NFTs continue to change the way the world views digital art and its economic sustainability. The explosion in internet usage of the last few decades has animated and expedited dissemination of information, but this benefit has also resulted in an increased tug-of-war between artists’ ability to protect their property rights in their work and the prevalence of piracy. Furthermore, the speed and vast scope of data spread online can disadvantage artists in other ways, such as oversaturation or misappropriation of their work which can lead to devaluation. Enter NFTs, a system based on blockchain technology, the same advancement that has already birthed cryptocurrency. NFT stands for Non-Fungible Token; in very simple terms, this token acts like a certificate of authenticity that the digital work it is attached to is the real thing. One of the major difficulties with protecting artists’ rights in digital art is the ease with which images can be saved, copied, and appropriated. NFTs produce scarcity where there previously was none, representing the difference between taking a photo of a famous artwork and actually owning the original or an official print of that work. As NFTs can also be attached to other assets such as social media posts, the system opens up a new frontier for the commoditization of digital data.
Most recently, an artist has made history by selling the world’s first “digital house” enabled by NFT technology. Toronto-based Krista Kim has designed a virtual space that she describes as a “light sculpture”; Mars House may exist only in the digital world, but it has commanded the equivalent price of a brick-and-mortar condo in Toronto. One of the most intriguing aspects of this creation is its potential to be accessed through augmented reality applications, which would allow the owner of such a work to experience the house as if it were tangible. To any science fiction fan, this appears to be one substantive step closer to Star Trek’s holodeck technology – an exciting prospect, to be sure. As this emerging field of technology develops, it will be important to keep in mind the ominous predictions illustrated by other sci-fi stories (looking at you, Black Mirror) and ensure that the tech does not run amok. Notions of augmented reality and transforming the digital into the corporeal challenges some core tenets of human existence as we know it, and humanity must take care to avoid irresponsible growth.
From an IP law perspective, the NFT regime is not to be approached without caution. It is easy to see how the NFT concept can aid creators in some of the same ways copyrights, patents and trademarks do, particularly when it comes to profiting from their works. Still, reconciling the old with the new is no simple task and where one source of conflict is resolved, another will surely arise elsewhere in the process. For example, the NFT marketplace is intimately connected to cryptocurrency, itself an often volatile system. Many NFTs are traded for crypto and the strength of the relevant cryptocurrency determines the value of the asset attached to the NFT. Speculators say that current values are overinflated and may fall drastically as the market settles, thus rendering NFTs a potentially questionable investment. Whether you buy into the hype or not, the NFT system is fascinating to consider from a legal context and will no doubt play a significant role in expanding broad new horizons for creative industries.