NFT tokens are breaking popularity records

NFT tokens are breaking popularity records
photo: Shashkin / / Shutterstock

The non-exchangeable tokens (NFT) market and the digital art trade with their use have been gaining popularity since the beginning of this year. According to VISA, in August of this year alone, the volume of payments in the oil market reached $ 1 billion, while in 2020 it was about $ 100 million. The popularity of tokens means that large corporations are increasingly interested in this technology, because NFT technology can be used not only in digital but also in physical goods. “For example, there are plans to assign NFT to private real estate and create something similar to an electronic land and mortgage register based on a blockchain,” said Piotr Jaśkiewicz of the Baker McKenzie law firm.

– NFTs or non-processed tokens are so-called non-exchangeable tokens. These are either blockchain-based digital files connected to a digital asset, such as virtual art or a tangible object. They can represent, for example, a location on a rover that will explore real estate, a purse, or space. This is comparable to physical CO, but unlike regular NFT files, they cannot be copied. They can only be transferred between users’ wallets, which allows them to create a unique file on the blockchain network – explains Piotr Jaśkiewicz in an interview with Businessser Newseria.

NFT is a type of cryptographic token. It acts as a certificate confirming that the file provided is genuine, available in only one copy. Although it is possible to copy and duplicate a file for sale, there is only one NFT-certified original. All transactions involving him and the amount of the transaction, the buyer, the seller, the block number and the time stamp are open and can be verified. As with cryptocurrencies, NFT is traded through a blockchain network.

– NFT became very popular this year when it started to exhibit the works of famous artists in this form. This has created a completely new sector in the art market. It’s hard to sell a digital file, graphic, or video for a little more money, if it’s not unique, anyone can copy such a file later, and videos are often available, for example, on YouTube. On the other hand, adding such a digital authenticity certificate to documents – that is, adding an NFT token – allows you to create value through the uniqueness of this work of art, says Baker McKenzie’s lawyer.

In March, Mike Winkelmann’s digital art “Everydays: The First 5000 Days” sold for an all-time high of $ 69 million. Auctioned by Christie’s. The buyer – Indian investor Vignesh Sundaresan – received an NFT token confirming its authenticity.

Importantly, digital artwork with such a certificate, like traditional ones, can be resold to subsequent buyers. However, the NFT mark cannot be copied or copied without the consent of the owner. This makes this technology an ideal tool for collectors to store information about the authenticity and ownership of a particular business. However, it is increasingly used outside of the arts.

– Dorota Rabczewska did a 3D scan of her body, then divided it into 400 parts, and each such puzzle was provided with an NFT mark. This may be an unusual application, but it is still a fairly typical NFT function, ie creating a collector element. Along with NFT, the founder’s first tweet from Twitter, or cards containing NBA basketball players, was also sold. These are value-added collection items and can be a way to invest. This is a completely new sector, and I am sure that creativity will be excellent here – emphasizes Piotr Jaśkiewicz.

Large corporations are also increasingly interested in this technology. At the end of August, VISA – a global magnate for electronic payments – 150 thousand. hole. Received the “CryptoPunk 7610”, one of the 10,000 pixel graphics of these characters, each of which has proof of ownership stored in the ethereum blockchain.

– As for other areas where NFT is used, the entertainment industry is one of the main areas. This is, for example, about the problem of ticket sales by so-called ponies several times more expensive. This is not a problem with regular digital tickets, as such a ticket can simply be emailed to someone and the QR code will work the same way. However, when it comes to tickets based on NFT technology, it is impossible to send these files without the consent of the original issuer, says lawyer Baker McKenzie.

At NFT, you can set up an automatic commission for the original issuer so that when transferring a token – the percentage of the transaction is always returned to him.

– This functionality is already used by artists. Their art often gains value over time, so they too can benefit from this growth. On the other hand, entertainment industry companies are interested in whether they can ensure the sale of tickets in this way, for example, when receiving a commission for such an operation, the expert said.

The bottom line is that NFT technology can be used not only digitally, but also for physical goods such as cars, homes or luxury clothing.

– Luxury brands such as Louis Vuitton, Gucci, Prada and Cartier now form the Aura platform. It is a platform for collecting NFT tokens assigned to specific products. We will be able to check whether the goods we buy are genuine, because it will have a QR code associated with NFT. If the platform is available for further transactions in the secondary market, then we can buy used luxury goods and check whether they are genuine or stolen, says Piotr Jaśkiewicz.

According to VISA, in August of this year alone, the volume of payments in the oil market reached $ 1 billion, while in 2020 it was about $ 100 million. In the report “NFT: Involving Today’s Fans in Crypto and Trade”, VISA believes that this new form of trade has great potential in the world of sports and entertainment, but new and surprising applications of this technology are always visible.

“There are plans to assign NFT to private properties and create something like a blockchain-based electronic land and mortgage registry,” said lawyer Baker McKenzie.

However, he stressed that the NFT market is currently not regulated in any way, which leads to many inaccuracies.

– We must act within the existing legislation on new technology, which is somewhat out of regulation. For example, it often seems that we get an asset when we buy NFT, but this is not necessarily the case. It is as if we have received a certificate of authenticity. If we give someone a certificate of authenticity of a piece of jewelry, it does not mean that we give them the right of ownership of this piece of jewelry – says Piotr Jaśkiewicz. – It will not happen that we have ever given the NFT assigned to someone’s property to them, because the law does not provide for such an effect.

The use of NFT in the art market is subject to the intellectual property rights regime, where the transmission of a token will often be classified as the transfer of a copy of a particular work. However, this does not mean the transfer of ownership to him, that is, the buyer can not commercialize the product and even demonstrate it to the public.

– Therefore, it is important to have a contract for each transaction where the transfer of the NFT token, which will tell us what rights go with such a sign – says the expert. – Another problem is that if the copyright remains with the creator, in theory, there is no contraindication for the creator to re-issue such a work with new NFT, and then the originality of our product loses its significance, and thus the value of such a work decreases. assets will also decrease. We must have a contract to protect ourselves from such situations.

Particular attention should be paid to proper legal regulation in international trade. The most commonly used rules will be the rules specific to the country of the creator, but – as Piotr Jaśkiewicz points out – this market is the unregulated Wild West today, and this should be taken into account when closing transactions.

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