Non-fungible tokens (NFTs) seem to have exploded out of the ether this year. From art and music to tacos and toilet paper, these digital assets are selling like 17th-century exotic Dutch tulips—some for millions of dollars.

But are NFTs worth the money—or the hype? Some experts say they’re a bubble poised to pop, like the dot-com craze or Beanie Babies.

What are NFTs?

Anything that can be converted into a digital form can be an NFT. Everything from your drawings, photos, videos, GIFs, music, in-game items, selfies, and even a tweet can be turned into an NFT, which can then be traded online using cryptocurrency.

But what makes NFTs unique from other digital forms is that it is backed by Blockchain technology. For the uninitiated, Blockchain is a distributed ledger where all transactions are recorded.

It is like your bank passbook, except all your transactions are transparent and can be seen by anyone, and cannot be changed or modified once recorded.

How Is an NFT Different from Cryptocurrency?

NFT stands for non-fungible token. It’s generally built using the same kind of programming as cryptocurrency, like Bitcoin or Ethereum, but that’s where the similarity ends.

Physical money and cryptocurrencies are “fungible,” meaning they can be traded or exchanged for one another. They’re also equal in value—one dollar is always worth another dollar; one Bitcoin is always equal to another Bitcoin. Crypto’s fungibility makes it a trusted means of conducting transactions on the blockchain.

The benefits

NFTs have a number of benefits. First, through processes akin to financial securitization and unitisation, tokens enable the owners of an asset to monetize its value through the sale of tokens. This is the case for fungible as well as non-fungible tokens.

Second, for NFTs linked to a physical asset, it may be possible to trace ownership and custody of the asset over time. In the fine art market, for instance, the provenance of artworks (ie who owned them from the time they were created) is important in establishing the authenticity and legal ownership of a work.

This is clearly an important issue for potential buyers of artwork, whether collectors or investors.

WHAT DO NFT BUYERS OWN?

Non- Fungible Tokens have opened many channels for discussion, particularly concerning ownership, copyright, and the moral rights of an artist.

Now, if we talk about ownership, it is to be noted that owning an NFT means that the person owns a particular digital copy of that asset. It does not provide rights over every copy or version of the asset or the underlying asset itself that the NFT is representing unless the original copyright holder transfers such rights.

As explained by NFT creator Anil Dash- “this means that when someone buys an NFT, they’re not buying the actual digital artwork; they’re buying a link to it.”

NFT buyers have some basic rights such as to use that picture as their profile picture or upload it on their social media. Due to the non-fungible nature of NFT, the holder cannot reproduce the additional copies of the work.

Popular NFT Marketplaces

Once you’ve got your wallet set up and funded, there’s no shortage of NFT sites to shop. Currently, the largest NFT marketplaces are:

•  OpenSea.io: This peer-to-peer platform bills itself as a purveyor of “rare digital items and collectibles.” To get started, all you need to do is create an account to browse NFT collections. You can also sort pieces by sales volume to discover new artists.

•  Rarible: Similar to OpenSea, Raible is a democratic, open marketplace that allows artists and creators to issue and sell NFTs. RARI tokens issued on the platform enable holders to weigh in on features like fees and community rules.

•  Foundation: Here, artists must receive “upvotes” or an invitation from fellow creators to post their art. The community’s exclusivity and cost of entry—artists must also purchase “gas” to mint NFTs—means it may boast higher-caliber artwork. For instance, Nyan Cat creator Chris Torres sold the NFT on the Foundation platform.

It may also mean higher prices — not necessarily a bad thing for artists and collectors seeking to capitalize, assuming the demand for NFTs remains at current levels, or even increases over time.

Concluding remarks

The tokenization of everything, even of ourselves, sees and creates value in virtually all artifacts that can be bought or sold on a digital platform.

The current NFT mania promises to empower artists, revolutionize the art market, and modernize the copyright management system. Our analysis shows that it will be difficult to deliver on these promises, at least from the copyright perspective.

NFTs do not seem to fit neatly with copyright law rules. Still, as with any cutting-edge manifestation of technology that musters sufficient public adoption, they offer an opportunity to re-examine core doctrines of copyright law, such as ownership, distribution, exhaustion, resale, and collective rights management. 

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