NFT | What is NFT | What Are the Opportunities and Legal Challenges in NFTs

Non-Fungible Tokens - NFT

Bitcoin and many other digital currencies are becoming popular as we enter digitalized society. Many hold that cryptocurrencies will ultimately replace the traditional paper currency notes.

However, Bitcoin is the flagship cryptocurrency, another increasingly dominant commodity is NFT, which means the non-fungible token that is almost like a digital form of a collectable. 

Non-fungible Token (NFT) is now at the top of the topic among the digital world, soon after its introduction to the fastly developing and changing whole digital world. 

Background - NFT

NFTs came into the market in 2012, but it's grown and became popular in the crypto community in 2017 when Dapper Labs company started selling NFTs linked to unique cartoons digital cats known as Crypto-Kitties. At that time, people went crazy for these pretty digital kitties. 

What is NFT?

NFTs are blockchain that is based upon units of value or "tokens", which have a unique ID linked to an underlying digital asset. It's a cryptographic token that describes something that cannot be changed. NFT is a digital asset representing real-world objects such as music, videos, art, and in-game items. Ethereum blockchain is most commonly used for an NFT, but it is also held on many others blockchains. 

It is composed of software code in a "smart contract". The smart contract consists of details of the underlying physical or digital assets to which the NFT relates and the rights and rules attached to the NFT.

What Are the Opportunities and Legal Challenges in NFTs 

The digital assets known as "Non-fungible Tokens" (generally known as "NFTs") have gained significant public attention. They are presently one of the hottest topics amongst tech companies and legal advisors. There is no doubt that NFTs generate massive opportunities and can revolutionize whole industries such as the industry of:

 

• Art
• Media
• Entertainment
• Sports.

 

NFTs create new opportunities and markets for innovators, investors, brands, musicians, artists, and consumers. However, a wide range of legal challenges and issues can come into play depending on the intent of the parties involved and the structure of the asset.

NFTs Given that now lay the base for ownership rights and a new class of assets, a careful and thorough analysis of the underlying legal challenges is required from those who issue and sell/trade the tokens and those who will buy obtain them.

Here is includes Key Legal Challenges and Issues include how NFTs can be categorized: 

 

• Anti-money laundering
• Sanctions implications
• Intellectual property rights
• Cybersecurity concerns and;
• State laws governing virtual currencies. 

Finally, it remains to be perceived whether the NFT boom of 2021 will continue in 2022. If the NFT is here to stay, its use will assuredly lead to numerous interesting legal challenges.

Therefore, we suggest that NFT buyers and issuers must follow these developments thoroughly, as many regulators already have taken note of the growth of NFTs. We also expect the upcoming interesting copyright-related disputes to arise in the future that will give further clarity on how to deal with NFTs.