Non-fungible tokens are the latest fashion in the cyber world. Building on blockchain technology, NFTs may be a new way to exploit intellectual property rights.
Similar to unique trading cards, non-fungible tokens are one of a kind and can be applied to anything digital. This means the technology and the new way of trading is proving exciting and popular in the music and entertainment world and is even being used to sell digital art.
People have been buying digital copies of things for years; music, films, pictures. With NFT’s the excitement is around the ability to buy pieces of the original, and it is believed that like cryptocurrency and bitcoin, these original pieces will increase in value.
It sounds fairly straight forward, but this method of trading and acquiring digital art raises a lot of questions when it comes to intellectual property. Dr Elliott Davies, Partner and Patent Attorney at Wynne-Jones IP says it’s difficult to know the real value of NFTs without their credibility having been tested.
“NFTs may not constitute proof of ownership of the associated intellectual property rights, they merely prove that a particular person or company is in possession of a particular work at a certain moment in time. This means that, potentially, NFTs can be sold or used in a way by people that don’t have the legal right to do so.
We need to consider how it is that NFTs are created; there is no centralised register or governing body. There is a risk that, until the legal system catches up with technology, the NFT market could end up like the wild west.”
It seems, however, that artists and buyers alike have confidence in the system with millions of pounds exchanged for digital art. Earlier this year, an animated GIF of Nyan Cat sold for more than $500,000. More recently, auction house Christies sold a compilation of artworks by Beeple for a massive $69m.
With such high value on the open market, it could be that NFTs and digital wallets become a target for hackers and this again raises questions of authenticity of ownership.
Matthew Veale, European Patent Attorney at Wynne-Jones IP says people should be aware that there are risks, nothing is infallible, but there is also potentially great reward for early adopters.
“NFTs can be combined with smart contracts to unlock their potential and deal with associated intellectual property rights. However, like any contract, you can get good and bad ones – it depends on how well it’s drafted. Blockchain, cryptocurrencies and the cyber world in general will continue to evolve and NFTs seem like a logical step.
I agree with Elliott in that NFTs themselves don’t prove ownership of intellectual property and that they are potentially open to corruption or theft.
In the most basic terms, NFTs are simply a form in which you can buy an asset. Historically, you could purchase a painting on parchment, canvass or paper. Now you can buy the whole, limited copy, or just a bit of it in a NFT form, and that’s part of the beauty.”
It’s difficult to know what the future of NFTs are, some thought they might be a passing trend or fad but with more artists announcing their intentions to release artwork in this form it looks like they’re probably here to stay.