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Making NFTs valuable and real

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If you don’t know what an NFT is, here’s a wrong explanation: they are an entry in a database saying that something, belongs to you (or more precise, to an account you have control over). It’s impossible to hack or fake…

…but it’s also meaningless. You see, you don’t really own the thing, you just have control over what essentially is a link. You can pass it on, sell it, but you can’t prevent someone else from creating a similar or the same link (you could claim you have the oldest one).

If you buy the NFT of a picture, you can’t do anything with it, while the original copyright holder can do everything they want. They can make more NFTs, license it for commercial use, print copies. If you want to stop, and end in court, your NFT is meaningless. This is the realm of intellectual property and by now it’s understood quite well. NFTs are not playing on the realm of intellectual property… not yet.

I think this would make NFTs very valuable and also real (they are sort of fake at the moment).

Make the NFT assignment also carry the contract that makes the assignment of copyright or transfers a trademark or patent. Now NFTs are wrapping the intellectual property that the courts will back up. Now it’s interesting.

One interesting bit of NFTs is the fact that the original creator could get 5% of every sale afterwards. If NFTs are being used to transfer copyright, it should be impossible to transfer copyright without transferring the NFT otherwise there wouldn’t be further transactions for the artist to get paid out of. Can a contract be made so that the IP assignment cannot be separated from the NFT. That is a technically and legal challenge that I find interesting and if it’s possible, that could change everything.


4 responses to “Making NFTs valuable and real”

  1. venkks Avatar

    Makes sense. Do you know if its legally possible to assign/transfer copyright to NFT in an unobtrusive way? I am also wondering if its possible technically to do such association.

    1. Pablo Fernandez Avatar

      The technical answer to that question is no, you cannot transfer it to an NFT. Copyright can be held by people and entities. Copyright (some of it) can be transferred from person/entity to person/entity. Those are very standard contracts that we’ve been doing for more than a hundred years now. What we would need to do is for the NFT creation/assignment to contain the contract. My gut feeling is that it’s possible, but that’s just a guess.

      What’s even harder is how to make copyright assignment tied to the NFT, so that the owner of the token can’t assign copyright to someone else without also assigning the token. That’s harder, but I’m not a lawyer, so I don’t know.

  2. William Volk Avatar

    The NFT can refer to anything (URL) so, it could point to a document that contains the contract, the art piece etc. Still there’s an implied ‘transfer’ that occurs with purchase. This seems to be happening when a real item (like a house) is tied to an NFT.

    1. Pablo Fernandez Avatar

      If there’s a contract signed and the NFT points to it, the NFT is not necessary for the contract to be signed, and when the NFT gets resold, the contract stays the same. I have yet to see a single example of NFT conveying any meaningful level of ownership.

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