If despite all the hype on the internet, you haven’t been pressured enough to open google and ask; “what the hell is an NFT?” then I have two things to say to you; 1. Omo nawa for you o, you no really send anybody or anything, and 2. Congrats, you’ve come to the right place. Permit us to break it down for you.
WHAT ARE NFTs
NFT stands for Non-Fungible Token. We’ll break that into two parts for easy digestion.
Non-fungible means that it can’t be exchanged for another item. So “fungible” means it can. An example of something fungible is money. You could always exchange a hundred naira note for another hundred naira note. Even a torn or much dirtier one. But NFTs don’t work that way; even if they look similar, they still can’t be exchanged. This is because each NFT is a specific unit of data with extra information encoded into it to help record it in the blockchain. So even if they look the same to your eyes, they don’t look the same to the computer. Your hundred naira, sadly, looks the same to everyone, human or computer.
A Token is a digital asset that could be used as money on the blockchain. An example would be cryptocurrencies like Bitcoin and Ethereum. However, while cryptocurrencies are mutually interchangeable or fungible, NFTs are not. Hence, they are tokens that are non-fungible; Non-fungible Tokens; NFTs- get it?
In a non-technical sense, an NFT can be anything as long as it is a digital file. So music, art, gifs, tweets, pictures, even memes can become NFTs capable of being sold or bought on the blockchain as long as they are digital files. But the most popular use case is digital art, and when most people use the phrase, they are most likely referring to this.
The current explosion of NFT hype on the internet is well deserved in my opinion. After all, the technology behind it disrupts a centuries-old method of collecting art. For one, it expands the category of things that could traditionally be sold or collected as art. Twenty years ago, no one was going to buy your tweet or video no matter how viral it went. Now, you can put it for sale on the blockchain (a process known as minting) and make good money from it. On the other hand, for traditional artists, it expands their earning capacity, as it cuts out the need for middlemen; a necessary part of the sales process in the past. If you think otherwise, just ask Beeple, who sold his piece of art; The First 5000 days for 69 million dollars. Just take a moment to think about how mind-numbing that figure is. Now don’t get me wrong, art gets sold for high figures like that all the time. But there’s one more reason why that figure is mind-boggling to me, and to some, sheer madness.
WHAT DO YOU ACTUALLY GET WHEN YOU PURCHASE AN NFT
Here’s the thing, when you buy an NFT, you get the right of ownership, that is, you get the right to say I own this artwork. However, the legal rights accorded to you from purchase mostly stop there. Even if you own the NFT, anyone is allowed to have a copy of it. In fact, here’s a copy of Beeple’s 69 million dollar artwork:
You see, it’s a digital file, and so anyone can have a copy. To critics, this is stupid, because it makes no sense to own something that anyone can easily download a copy of. But that’s the thing; it will always be a copy. The original will always be held by the purchaser, whose identity can always be verified on the blockchain because the NFTs are encoded with this information. I guess that’s just the NFT flex- ownership/bragging rights. And if you disagree, well, there’s Beeple’s million-dollar artwork right there. Even if you download it, does that mean that you are now worth 69 million dollars?
One more consideration that arises as regards NFT purchases is the question of what other rights accrue to a purchaser of an NFT, apart from the right of ownership. The simple answer to that is none. However, a lot of people still tend to make this flawed assumption that purchasing NFTs grants them IP rights like copyrights and the right of reproduction. A popular story that comes to mind is the story of Spice DAO; an anonymous NFT group who successfully bid for and purchased a rare book; Jodorowsy’s dune, which was to serve as a guidebook to the adaptation of the Frank Herbert novel “Dune”. They purchased the book for 3 million dollars, intending to make it public and then adapt it into an animated series. Of course, this plan failed. Because like I said earlier, while they purchased the book, a purchase only confers the right of ownership and not other associated rights like copyright. These remain with the artist, who retains the right to reproduce the work, and the purchaser is not entitled to any royalties.
This isn’t a condition peculiar to NFTs, the same rules apply to the collection of physical art as well. The artists always retain the IP rights associated with the work. It is possible though, that the artist(seller) and buyer can reach an agreement that enables the transfer of other Intellectual property rights upon purchase. But where this agreement does not exist, the buyer does not have the right to make more NFTs or use it in any manner inconsistent with the IP rights of the artist.
IP CONSIDERATIONS FOR THE ARTIST
There’s one more angle to this NFT conversation, and that is the intellectual property considerations of the artist. Consider this scenario; a particular tweet has gone super viral on Twitter and I decide to mint the tweet and put it up for sale on the blockchain as an NFT. Have I committed an IP infringement? It’s just a tweet, right? Or consider another scenario; a particular TV series is trending and is super popular in social media circles, so I as an artist decide to make limited edition NFTs of each of the characters and begin to sell them. Is that an IP infringement or not?
Let’s answer this question with the real-life case study of Hitpiece. Hitpiece was a website that gave artists a platform to sell their songs as NFTs. The problem was that any random person could register on the site and sell songs, even those that did not belong to them. Soon enough, songs of several artists from all levels, across the world were being sold as NFTs without the artist’s permission. As expected, there was outrage from different artists as regards what the Website was doing, and soon it was shut down. To put this conversation into proper context, we must consider one very important word: Copyright. A Copyright is a form of Intellectual Property protection given to literary, artistic, dramatic, or musical works in addition to performances, recordings, and other related works. As such, social media posts are also covered by copyright. Creators also do not need to apply for them to have this protection. It automatically exists from the moment the work is created.
We cannot take the creations of others and make NFTs of them because their creators all have inherent copyright protection over them. Even their tweets are protected. If an artist seeks to legally make NFTs of the creations of another person, then an agreement must be drawn out between them. Anything other than this amounts to an IP infringement. And if you’re sued, it’ll cost. Trust us on this one.
As NFTs and crypto technology become more mainstream, it becomes increasingly important to educate the public on the nature of this technology and how it is affected by intellectual property. As it stands, the NFT ecosystem still has a lot of catching up to do with the diversity of copyright laws and systems across the world. However, the foundation for this has already been laid down by some international agreements such as the Berne Convention.