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What does NFT mean?
NFT stands for Non-Fungible Token. “Non-fungible” means that it is unique. “Token” means that it can be transferred on a blockchain. Essentially, NFTs are assets that carry a unique digital identity and can be traded between users on a public blockchain like Tezos. Common examples of NFTs include artwork, trading cards, comic books, sports collectibles, games, and more. Although NFTs tend to be associated with artwork, they represent much more.
How do NFTs work?
A non-fungible token (NFT) is a digital certificate stored on a blockchain which is a digitally distributed, decentralized, and public ledger.
Blockchain records all transactions in a peer-to-peer network; therefore, NFTs are:
– publicly verifiable
– decentralized: they’re stored on a network of computers
– immutable: nobody can change them once committed
How can an NFT be used?
The NFT world is relatively new. In theory, the scope for NFTs is anything unique that needs provable ownership. Here are some examples of NFTs that exist today, to help you get the idea:
- A unique digital artwork
- A unique sneaker in a limited-run fashion line
- An in-game item
- An essay
- A digital collectible
- A domain name
- A ticket to a conference, an exhibition, a festival, a concert
Can anyone make an NFT?
An NFT is a unique digital item with a sole owner. That rarity gives an NFT value. Anyone can create an NFT, just make sure that you own the intellectual property rights (copyright) to the item you want to turn into an NFT. Creating an NFT for a digital asset you don’t own could get you into legal trouble.
Wich Blockchain provides NFTs?
Some basic examples:
- Etherium – was the first blockchain to support NFTs (with its ERC-721 standard) and is currently the most widely used and most popular.
- Bitcoin Cash – Bitcoin Cash supports NFTs and powers the Jungle NFT marketplace.
- Cardano – Cardano introduced native tokens that enable the creation of NFTs without smart contracts with its March 2021 update. Cardano NFT marketplaces include CNFT and Theos.
- Flow – The Flow blockchain, which uses a proof of stake consensus model, supports NFTs. CryptoKitties plans to switch from Ethereum to Flow in the future.
- GoChain – GoChain, a blockchain that bills itself as ‘eco-friendly’, powers the Zeromint NFT marketplace and the VeVe app.
- Solana – The Solana blockchain also supports non-fungible tokens.
- Tezos – Tezos is a blockchain network that operates on a proof of stake and supports the sale of NFT art.
- Binance Smart Chain – The Binance Smart Chain provides easy access and cheap fees
What happens when you buy NFT?
What you do own when you buy an NFT are the keys to a non-fungible – perhaps unique – token. That token is yours to trade or holds or display in Decentraland. But the digital file associated with an NFT is just as easy to copy and paste and download like any other – the third point.
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Does NFT include copyright?
Ownership of an NFT does not inherently grant copyright or intellectual property rights to the digital asset the token represents. Even though someone may sell an NFT representing their work, the buyer will not necessarily receive copyright privileges when ownership of the NFT is changed and so the original owner is allowed to create more NFTs of the same work. Therefore an NFT is merely a proof of ownership that is separate from copyright, therefore ownership data is stored in the blockchain and it is almost impossible to hack its system. Unless you give up the copyrights with an external agreement in the smart contract of the NFT, the owner can’t, for example, create commercial products based on your art or design and sell them for profit.
“In one sense, the purchaser acquires whatever the art world thinks they have acquired. They do not own the copyright to the underlying work unless it is explicitly transferred. “ says legal scholar Rebecca Tushnet. This means that in practice, NFT purchasers do not generally acquire the copyright of the underlying artwork.
Anything that can be digitized can be turned into an NFT; the original work is only needed in the first step of the process to create the unique combination of the tokenID and the contract address. So, in principle, NFTs have very little to do with copyright.
What about future Copyright issues, how is the industry dealing with such concerns?
Inevitably, there will be some practical interaction between NFTs and copyright, although most disputes will be handled at the platform level. The market is already acting as a gatekeeper, removing possible infringement by encouraging the existence of a space where creators can offer the tokens they have generated. Nonetheless, the nature of the market, and the incentive for large returns, still means that the NFT space may generate a good number of copyright disputes. These are the early days of potentially disruptive technology, so it will be interesting to see how dispute and ownership claims develop.
If i decide to make an NFT Collection with my brand, how can i be assured to not step into any legal issues?
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