NFT
NFT
A non-fungible token is a non-interchangeable unit of data stored on a blockchain, a form of digital ledger, that can be sold and traded. Types of NFT data units may be associated with digital files such as photos, videos, and audio. Because each token is uniquely identifiable, NFTs differ from most cryptocurrencies, such as Bitcoin, which are fungible.
NFT ledgers claim to provide a public certificate of authenticity or proof of ownership, but the legal rights conveyed by an NFT can be uncertain. NFTs do not restrict the sharing or copying of the underlying digital files, do not necessarily convey the copyright of the digital files, and do not prevent the creation of NFTs with identical associated files. NFTs have been used as a speculative asset, and they have drawn increasing criticism for the energy cost and carbon footprint associated with validating blockchain transactions as well as their frequent use in art scams. The NFT market has also been compared to a Ponzi scheme. Characteristics An NFT is a unit of data, stored on a type of digital ledger called a blockchain, which can be sold and traded. The NFT can be associated with a particular digital or physical asset including but not limited to, art, songs, and sport highlights and a license to use the asset for a specified purpose. An NFT can be traded and sold on digital markets. The extralegal nature of NFT trading usually results in an informal exchange of ownership over the asset that has no legal basis for enforcement, and so often confers little more than use as a status symbol. NFTs are created when blockchains concatenate records containing cryptographic hashes—sets of characters that identify a set of data—onto previous records, creating a chain of identifiable data blocks. This cryptographic transaction process ensures the authentication of each digital by providing a digital signature that tracks NFT ownership. Copyright Ownership of an NFT does not inherently grant copyright or intellectual property rights to the digital asset the NFT purports to represent. Someone may sell an NFT that represents their work, but the buyer will not necessarily receive copyright to that work, so the seller may create additional NFTs of the same work. So an NFT is merely proof of separate from copyright. According to legal scholar Rebecca Tushnet, "In one sense, the purchaser acquires whatever the art world thinks they have acquired. They definitely do not own the copyright to the underlying work unless it is explicitly transferred." History Early history The first known "NFT", Quantum, was created by Kevin McCoy and Anil Dash in May 2014. It consists of a video clip made by McCoy's wife, Jennifer. McCoy registered the video on the Namecoin blockchain and sold it to Dash for $4, during a live presentation for the Seven on Seven conference at the New Museum in New York City. McCoy and Dash referred to the technology as "monetized graphics". This explicitly linked a non-fungible, tradable blockchain marker to a work of art, via on-chain metadata. This is in contrast to the multi-unit, fungible, metadata-less "colored coins" of other blockchains and Counterparty. In October 2015, the first NFT project, Etheria, was launched and demonstrated at DEVCON 1 in London, Ethereum's first developer conference, three months after the launch of the Ethereum blockchain. Most of Etheria's 457 purchasable and tradable hexagonal tiles went unsold for more than five years until March 13, 2021, when renewed interest in NFTs sparked a buying frenzy. Within 24 hours, all tiles of the current version and a prior version, each hardcoded to 1 ETH, were sold for a total of million. The term "NFT" only achieved wider usage with the ERC-721 standard, first proposed in 2017 via the Ethereum GitHub, following the launch of various NFT projects that year. The standard coincided with the launch of several NFT projects, including Curio Cards, CryptoPunks, and rare Pepe trading cards. The NFT market experienced rapid growth during 2020, with its value tripling to million. In the first three months of 2021, more than million were spent on NFTs. In 2020, the U.S Patent and Trademark Office received three trademark applications for NFTs. In 2021, the number of trademark applications jumped to more than 1200. In January 2022, the U.S. Patent and Trademark Office received 450 NFT-related trademark applications. In the early months of 2021, interest in NFTs increased after a number of high-profile sales and art auctions. Uses Commonly associated files NFTs have been used to exchange digital tokens that link to a digital file asset. Ownership of an NFT is often associated with a license to use such a linked digital asset, but generally does not confer copyright to the buyer. Some agreements only grant a license for personal, non-commercial use, while other licenses also allow commercial use of the underlying digital asset. Digital art American curator and art historian Tina Rivers Ryan, who specializes in digital works, said that art museums are widely not convinced that NFTs have "lasting cultural relevance." Ryan compares NFTs to the net art fad before the dot-com bubble. No centralized means of authentication exists to prevent stolen and counterfeit digital works from being sold as NFTs, although auction houses like Sotheby's, Christie's, and various museums and galleries worldwide started collaborations and partnerships with digital artists such as Refik Anadol, Dangiuz, and Sarah Zucker, selling NFTs associated with digital artworks and showcasing those artworks both in virtual galleries and real life screens, monitors, and TVs. High-profile auctions of NFTs linked to digital art have received considerable public attention. The work entitled Merge by artist Pak was the most expensive NFT, with an auction price of million and Everydays: the First 5000 Days, by artist Mike Winkelmann the second most expensive at million in 2021. Some NFT collections, including EtherRocks and CryptoPunks are examples of generative art, where many different images are created by assembling a selection of simple picture components in different combinations. In March 2021, the blockchain company Injective Protocol bought a $95,000 original screen print entitled Morons from English graffiti artist Banksy, and filmed somebody burning it with a cigarette lighter. They minted and sold the video as an NFT. The person who destroyed the artwork, who called themselves "Burnt Banksy", described the act as a way to transfer a physical work of art to the NFT space. if they can be traded on third-party marketplaces without permission from the game developer. CryptoKitties was an early successful blockchain online game in which players adopt and trade virtual cats. The monetization of NFTs within the game raised a $12.5 million investment, with some kitties selling for over $100,000 each. Following its success, CryptoKitties was added to the ERC-721 standard, which was created in January 2018. In December 2021, Ubisoft announced Ubisoft Quartz, "an NFT initiative which allows people to buy artificially scarce digital items using cryptocurrency". The announcement prompted with a dislike ratio of 96% over the YouTube announcement video, which has since been unlisted. Some Ubisoft developers also raised over the announcement. The Game Developers Conference's 2022 annual report stated that 70 percent of developers surveyed said their studios had no interest in integrating NFTs or cryptocurrency into their games. Some luxury brands minted NFTs for online video game cosmetics. In November 2021, Morgan Stanley published a note suggesting that this use could become a multi-billion dollar market by 2030. Music In February 2021, NFTs reportedly generated around million in the music industry, with artists selling artwork and music as NFT tokens. On February 28, 2021, electronic dance musician 3LAU sold a collection of 33 NFTs for a total of million to commemorate the three-year anniversary of his Ultraviolet album. On March 3, 2021, an NFT was made to promote the Kings of Leon album When You See Yourself. Other musicians who have used NFTs include American rapper Lil Pump, Grimes, visual artist Shepard Fairey in collaboration with record producer Mike Dean, and rapper Eminem. Film In May 2018, 20th Century Fox partnered with Atom Tickets and released limited-edition Deadpool 2 digital posters to promote the film. They were available from OpenSea and the GFT exchange. In March 2021 Adam Benzine's 2015 documentary Claude Lanzmann: Spectres of the Shoah became the first motion picture and documentary film to be auctioned as an NFT. Other projects in the film industry using NFTs include the announcement that an exclusive NFT artwork collection will be released for Godzilla vs. Kong and director Kevin Smith announcing in April 2021 that his forthcoming horror movie Killroy Was Here would be released as an NFT. The 2021 film Zero Contact, directed by Rick Dugdale and starring Anthony Hopkins, was also released as an NFT. In April 2021, an NFT associated with the score of the movie Triumph, composed by Gregg Leonard, was the first NFT minted for a feature film score. In November 2021, film director Quentin Tarantino released seven NFTs based on uncut scenes of Pulp Fiction. Miramax subsequently filed a lawsuit claiming that their film rights were violated and that the original 1993 contract with Tarantino gave them the right to mint NFTs in relation to Pulp Fiction. Other associated files A number of internet memes have been associated with NFTs, which were minted and sold by their creators or by their subjects. Examples include Doge, an image of a Shiba Inu dog, as well as Charlie Bit My Finger, Nyan Cat and Disaster Girl. Some virtual worlds, often marketed as metaverses, have incorporated NFTs as a means of trading virtual items and virtual real estate. Some pornographic works have been sold as NFTs, though hostility from NFT mark…
