Image Credit: https://www.flickr.com/photos/rbulmahn/5714362160
A few years back, we published a blog post, along with a list of resources, called Blockchain Technology and the Evolution of Law. To say that blockchain tech has exploded in the years since is not an understatement. In 2020 companies that added the words “blockchain” or “bitcoin” to their names saw enormous financial gains. Both amateur investors and major financial players are trading in cryptocurrencies like Etherium, Litecoin, and so many others. New tokens arrive on the market every day, a surge in popularity that many have linked to the COVID-induced shutdown. And now an even newer innovation in blockchain tech is catching the attention of investors, including those who buy and sell art, as well as those (with money to spare) who just want in on the newest thing in tech.
A non-fungible token, or NFT, is a unique blockchain unit that is not interchangeable with any other blockchain unit, even within the same platform. Purchasing an NFT gives you ownership of an exclusive item. NPR describes it as “a kind of barcode, almost a certificate of authenticity that serves as proof that a certain version of something in uniquely yours.” An NFT can be anything in digital form, including illustrations, music, video, or, as this NFT FAQ from The Verge says, “your brain downloaded and turned into an AI.”
Much of the current craze for NFTs centers around digital art. Crypto art platforms such as Zora, SuperRare, and Nifty Gateway serve as marketplaces where artists can sell or auction their digital work. The creator of Nyan Cat, Chris Torres, celebrated the 10-year anniversary of his popular meme by auctioning a remastered version on the Foundation platform. The iconic GIF sold for more than half a million dollars. Other artists, including Grimes, Deadmau5, and Beeple, have sold their work – digital images, music, buttons, and videos – for millions. The numbers are staggering, considering that anyone can access, download, capture, and keep digital copies of the identical content on their own computers. However, only the buyer of the original NFT gets to brag about owning the true, unique original. In other words, anyone can possess a copy of the Mona Lisa – on a t-shirt, coffee mug, or mousepad – but only the Louvre can claim ownership of the original. Similarly, the prestige that comes with owning this Lebron James NBA Hot Shot video, for example, attaches only to the owner of the digital clip.
Many tech publications and others are covering this trend (a few good articles are linked below) but commentary on NFTs and the law is still a bit skimpy. NFTs are just becoming a more widely-known, and the number of creators who release digital works for sale on the NFT market, as well as their well-heeled buyers, will grow as the financial gains become even more lucrative. As the law catches up with technology, expect more observers to comment on the legal issues surrounding this still somewhat mysterious form of art. How does the ownership of tangible or intangible goods differ? How does the first sale doctrine apply? What copyright issues may arise, and how do the interested parties – artists and owners – stand to benefit from royalties? Some of these ideas are explored in the content below.
Explainers
What's An NFT? And Why Are People Paying Millions To Buy Them? – NPR
What Are NFTs and How Do They Work? -- Coindesk
NFTs explained: what they are, why rock stars are using them, and why they’re selling for millions of dollars – The Conversation
NFTs and the Law
Non-Fungible Tokens — From a Legal Perspective – Altcoin Magazine via Medium.com
State of Crypto: It’s Time to Talk About NFTs and Intellectual Property Law – Coindesk
Once Upon a Time in NFT: Blockchain, Copyright and the Right of First Sale Doctrine — Cardozo AELJ