Are NFTs the future of digital art?
Through creating and releasing work as non-fungible tokens, creatives and artists can cut out the middleman, have greater control of how and where their work is used, and can secure more favourable payment terms by utilising the advantages of blockchain and smart contracts.
How are NFTs fuelling the digital art boom?
Up until now, people haven’t found a good way of collecting digital art – buying NFTs is easier and much more accessible than owing a traditional art collection. In leveraging blockchain technology, it also removes the “middleman”– democratising the art market – in that artists have direct access to their audience. Provenance is assured. Artists are able to collect ongoing revenues on their work, upon each and every resale, allowing creators (and their estate) to benefit ad infinitum on their work.
What makes NFT digital art valuable?
The NFT value is derived from its non-fungibility. This means that the token cannot be replaced by an identical token, as it is entirely unique and scarce. Therefore “value” is assigned by the purchaser each time an NFT is sold and bought. But NFTs can be perceived as valuable depending on their rarity, whether ownership provides for additional rights, including intellectual property and availability to commercialise the NFT, associated and exclusive membership benefits, ongoing royalty payments post-sale, and other features or aims of the NFT collection.
There is no rule book on how to assess an NFT valuation. Over time, the value of NFTs is driven by a perception over which both buyers and sellers may lack any control. According to a recent report, there is speculation that the traditional and crypto art markets could merge into a permanent hybrid experience, where physical art galleries showcase crypto art and traditional artworks are digitised and sold online.
What are some of the legal implications for NFTs?
Plenty! IPR, including copyrights and trademarks, GDPR, and contract law, to identify a few. Having the ownership of digital goods proven as an immutable record on a blockchain is a secure way to providing proof of rights related to a digital asset. Recent cases are already showing the evolution of laws pertaining to the related advancements of NFTs entering common use, including the recognition by the UK courts that NFTs are considered real property assets.
Can you sell the same art as NFT through different platforms?
Whilst technically possible, you really don’t want to as it will adversely affect your reputation and ability to sell NFTs in the future, and in any case it will risk diluting NFT value – a solution may be to change the art slightly, and mint it on a different platform creating an entirely new, unique NFT – thereby not affecting the buyer of the first piece, and perhaps even creating a buzz for collectors to buy a “set” – remember, scarcity and exclusivity are one of the reasons NFTs are so popular.
Can NFTs eventually replace copyright?
No. NFTs merely “point to” certain works on the blockchain. They can of course qualify for copyright in their own right, but a distinction must be drawn between the NFT itself and the underlying IP of the work on the blockchain that is represented by the NFT. But in any case, copyright is the law that seeks to protect original work (in any recorded format), which can of course help protect the NFT itself as well as the underlying rights associated with the NFT (despite being separate and distinct). In the event an artist uses another’s artwork (in the absence of consent) to create a new NFT collection, it is highly likely that copyright infringement would arise, and the use of copyright law would assist in determining the extent of any infringement and the level of damages due to the injured party. Therefore, copyright law is crucial to authors and owners of the underlying work, and for the very NFT holders themselves.