NFTs: A Few Tips on How to Avoid Fraud, Prevent Art Piracy, and Protect Copyright
The number of non-fungible tokens (NFTs) sold has skyrocketed in recent months and reached $87 million. The number of NFT marketplaces keeps growing, attracting more artists, willing to sell their art for ridiculous amounts of money. This hype causes many people to feel the fear of missing out (FOMO), and start obsessively buying anything NFT-related. This happens due to the wrong idea that NFT means copyright, which it doesn’t.
NFTs allow holders to immutably and verifiably prove their exclusive ownership over intangible assets, like a 3d model or a song. The data that each NFT contains makes every created piece unique, even if you make a hundred tokenized copies of the same file, they all will be different from each other.
Sometimes this idea of uniqueness leads to people spending a lot of money on NFTs while thinking that they are buying intellectual property (IP) rights. Let’s figure out what to do to keep your IP safe.
How to buy and sell NFTs safely
1) Remember, that when you purchase a token, you buy the ownership over a piece of blockchain-based information, directing to a URL where the associated file is stored. Hence, you only possess the right to do as you please with the token but do not own the thing it leads to.
That’s what happened to the crypto group that bought a book with Alejandro Jodorowski’s concept for failed “Dune” adaptation.
We touched upon this case before but a quick reminder wouldn’t hurt. The guys spent €2.6 million on buying the book to tokenize every page and then burning it, making themselves the only owners of it. Truth to be told, they indeed planned on making the movie too. Though it never worked out, since, again, owning an NFT means possessing the right to hold and sell the token, not the copyright over it.
2) In some cases you may have copyright over a tokenized item you’ve bought. That’s how the famous Bored Ape Yacht Club works, as it grants you “an unlimited, worldwide license to use, copy and display the purchased art”. You can, for example, make T-shirts with art.
3) Make sure, that the person trying to sell you an NFT is the one who created the art piece in the first place. Some countries start to regulate how the tokens are sold and fine marketplaces that fail to check the seller’s background properly.
This was the case with BigVerse NFT market operator in Hangzhou, China. The company was fined a mere $600 but the situation shows that governmental bodies start to pay attention to the wild market of tokens.
4) Deal with verified users only. Credible NFT marketplaces check whether a user is a fraudster or not based on their trading history. Not mentioning, that this helps to avoid bots, computer programs, and mimicking people in an attempt to sell you a stolen NFT. Usually, a sign like a blue tick signifies that a seller is verified. This simple check-up helps to avoid most NFT frauds.
5) If you are dealing with someone claiming to be an artist, don’t hesitate to check if their social networks are active. A regularly updated Facebook or LinkedIn profile shows that you are dealing with a human being that probably has other interests and is not seeking to steal your NFT.
Artists who are into NFTs usually show that on their social networks. Messages regarding it are often pinned on top of their profiles. And if you still have doubts, you can try reaching them out and ask whether they minted a particular token.
Why is it important to trade NFTs carefully?
For collectors, the tokens provide an opportunity to become the immutable owners of various items. This is especially true for gamers, with virtual worlds having many items that can be monetized.
For artists, NFTs mean the freedom to sell digital art straight to buyers without using auction houses or galleries. This allows them to generate a significantly greater amount of profit.
The price of NFTs is regulated by supply and demand, the same as all assets. And as collectors, investors and gamers are always interested in them, some people are ready to pay whopping amounts of money for them. But the lack of state regulation and control makes the sphere a great hunting ground for various fraudsters.
