NFTs
An NFT is an entry on a blockchain that points to something. What you legally buy along with it depends entirely on the contract, and that's often less than buyers think.
An NFT is a unique entry on a blockchain. It proves that this entry belongs to you. It doesn't automatically prove that the image it points to belongs to you too.
Often the image file isn't on the blockchain at all. It sits on an ordinary server. If that's switched off, the entry still exists, but it points to nothing.
Legally, copyright doesn't automatically pass to you. What you get is in the terms of use, and they vary a lot. If you haven't read them, you don't know what you've bought.
Economically it's like collectibles, except NFTs are even harder to sell. The price depends solely on demand, trading is expensive, and published return figures only show sales, not the pieces nobody wants. A well known NFT sold for 2.9 million dollars in 2021. When the buyer offered it again in 2022 for 48 million, the highest bid was at times a few hundred dollars.
Technically an NFT usually points via an address to a description, which then points to the actual file. If the file is on an ordinary server, it only exists as long as someone runs the server. Storage systems that find files by their content help. But they too only guarantee the file is there as long as someone keeps it available.
Legally you have to separate two things: owning the token and being allowed to use the work. Without explicit permission you may not exploit the work, for example print it on T shirts and sell them. The licenses often used for this differ a lot in what they allow and whether the right passes on with a resale.
The market for NFTs is very thin. Little is traded (liquidity), trading is expensive, and most turnover falls on very few collections. Published prices are just as distorted as in other collectibles markets, because pieces nobody buys don't appear in any statistic.
Summary
- The token is the entry and not necessarily the work.
- Copyright doesn't automatically transfer with it.
- Price statistics only show the objects that sold.
Did you get it?
What do you technically own with an NFT?
An entry on the blockchain that points to a description and through it to a file.
Do you acquire copyright with the purchase?
Not automatically. What counts is what the license terms say.
Why are published returns distorted?
Because pieces nobody buys don't appear in the statistics.
Related
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