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When you buy an NFT, you don’t completely own it – here’s why

3 8 0
24.08.2021

NFTs or non-fungible tokens first captured the public imagination when a digital collage by an artist named Beeple sold for US$69 million (£51 million) at Christie’s in March 2021. Since then, there has been an explosion in the use of these units for storing digital content, which are bought and sold using online ledgers known as blockchains.

Since that initial connection with art, we are seeing NFTs being used in numerous other ways. Notably, many are being traded as collectables on exchanges like OpenSea and Rarible. Lately, for example, a series of 8,888 adorable “Pudgy Penguins” made a splash, each reflecting its own unique characteristic, with one selling for a record 150 ethereum (about US$500,000).

Yet whether it is a remarkable piece of digital artwork or a cute digital penguin, NFTs are essentially tradeable jpegs or gifs. Unlike physical collectables, an NFT owner will not be able to display the asset in their home – except on a screen. They might think they could display it on a website, but this isn’t necessarily the case. So what is someone actually getting when they buy an NFT, and what do they truly own from a legal perspective?

To understand NFTs, it is important to understand what is meant by “fungible”. Fungible is derived from the Latin verb fungi, meaning to perform. In the broader context, this means interchangeable and relates to whether........

© The Conversation


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