NFTs are gaining visibility, but are they an attractive investment?

reDuring this year, investors have shown increasing interest in the non-fungible token (NFT) market.

Beeple’s “Everydays – The First Five Thousand Days” NFT sold for $ 69 million at auction. Photo courtesy of Beeple / Christie’s.

Many prominent artists, celebrities and athletes got involved in this market – Kings of Leon released their latest album “When You See Yourself” in this format, Mick Jagger and Dave Grohl of Foo Fighters teamed up with the artist 3D Oliver Latta over a duration of 30 seconds. loop of their song “Easy Sleazy”, and filmmaker Kevin Smith is releasing his undistributed horror film “Killroy Was Here” as NFT.

The digital artist known as Beeple sold an NFT of his work “Everydays – The First Five Thousand Days” at a Christie’s auction for $ 69 million, a record amount for this market. Some larger NFTs are sold as charity auctions – the Jagger-Grohl NFT has been auctioned to help music industry personnel affected by the Covid-19 pandemic. NFTs became so popular that the topic inspired a song parody on “Saturday Night Live” that garnered over 3.3 million views on YouTube.

But what exactly is the NFT market and what are the advantages and risks inherent in this digital environment?

Cliff Ennico, a Trumbull-based lawyer and author of “Small Business Survival Guide” and “The Crowdfunding Handbook,” explored the NFT experience during a May 25 webinar presented by the Inventor’s Association of Connecticut (IACT) in collaboration with Fairfield University School of Engineering.

Ennico acknowledged that for the uninitiated the concept of NFT can be confusing, adding that “it’s easier to tell what they are not than what they are.”

“A non-fungible token essentially takes digital artwork and turns them into a verifiable asset,” he explained. “Think of the NFT as an authentication certificate. And those of you who have ever purchased a valuable antique or collectible, like a 1956 Mickey Mantle rookie card, usually come with a certificate of authentication which can be very valuable depending on who the dish.

Ennico pointed out that artists do not create NFTs, but that they are created by marketplaces that host NFTs on their digital platforms.

“Every person and every sale of an NFT artwork is recorded on a blockchain, making it almost impossible for someone to sell counterfeit artwork without getting caught,” he said. he continued. “If someone is selling the same piece of art and it’s not tied to a DTV, that’s a fake.”

Likewise, he added, if a person’s name does not appear in the title string, they have no legal rights to the artwork unless it is authorized reproduction.

And this is where things get a bit tricky. Ennico explained that artists now use NFTs to “prove their date of first publication without having to go through the tedious and often inefficient process of registering a copyright.”

However, the buyer of the NFT does not have full ownership of the digital item.

“When you buy an NFT, you are only buying the artwork itself,” Ennico said. “You don’t get the artist’s copyright, the legal monopoly that gives the artist the exclusive right to commercially exploit the work of art for several years. This artist is absolutely free to generate multiple copies of this NFT artwork.

“This NFT is not copyright,” he added. “It can be used to establish the date of publication for copyright purposes, but it is not in itself a copyright.”

Ennico also pointed out an often overlooked aspect of TVN: Every time the owner of the TVN sells it, the artist receives a percentage of the purchase price.

“It’s going to transform the art world in a very big way,” he said, noting that an artist never receives a dime if his painting or sculpture first exhibited in a brick gallery and of mortar is sold over the years.

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