A Concern Regarding NFTs

A Concern Regarding NFTs

By Suspect78 | Crypto and Thoughts | 28 Nov 2020


About a month ago, I went over to Rarible to figure out how it works. I enjoy testing applications on Ethereum (Curve, Balancer, Compound and Uniswap are among those I’ve played with) and, I was happy to spend some Gas to test it out.


But as I surfed the Rarible market and tested the various functionalities I grew concerned: NFTs show a chain of ownership and making proving who owns what easy - but “owning” it on the blockchain and owning the “rights” are not the same.


For example - looking through Rarible or OpenSea a number of “sh**posts” seem to overwhelmingly flood the markets. There are minute by minute thousands of NFTs created that are memes, meme templates, common GIFs and other items that, for lack of a better term, are trash. If I was to buy, for example a Pepe meme - I may own the digital “token” but I do not own the rights to that image. By holding an NFT I guarantee that I “own” that item but I have no rights regarding it (except to resell). In some ways it’s like buying junk mail from your neighbors. If I spend $10 to buy your junk mail, I “own” it, but I have no rights to the images, or control of the artwork or image, and it’s junk mail, so it’s worthless anyways. While NFTs may make the “trading” of that item easy, there is no inherent value to it, and it’s so prolific and widespread as an image, that “owning” an NFT of it really doesn’t mean much at all.


If someone were to upload and sell copyrighted images (a photographer’s photo for example) - and by selling/owning the NFT of that item they claim ownership, they are profiting off of illegally sold items. And, since there is no way to prevent people from creating these, and there are ways to trace who owns what, the potential that copyright lawyers and others get involved seems like a huge issue. I can foresee Rarible and others getting shut down for hosting the sales of illegally sold items.

But furthermore, if I owned an NFT for a domain name - I can at least claim that I own the domain and can prove that it is unique and use the NFT market to trade it. Similarly, if I was to own an NFT of a real-world piece of art, tied to a unique serial number for that art, I could prove ownership. But NFTs generated out of thin air for anything dilute the point of NFTs.  If I can create whatever I want, whenever I want and sell it and profit off it (including royalties) then I run the risk of serious copyright infringement - specifically because of the royalty aspect.

Generally, artists retain the copyright to their work, even if that work is sold and resold and sold again. The person who owns it, only owns the physical item.


In this particular example, I look at the NFTs I created (here and here). I used a photo I’d taken and digitally edited and created an NFT. I set an arbitrary price based on the time/effort it took to create along with a premium and generated the NFT. I listed two copies of each available. But - despite this - I still own and control the original IP off the blockchain.  Because it is my own artwork, and not something created “on chain”, in the sense that a program generated a limited number of items which are restricted by the program itself - I still technically have access to the raw files and could sell the rights off-chain somewhere else. The on-chain ownership of the NFT does not provide legal protection of the IP. But, if I wanted to make a claim, I would have to both prove I have the copyright and was the one who created it.


I of course, could also promise that I would never sell, create those items off or on-chain again (and I don’t plan to) - but the honesty of that promise is only as good as the person who buys them trusts that I won’t. So the digital representations and artificial market cap I created make the items only as valuable as those who purchase them deem them to be. I “own” the copyright to those items but the digital items themselves I may not own in the future.

I guess my concerns boil down to this:

1. Ownership of an NFT, does not guarantee the item to be “unique” - only the NFT itself.

2. NFTs of copyrighted material can be created and profited on without consent from the

copyright holders

3. NFTs can be replicated and created ad infinitum, even by the same creator, diluting the “rareness” of that NFT

4. Trash NFTs are little more valuable than trash itself, and dilute the marketplace significantly.

5. NFTs do not guarantee copyright ownership, but being digital, there is no method to prevent copyright infringement.

Regardless, I believe that NFTs provide a great and much needed method of digital ownership. Trading card games, CryptoKitties and others help us grow the blockchain and marketplaces like Rarible allow digital creators a chance to sell and profit off of their work.


Do you agree? Disagree? Let me know you thoughts in the comments below!





Suspect loves crypto.

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