Harris Bricken attorneys Jonathan Bench and Fred Rocafort sat down to discuss Non-fungible Tokens (NFTs) and the legal issues common to their creation and transfer. A transcription of this talk can be found below.

NFTs (non-fungible tokens) are digital assets, defined by Merriam-Webster as “a unique digital identifier that cannot be copied, substituted, or subdivided, that is recorded in a blockchain, and that is used to certify authenticity and ownership (as of a specific digital asset and specific rights relating to it). Investopedia defines NFTs as “Cryptographic assets on a blockchain with unique identification codes and metadata that distinguish them from each other.”

NFTs can be stored on a blockchain (on-chain) or off-chain, e.g., a website. NFTs are typically powered by a smart contract, but they can be the subject of a conventional contract or assignment. They are generally digital goods (artwork, videos, or GIFs) or rights (concert access, etc.).

NFTs are conceptually different from the underlying assets. The NFT represents a unique copy of the asset rather than the asset itself. NFTs are non-fungible, but multiple NFTs could be minted in connection to a particular item. This is important because ownership of an NFT doesn’t automatically confer IP rights. Those conferred IP rights are set forth in the relevant sales contract.

 

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