other BTC. “Non-fungible” means that each NFT is unique, encrypted on the underlying blockchain with specific metadata that distinguishes it from all other tokens, even if the underlying image is the same. The ownership of each NFT is still tracked on the blockchain, and the code determines how ownership is verified and whether the transfer conditions are met. However, no two types of NFT are alike.
Like other types of cryptocurrency, NFT can be supported by various blockchains including Ethereum, Flow, and Wax. However, some NFT markets are only compatible with specific blockchain chains, which can have commercial implications for the seller and anyone who buys with an emphasis on valuation potential over time.
This comment focuses on NFTs based on a baseline chart, so the obvious question is what the seller is actually working with or what the buyer is actually getting from the NFT.
Sale of works of art in traditional deals
Consider what happens when someone buys a unique piece of art from an artist, such as a painting, outside of the digital context. Acquisition of a painting usually involves the transfer of ownership of the physical thing. After that, the buyer can purchase and view the painting, but his rights are not limited. The buyer owns the artwork, not the “intangible property” associated with the content.
While this may surprise some people, buyers cannot make copies of the painting, display it, or distribute it without the artist’s consent, either at the time of purchase or later. They cannot create derivative works from it; In many cases, they cannot change the board or significantly damage it. Section 106 of the US Copyright Act restricts buyers’ ability to reproduce, distribute, or create derivative works upon purchase, and the Visual Artists Rights Act protects an artist’s “moral rights” in certain works.