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What our NFT self-experiment showed us is that an NFT is an interesting vehicle which functions well in identifying tangible and intangible goods. The process from tokenisation/minting to execution of the transactions is not entirely simple from a technical point of view, but it is certainly feasible even for non-specialists. The legal questions are in general similar to those that also arise in other online transactions.
We collected some important questions that artists and buyers or collectors of NFTs as well as museums should consider when delving into the world of NFTs.
NFTs are not new. But it was not until artists discovered them for their works and generated high returns for NFT art in online sales and auctions that they attracted broad attention worldwide. For artists, the blockchain technology and NFTs offer new opportunities to showcase their works and to reach out to buyers and collectors as well as to museums.
So what are key questions NFT artists should ask?
These are just some (but important) questions NFT artists should remember to ask when starting the process of creating and minting their artworks as NFTs.
A significant advantage of tokenising an artwork is, that a clear connection between the artist/author and the artwork connected to the NFT can be established (that is ambiguously stored on the blockchain). This could thus facilitate the determination of the provenance of the work and might also increase a work's value .
In practice, most NFTs merely represent a piece of art. The NFT may not include the artwork as such, but a link to it.
The artwork that is linked or otherwise connected to the NFT will in general be protected by copyright. The mere purchase of the NFT, however, mostly does not grant the buyer the right to use the artwork in a way reserved for the author, e.g. to post it on his/her own website or on social networks.
What questions should a buyer or collector of an NFT ask?
Again, these are just some (basic but important) questions buyers or collectors of NFTs should consider when purchasing NFT art.
If buyers/collectors want to further (potentially also commercially) exploit the artwork that is connected to the NFT (e.g. by using it as corporate design to identify their company's products), it is definitely recommendable to try to contact the NFT artist or a gallery connected to the artist directly.
Museums worldwide have already or are in the course of extending their art collections with digital art (such as NFTs). This not only because of their educational or cultural mission and even task to collect, conserve, scientifically process and document the testimonies of the past and present and make them accessible to a broad public, but because NFTs are an interesting new genre of digital art
What are key questions a museum should take into consideration when buying an NFT for their collection?
For further information see our LegalInsight "When a museum buys an NFT: Legal challenges and considerations".
For artists, the blockchain technology offers new opportunities to showcase their works and reach out to new collectors. For collectors and museums, NFTs are a reasonably new form of digital art.
It can be assumed that NFTs in the art market are just one exciting way of "using" NFTs and that the issues around tokenisation and digital assets will also find further use, for example for investments in equity derivatives, crowdfunding initiatives or perhaps even for real estate transactions. The disproportionately high energy consumption for transactions in the blockchain should, however, be looked into and (hopefully also) resolved (for more in this respect see our LegalInsight "NFTs: What about energy and climate issues?").
Please note that although these lists of questions give an overview of what should be asked when considering the NFT realm from the perspective of an artist, buyer or museum, they are not exhaustive.
authors: Guido Kucsko and Anna Katharina Tipotsch