TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
Want to profit from NFT trading? Know its challenges
Royalties will automatically be paid to the NFT creator once the NFT is sold on without the need for a third party.
Change Size
Year-end sale: Gold plated souvenir cryptocurrency coins are on display in a non-fungible token (NFT) marketplace in London on Dec. 30, 2021. (AFP/Justin Tallis)
N
on-fungible tokens (NFTs) have gained traction lately. They have been an avenue for the rich and famous to satisfy their status symbol needs, or simply to have fun with them. On the other side of the fence, NFT creators have been making millions by selling NFTs on the marketplace.
This is one of the salient reasons why a digital artist named Beeple successfully sold an NFT attached to a work of art titled "Everydays: The First 5000 Days” for US$69 million. The interesting part is that this artwork is in the form of a JPEG (and hence has no physical presence) that is comprised of 5,000 digital images made every single day from May 2007 to January 2021.
As with anything new, NFTs too are bringing challenges especially within the ambit of the law.
The first challenge concerns the misconception about NFTs. As suggested by their name, NFTs are digital tokens that are non-fungible and used to represent ownership of a unique digital item (i.e. the underlying asset). They are composed of a unit of data built on a blockchain that is linked to an underlying asset. Imagine if you have a basketball card with the signature of the player on its back. The NFT is essentially the signature of that player, not the basketball card.
Owning an NFT means you have the signature and therefore are entitled to use the basketball card, but you do not have any intellectual property rights (IPR) of the card. Considering the IPR remains with the NFT creators, there are restrictions applicable to NFTs buyers, including that they cannot reproduce, distribute or make copies of the underlying asset without the creators’ consent. However, they can still display the asset as their profile picture on social media and sell it again. This is true in the case of the NFT that is attached to "Everydays: The First 5000 Days”.
Another case to illustrate is the NFT of Twitter’s CEO, Jack Dorsey “just setting up my twitter”, which was sold for approximately $2.9 million. As it was explained by Valuables, the platform on which the NFT in question was sold, the NFT is an autographed certificate of the tweet. The buyer of the NFT can resell and display it in her or his digital gallery, but the copyright remains with the author. The buyer cannot even use the content of the tweet by printing it on T-shirts.
In a nutshell, despite millions of dollars spent, owning an NFT does not necessarily mean you own all rights attached to the underlying asset it represents.
