Yahoo Finance Footprint: Do you own copyright when buying an NFT?
According to the latest data from Footprint Analytics, total NFT market transactions in the third quarter exceeded $9.9 billion, an increase of 832% compared to the second. Clearly, the NFT market is trending up, and more people are looking to buy into or utilize this unique new form of digital transactions. Just a few recent headlines:
In August 2021, NBA star Stephen Curry announced that he had purchased an NFT—a “Bored Ape”—for $180,000 and is using it as a Twitter avatar.
In November 2021, crypto artist Beeple’s NFT work HUMAN ONE sold for almost $29 million at Christie’s.
But if you buy an NFT, which ownership rights are you entitled to?
Footprint Analytics: NFT Monthly Trading Volume
What is an NFT?
NFT is an acronym for non-fungible token. Each token represents a unique digital profile recorded on the blockchain digital ledger. This means that two NFTs are completely unique.
In a recent article, we analysed the main two areas currently in the spotlight for their NFT use cases, collectibles and gaming, and explored how investors can find promising NFT projects.
How did NFTs create a $10 billion market?
Their scarcity.
They allow convenient transactions in the metaverse.
They give artists and content creators more control over their work.
What do I get when I buy NFT?
There are three parties involved in minting and trading NFT rights:
The creator of the original work
The creator of the NFT
The NFT buyer.
In the case of a painting, for example, the original creator creates a painting, the NFT creator casts it as an NFT on OpenSea and puts it up for sale, and the NFT buyer buys it.
When the creator of the original work and the creator of the NFT work are the same person
The attribution of rights will be agreed in appropriate terms and set out in a smart contract on the platform to declare what rights the buyer of the NFT work can expect from the creator.
Often, the agreed rights are only those attached to the cast NFT work, not those attached to the original work. For example, Christie’s contracts indicate that the buyer of an NFT acquires only ownership of the NFT and rights to store, sell and dispose of it. However, they do not necessarily own the intellectual property rights of the original work on which the NFT is based.
Therefore, a buyer who purchases an NFT does not acquire any rights to the original work on which the NFT is minted, unless the contract specifically agrees otherwise.
When the creator of the original work is not the same person as the creator of the NFT work
The NFT artist uploads the original work to the blockchain and mints the NFT to be traded, thus gaining profit. If the foundry is authorised, you will then acquire the rights related to the NFT work as set out in the contract.
If the minter is not authorised, there is a risk of recourse for intellectual property infringement. If the minted NFT work is then taken down from the platform for infringement, the buyer’s NFT does not actually get anything..
Summary
Buying an NFT does not entitle you to the physical work nor to the copyright or any other rights in work. Buyers need to be aware of the rights contained in the smart contract.
At present, there are problems with NFT trading such as piracy and other intellectual property infringement, which we will discuss in the next article – ‘Are the NFTs you trade really protected by law?’ to elaborate on this from a legal perspective.
Disclaimer: The contents of this article represent the views of Footprint and are for information and reference only and do not constitute any investment advice.
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Footprint Analytics is an all-in-one analysis platform to visualise blockchain data and discover insights. It cleans and integrates on-chain data so users of any experience level can quickly start researching tokens, projects and protocols. With more than a thousand dashboard templates – plus a drag-and-drop interface – anyone can build their own customised charts in minutes. Uncover blockchain data and invest smarter with Footprint.
