Finding the 'Fun' in Non-Fungible Tokens

D I C T U M S O C I E T Y

Finding the 'Fun ' in Non-fungible Tokens Finding the 'Fun ' in Non-fungible Tokens

D I S C U S S I N G I N T E L L E C T U A L P R O P E R T Y L A W S A R O U N D N O N - F U N G I B L E T O K E N S O R N F T

What are NFTs?

NFT are a unique digital certificate which essentially translates into a digital asset. The difference between cryptocurrencies and NFTs are that NFTs are considered indivisible, i.e. it is one of a kind and cannot be broken down in parts in the manner in which cryptocurrency is distributed. Additionally NFTs do not represent a value or store of value but instead its value arises from the rights attached to the digital asset.

Therefore, an NFT can be an intangible or tangible asset in the form of music, art, collectibles, or ingame assets as well.

Smart contracts are digital transaction protocols that get processed with the ocurrence of an event and blockchains are a secure and permanent digital ledger that keep a record of the transaction history related to the NFT between the network and its peers.

Using smart contracts on a blockchain NFTs are created.

It is important for NFT buyers to differentiate between owning an NFT and owning the copyright linked to the asset or owning the underlying asset. The buyers intellectual property rights revolve around the smart contract i.e buying owning the underlying asset they are able to hold it for noncommercial purposes with a non-exclusive license unless otherwise agreed upon with the seller. In the meantime, the original owner is able to continue commercialising the asset and producing more NFTs. According to Cooper Grace Ward Lawyers,

' there are a number of digital marketplaces that facilitate the listing, buying and selling of NFTs. The terms of use governing these marketplaces may also impose additional restrictions on the rights NFT buyers receive.

Anyone looking to buy an NFT should conduct a thorough due diligence process to ascertain the rights associated with the NFT. Among other things, this process should include a review of any smart contract and marketplace terms of use.