There is no doubt that blockchain will be the driving force of technology in the future. There are several trends related to blockchain technology, including smart contracts, initial coin offerings, and since the beginning of March this year, Non-fungible tokens (NFTs) have gained popularity and spotlight. NFTs hold the market attention in 2017 with the rapid rise of CrytoKitties- a blockchain game that allows players to collect, adopt, buy and trade virtual cats. And in this year, NFTs gained back its well-deserved reputation when Christie’s auction house sold a piece of artwork called “Everyday: The First 5000 Days” (by Mike Winkelman) for $69 million. With the rapid NFT Development, several NFTs related to different fields such as digital arts, music, blockchain games, etc become trendy. Although NFT is the hot trend in the blockchain market now, it can be denied that NFT still has various problems, and one of the universally interesting issues is copyrights. So, let’s get to know the challenges and opportunities of NFTs' copyright problems.
1. What are NFTs? How does blockchain technology distribute to NFT Development?
The term “NFT” stands for a Non-fungible token – a special kind of cryptographic token that represents unique items. It exists in different types such as music files, images, videos, game characters, or even tweets. NFT can hold the uniqueness of work since it is unexchangeable and there is no NFT that has the same value to exchange with others. In contrast, fungible tokens (such as ETH, Bitcoin, etc) are interchangeable with other assets that have the same content. For example, 1 ETH (Ethereum) is equal to 0.07 BTC (bitcoin). Then, fungible tokens are not unique while NFTs are scarce, and it makes NFTs valuable.
Blockchain technology plays an indispensable role in protecting NFTs while smart contracts help to verify its ownership. It is a distributed ledger that provides time-tamp records. Records are copied and stored in nodes without the interference of third-party organizations, which helps to prevent data loss. Additionally, the transparency of blockchain brings better security while still ensuring that transactions can be traced back easily. Especially, once data is entered into the blockchain systems, it can not be altered or deleted. So, this characteristic makes blockchain technology trustworthy since no one can alter or change the data without all parties involved knowing. That’s why NFT Blockchain Development and NFT Smart Contracts are always mentioned in the process of NFT Development.
Related: Create Your Own NFT Tokens on Popular Blockchain Platforms with Non-Fungible Token Development Services
2. Copyright issues and opportunities of Non-fungible tokens
a. Ownership issue
Many people are joining the NFT market without fully knowing about its ownership concept. They often misunderstand that owning an NFT digital work means the author has transferred copyright to purchasers and then, they have proprietary rights to every copy or version of the underlying work. However, the concept of NFT ownership is not like that. So, the question is who is the owner of NFTs? And who can exploit NFTs? When a person buys an NFT, they only own the specific copy or version of the work represented by that NFT. Consequently, purchasers can only use that NFT work for personal use. If buyers resale, reproduce or exploit NFTs, for example, using digital artworks for printing merchants, they will infringe copyright. Only creators of NFTs or copyright owners have the exclusive right to copy, distribute, and modify the work.
b. Copyfraud and copyright infringement issues
The lack of strict legal regulations in the NFT market leads to “copyfraud” and copyright infringement issues. The term “copyfraud” describes the action of minting an NFT of a public domain work without copyright from authors of original work. Similarly, copyright infringement occurs when an NFT is minted in the NFT market by a person who is not the copyright owner of that work. Currently, in the NFT market, minting an illegal copy of a work is possible and many artists have complained that their works are stolen and sold in the NFT market without their permission.
Although NFT information is stored in blockchain networks such as transaction history, processes of making work, author information, it is hard to guarantee the originality of the underlying work either. Blockchain technology can only provide a safe, trustworthy storage network that can hold a huge amount of data. Meanwhile, verifying the real authors of NFT work is an existing issue since anyone can create an NFT using a third-party’s work and sell them under the name of the original author or as they own it.
c. Royalty payment issue
There are more and more organizations paying attention to NFT Marketplace Development since it can provide greater advantages for NFTs’ authors, especially in royalty payment. Some countries, such as the UK, have not adopted royalty payment regulations related to creative work in their law systems. Artists are accepting the resale rights to be accepted so that they can get royalty each time their work is sold. However, NFT with blockchain technology can partly solve this problem. In this case, the usage of the Smart Contract is the great answer to the question “How to use blockchain technology for development ?”. The Smart Contract, a great feature of blockchain, is written into the NFTs codes, allowing distribution of royalties paid to the NFTs’ ownership each time the work is resold. But, if NFT is resold through different platforms, the automatic royalty payments will not be transferred to the original authors. So, NFT Smart Contract Development needs to be improved to increase the efficiency of royalties payment systems, by enhancing connection and diversifying platforms that can trade NFTs.
3. Final thoughts
NFT is not just a trend that is rapidly outdated and forgotten. With the unique characteristic, NFTs will be big in the near future in different aspects including real estate, media, entertainment, art, etc, if copyright issues are solved. The NFTs Development will be along with Dapp Development, DEX Development, and DeFi Development. So, the NFTs market should promptly upgrade features to improve copyright-related issues to grasp the golden opportunities when Dapp, DeFi, DEX, and NFTs are getting great attention.
If you have an intention to join the NFT market, please feel free to contact us. SotaTek, with skillful and seasoned teams, will provide you with great services and solutions to build your NFT-based projects that catch the latest trends.