Advancements in the blockchain technology are happening at a fast pace, while lawmakers and regulators take longer to establish their oversight policies. The Nft technology for one, was devised only in 2021 by British scientist Sir Tim Berners-Lee, and has been making headway in the blockchain industry as a lucrative source of newfound wealth. However, everything has been happening so fast the UK Law Commission is still in the process of threshing out potential legal issues to ensure that NFT transactions work within the boundaries of English laws.
What Inspired the Development of NFT Technology?
Sir Tim Berners-Lee, invented the Nft technology, as a means by which ownership of digital assets can be established via a blockchain platform so it can be monetized. However, the principle behind the financial value of an NFT is that it is not tied to a price index. Mainly because of the digital asset’s non-fungible nature, which means it cannot be easily interchanged or exchanged for another asset in light of its intrinsic value. That is why NFTs are put up for sale in auction houses, where there are buyers willing to pay any price in order to acquire ownership of a digital masterpiece.
Months after the British scientist’s NFT technology was introduced in the Ethereum platform, he was able to sell the source code of his WWW invention at Sotheby’s for $5.4 million. Thereafter, other creators or established owners of digital assets had their works tokenized as a non-fungible asset via the Ethereum blockchain platform.
Apparently, there is a market for NFTs, as many took to selling NFTs in exchange for millions worth of cryptocurrencies. Sometime in March, graphic designer and digital artist Mike Winkelmann, who goes by the name of Beeple in the art world, made record for selling the highest priced NFT. Beeple sold his NFT “Everydays – The First 5000 Days,” to cryptocurrency mogul Vignesh Sundaresan, for a whopping price of $69 million.
However, law experts warn there are legal considerations that must not be overlooked when dealing with this type of blockchain transaction. Currently, the UK Law Commission is looking into the following matters:
Claim of Ownership
Anyone can claim ownership of a digital asset by affixing a token to it regardless of whether the claimant is the creator. The blockchain platform even if publicly available, does not require claimants to use their true identities when converting a digital asset into an NFT.
NFT Ownership Can be Challenged
While some buyers of goods require proof of ownership to make sure the seller has legal right to sell the asset, many believe that NFT conversion serves as a good enough proof of ownership. Still, if ever another person discovers that his original creation was converted into an NFT that was later auctioned off, that person can take legal action to reclaim ownership from whoever is the current owner of his work.
NFT Proof of Ownership is Not a Copyright Equivalent
Establishing ownership by converting a digital asset into an NFT does not deliver the same rights afforded by a copyright. What is owned is the key to a code that entitles you to link the digital asset to a blockchain transaction. As mentioned earlier, a claim of an NFT owner to a specific digital asset can still be challenged.
Enforcement of Conditions and Stipulations Requires Use of Same Blockchain Platform
Some NFTs include information that give the first owner the right to receive a specific amount as royalty every time the NFT changes ownership. However such special privilege can be enforced only in the blockchain platform where the NFT originated.
