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[thoughts] The criminal life of NFTs: 5 loopholes
Authorship and originality are the strongest drivers of value in art. It’s important to investigate the extent to which NFTs fulfill their claim to eradicate fakeness and fraud – the antithesis of that value and NFTs’ lofty claims to fame. Here are 5 technical loopholes to NFTs:
Real-world legality is murky. NFTs exist as online claims to rights that may or may not be recognized by real-world legal systems. (ex. Dapper Labs produced a template NFT license in 2018 that delineates for creator to retain ‘all legal right, title and interest to the Art, and all intellectual property rights therein’ (other than insofar as these may be passed on to the buyer in terms of the individual license created), the buyer is given the right to use, copy and display the art for private use and to monetise it in commercial use up to a ceiling of $100,000 per year” – but how much of this license is recognized by all jurisdictions?
Some NFTs allocate exclusive rights to artwork that has long been in the public domain (ex. ‘DEAL WITH IT’ meme - artist granted exclusive ‘photoshop rights’ for a meme that people have extensively reproduced in the past)
Copyright infringement. Lack of verification in the minting process that the creator owns the image being minted. (ex. Serbian artist Milos Rajkovic found out in August that imposter was trying to sell off 122 of his works as NFTs for as much as $50,000 combined on OpenSea. In the past, Banksy-like artwork was sold for millions as buyers were under the impression the artist was trying to stay anonymous. Later revealed that it wasn’t Banksy behind the works at all)
The token is not the artwork, legally. (ex. The terms and conditions of Christie’s sale of Beeple’s Everydays in March 2021 specify that buyers must acknowledge that ‘the ownership of an NFT carries no rights, express or implied, other than property rights for the lot’)
The token is not the artwork, physically. What is on-chain is a pointer (usually an IPFS link) to the image that is hosted on a server. That link can be altered, as shown by a collector who advertised 26 artworks for sale on the platform and then changed them all to photos of carpets half way through the sale, saying ‘All discussions about the value of NFTs are meaningless as long as the token is not inseparable from the artwork itself. What is the meaning of creating an unforgeable token on a highly secured network if somebody can alter, relink or destroy your possession?’
We still have a long way to go, but we will make it!