The casting, distribution and sale of NFTs must involve copyright law

Everyone is crazy Irreplaceable tokens (NFT).Saw it in the first half of 2021 alone Andy Warhol’s NFT, NFT World Wide Web Code, First tweet Of course, there are also famous Beeple’s “Everydays” is sold for $69 million in NFT. Whether the explosive rise of NFT is a short-lived or the future of art and other fields is a hot topic. An emerging topic of the conversation is whether there are copyright issues with NFTs. Copyright is involved in the entire NFT process, but the NFT itself has no inherent content to ensure that copyright rules are respected (or even considered).

The story of blockchain development in the cryptocurrency field is a confrontational struggle Centralization and supervision. Cryptocurrency extremists envision a “democratized” financial system that is not controlled by legislation. NTF has developed from this field, and has some tendency to decouple from established institutions. With this decoupling of NFTs from copyright law, major issues have arisen that affect NFT buyers and the artists who created them.

Related: Unfungible tokens from a legal perspective

Copyright issues

The first issue is ownership. The transfer of the NFT itself will not transfer any property rights of the digital files linked in the NFT or any intangible rights related to the artwork. Just as owning a painting does not give the owner the right to copy the painting, the owner of the NFT does not share any exclusive rights that belong to the copyright owner of the related work.

In many cases, owning an NFT does not even guarantee the ownership of the digital files covered by the NFT (such as Beeple’s “Everydays” JPG), which are usually not included in the NFT. In contrast, NFT contains links to the location of digital files on Internet servers. To mint the NFT, the mint stores a copy of the digital file on the server, and then creates a blockchain token containing a link to the file. If the hosting service is closed, the NFT will point to a dead link.

Secondly, the process of casting NFT brings copyright issues to both copyright owners and NFT buyers. Buyers regard NFT as an endorsement of authenticity, but anyone can cast any digital file’s NFT. Casting an NFT usually involves storing a copy of a digital file on a server, but only the copyright holder of the basic work can make a copy of the work. Therefore, unless the NFT was minted by the copyright owner (or a person with permission to operate it), the act of casting the NFT is an infringement of copyright. The promotion and sale of this NFT may involve additional infringements.

Unauthorized NFT casting is not just the result of malicious actors. Misunderstanding of copyright may lead to casting of NFT without proper license.For example, the owner of the physical map of Jean-Michel Basquiat on purpose Before Basquiat Manor intervened and pointed out that the owner of the painting was not the potential copyright owner, they performed an NFT casting on the painting.

Larger auction houses, such as Christie’s and Sotheby’s, will use their history and expertise as the backing to ensure the provenance of the NFT. But most people will not buy their NFT from mature auction houses. Online NFT markets such as Rarible and OpenSea cannot verify that every NFT sold is properly licensed.

Related: Christie’s July: NFT sales exceed $93 million and Art+Technology Summit 2021

In general, the widespread distribution of unauthorized NFTs has also weakened people’s confidence in them. If the NFT is to realize its potential as a new tool for building and exchanging the intrinsic value of creative works, the NFT and copyright fields will need to start cooperating.

Potential solutions

The solution to these problems lies in combining non-encryption expertise with NFT development. Combining copyright knowledge with NFT development will produce NFT solutions that understand, respect and utilize copyright law. One of the long-term potentials of NFTs is as a form of copyright ownership, and some companies are working hard to combine the world of copyright and encryption.

Related: Irreplaceable tokens: a new paradigm for intellectual property assets?

One solution is to limit NFT sales to specialized auctions that handle a limited number of NFTs. Companies operating in this model restrict NFT sales to auctions they control. These NFTs are planned and reviewed in advance by experts. This solution solves the provenance problem with expertise, but at the cost of accessibility for artists and buyers.

Verification and verification of copyright ownership must be part of the NFT casting process—for example, by bringing humans into the casting process to gather evidence and support, as a package of evidence proving that the person who casts the NFT has the necessary permissions. Then store the certification package online, and NFT provides links to supporting documents. The NFT minted in this way is portable and can be sold and exchanged on any Ethereum-compatible NFT market. In this way, artists can be protected from unauthorized casting, and purchasers can ensure that what they get is an NFT that is cast responsibly by the copyright owner.

Related: NFT is a game changer for independent artists and musicians

Introduce NFT and copyright law

NFT is regarded as a digital asset, a unique piece of code that can maintain value due to its scarcity. As the use of NFT expands to the arts and creative fields, the ambition of NFT exceeds the consideration of legal consequences.

The technical process of casting, distributing and selling NFT involves the impact of copyright law that has not yet been fully resolved. If the application of copyright law is not properly considered, NFT will cause problems for both creators and consumers. In response, the new company has already presented a solution. Applying copyright law expertise to the creation and sale of NFTs will begin to solve these copyright issues and pave the way for NFTs to reach their full potential.

This article does not contain investment advice or recommendations. Every investment and trading action involves risks, and readers should conduct research when making a decision.

The views, thoughts and opinions expressed here are only those of the author, and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Haskanderwal Is the CEO of Ureeqa, a blockchain-based platform for protecting, managing and monetizing creative work. Harsch is an engineering gold medalist at the University of Waterloo and an Ivey Scholar at the Richard Ivey School of Business. Over the past 20 years, he has built and managed companies in different industries, including technology, real estate, and private equity.