BUYING NFTs

BUYING NFTs

A quick look at the NFTs, what they are and how they can be used.

The business of acquiring art is typically associated with the sale of unique, physical things whose source was confirmed by galleries, public auction houses and generally, a route of paper, to identify an original from a copy. In the physical world, you can simply go and buy a painting that you wish to hold. You pay the artist, as well as you become the proprietor of that piece.

Currently, it’s possible in the digital world with a Non-Fungible Token (NFT). With the rise of NFTs, electronic “musicians” can offer their “work” (or any type of photo currently easily readily available on the web) to an expanding base of “collection agencies” with the click of a button. Through NFTs, every electronic collectable is ascribed a distinct, cryptographically set code thereby making it a distinctive work. What are NFTs? In technological terms, an NFT is a representation of data which licenses a digital asset as being unique. When used in the art world, NFTs run like digital certificates, which establish the outright ownership and credibility of such, now an electronic, ‘art-work’.

An NFT is a sort of “crypto property”, in which an asset is made into a one-of-a-kind, by providing the one-of-a-kind line of code in an immutable ledger (blockchain). This one-of-a-kind code resembles the possession certificate, now of course being the digital possession. NFTs are electronically special assets and no two NFTs can be identical. NFTs, hence, are basically computer documents, combined with proof of possession and also credibility. In this respect and manner, they are like a more traditional deed or title. They exist on a blockchain or a secure electronic, publicly-available ledger — which is also how cryptocurrencies exist.

Cryptocurrencies vary from NFTs, in a few essential ways.

One being, like conventional currencies the set of cryptocurrencies are “fungible”. Meaning that such currencies like USDT or LiteCoin are equally interchangeable. One type of cryptocurrency will constantly reserve the same as any other of its type, thereby becoming interchangeable. As with all currencies, this does not speak to market valuation and structure. On the opposite side, NFTs are not fungible. NFTs cannot be interchanged with each other with say NFT ‘A’ service the same purpose or function as NFT ‘B’. Every individual NFT has the capacity to retain its own, distinct valuation. Commonly for artwork and the like, this valuation is established by the highest bidder. Today, artists that look to offer their work as NFTs have to sign up first with an NFT market, upload and also confirm their info on a blockchain. After that, with all the pieces in place, they then must “mint” their digital representations as or in NFTs.

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What makes an NFT unique.

Every NFT should have a creator. This action and event, as it is on-chain, is typically a matter of public record and thereby easily verifiable. The holding or possession of that NFT is what makes the asset unique. In that, such possession is documented in a protected, immutable, decentralized and openly verifiable ledger. The complete record of ownership title, exchange or payment history as well as the information about the property is often also kept on this open, decentralized blockchain network.

Critically, the possession of the asset alongside the meta-data or ‘associated information’ are immutably recorded. The security of the blockchain adds substantial worth to NFTs as possessions: once NFTs are entered into a blockchain, no one can change the document of possession or paste a brand-new NFT into replace it. This constitutes a fairly secure recording method of possession and is what distinguishes NFTs from real-world possessions. The personally encrypted control of ownership identification, as well as the primary data or file associated with the NFT, are where TOF® truly excels.

NFTs can be acquired, marketed, traded or basically utilized themselves to act as a ‘security’. This method and potential is similar to how other properties are used in the real-world. Certainly, since NFTs are a comparatively newly emerging property type, there remain significant number of use-cases that presently remain under regulative scrutiny. Yet, by attaching real-world contractual documentation as well as terms of ownership and transfer, TOF® is answering the most pressing concerns that have thus far limited NFT’s more global implementation.

NFTs in the art world.

The art-NFT is addresses questions of uniqueness, control and accountability. Authenticity and ownership of artworks are both critically important aspects in field of any innovation, especially in the visual as well as aesthetic arts. By using NFTs, it is possible now for independent content creators as well as the secondary or subsequent collectors to now control the means of accrediting authorship as well as safe ownership-control for any documented a piece of art. Through the use of NFTs and similar cryptographic asset controls, content creators have the potential to firstly digitize and then sell their compositions almost anywhere.

This permits independent creators, who were once both geographically and physically constrained, instant access to international markets. Likewise, makers now may also easily retain legal ownership-control over their works, including the hugely beneficial corollary of claims and receipts of resale royalties. With art-NFTs, the underlying physical or real-world item that is thereby linked to the NFT could be most any form of multimedia such as say a computer animated GIF, song or range of various other filetypes.

Copyright and art-NFTs

When considering intellectual property (IP) rights and the potential consequences or effects derived from NFTs, it’s very important to compare ownership of an art-NFT to say the more traditional ownership-control of the underlying copyright. An NFT, as a digital blockchain asset in and of itself, does not give anybody a traditionally classified or qualified ‘copyright title’. Most commonly all NFTs, art or otherwise, are simply just cryptographically signed invoices. The NFT purely states that you have digital control of a unique, digital representation of said work.

The maker of the artwork represented in an NFT still owns the copyright to that artwork. The person that paid to control the digital registration, that NFT, really only has a duplicate of that. What is unique is that they are owning a registration certificate which, could further be re-entered or re-created on a separate blockchain network. Jack Dorsey, the Chief Executive Officer of Twitter, notoriously offered an NFT of his first tweet, yet that does not imply that the customer possesses the tweet; the customer owns simply a digitally authorized screenshot of it.

So, from the more traditional and legal viewpoints of intellectual property rights and control, ownership of an NFT may not be helpful whatsoever. The legal rights granted by an NFT seller depend upon the legal rights that are or have been moved, through legal contractual documentation and/or using a permit or assignment. These can vary with every NFT or, as in the majority of cases, do not even exist with most NFT sales and exchanges. It is held that other than purchasing the blockchain or distributed ledger token, the purchasing of an NFT does not confer copyright ‘possession’.

Owning an NFT does not, by itself and particularly without a contract, grant the right to print or distribute the work without the authorization of the copyright owner. This is why TOF® only permits the sale and exchange of NFTs as are based on E2EE, AML/KYC compliant, directly compiled and user-set contractual documentation. As a more specific example, if say a musician did not accredit the linked NFT content in the first place then, fundamentally the sale of that NFT is a stand-alone digital registration — nothing more. In the context of legal copyrights, consequently, the ownership of underlying civil liberties will just move if the creator or composer of the original expressly accepts to move those legal rights to the NFT proprietor.

This however is a secondary legal and contractual agreement that must be represented in the contractual exchange alongside the NFT purchase, it is not inherent to the NFT sale in and of itself. Only if and also when such tangible copyright capacity or legal rights are moved, subject to the terms of the transfer, an NFT owner might not be permitted to duplicate, distribute copies, publicly perform, show, or make acquired jobs of the original job.

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Should others’ be using the work, as associated with an NFT, without appropriate permission, the copyright holders of any works that may be linked to an NFT can only send ‘take-down’ requests — as in the traditional recourse methodologies for infringement. The underlying work may be taken down as a result. Only when all duplicates have been a) discovered and b) removed could there then be that one, desirable link to the NFT which would ascribe ownership-control to the holder. This is an untenable, impractical proposition. TOF® holds that direct ownership-control of the original file itself, through the use of cryptographic keys and quantum-proof distributed hosting, is the one practical solution.

It is necessary to understand the link, if any, between the seller of an NFT as well as the copyright owner of the connected content. Both must belong to the transferring party (e.g. seller), in order to create the persistence of legal right transfers as may be associated with ownership-control by that NFT purchaser. On all networks, each NFT contains a distinct digital signature. TOF® extends provenance control further by ascribing the creator or owners’ encrypted PII, held using personal encryption in that persons’ data-wallet, to NFT records. Neither can be forged, replaced nor edited or duplicated.

It is further critical to not forget that by itself the NFT, outside of the TOF® Biosphere, may just be a link to web content. It can simply be a cryptographic hash on a network. The NFT may have no copyrightable material itself. The software used to create most NFTs can themselves most likely be copyrightable. Naturally, the NFT hype and mainstream attention has brought with it a host of fraudsters, con-men and IP infringements. These ‘nefarious’ characters typically tend to be those obtaining digital content releasing such as NFTs. This is easy since it’s possible that most any individual can produce an NFT for most any digital file.

Other concerns with NFTs.

Possession. Since the sale of an NFT entails making a copy of the creative work and also communicating it to the purchaser, any type of unauthorized reproduction, circulation, or adjustment may amount to copyright infringement. Territory. There are no global guidelines around crypto-assets or NFTs. Under the existing stipulations, crypto-assets as well as NFTs could be treated as abstract properties like software applications. However, figuring out the area of an NFT is an open question as blockchains are worldwide journals and Courts have actually acknowledged that crypto-assets “can not be stored anywhere”. Licensing. An NFT usually does not transfer the copyright ownership to the owner unless it is contractually so agreed. Normally, the certificate will certainly book all other civil liberties to the IP owner. Just like the customer of an authorized poster possesses the poster itself, but not the underlying copyright, the purchaser of an art NFT would certainly possess that electronic item, yet normally would not get the right to recreate the art work. Infringement. An NFT creator can have misstated themselves as the author of the underlying asset. Or, the NFT could be associated with an infringing work. Or, the NFT buyer may have created a derivative work without permission. The unalterable nature of blockchain transactions together with the typically pseudo-anonymous nature of NFT possession can make it near impossible to impose IP legal rights.

The possession of an NFT, like any other possession in the real-world, is valued and driven by the dynamics of supply and demand. This is set by market economics. Due to the fact that NFTs are one-of-a-kind, there is a common belief that this intrinsically unique digital items’ originality somehow automatically is of value by itself. Yet as in the art world, just like any type of physical painting or work or say sculpture, an NFT can be practical investment and/or hold emotional value. However, as with all crypto financial investments, there is a further layer or potential of danger as this digital asset is wholly dependent on commonly not yet perfected or refined exchange strategies, ownership-controls as well as subsequent use-case activities. This is again where the Biosphere focuses attention and applies practical solutions to answer these issues.

Generally speaking, it is largely unclear as to what degree existing NFT-market activities are being driven by genuine collectors i.e., those who are truly thinking about the underlying artwork or item, versus speculators and/or ‘bad actors’. Without question, there are certainly numerous participants who intend to artificially manipulate costs, the so called ‘market makers’. Further, there exists the likely resulting, true excess of supply. It is prudent to not forget that, as with all compositions — quite simply — not all works, despite being unique, are worthwhile to hold.

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