Why NFTs do not give ownership rights to the holders

Synopsis

According to the report, the majority of NFT operators apparently have ‘misled NFT purchasers’ about the extent of their rights, and this has faced some backlash from the buyers. However, NFT players have come out in defence.The question of ownership, both intellectual and actual, when talking about an NFT is way more nuanced than it is with physical art and assets, they said.

The owners of non-fungible tokens (NFTs) have zero intellectual property ownership of their content, as revealed in a recent report by Galaxy Digital Research. This hit NFT enthusiasts hard, who either own them or wish to own them

Only one NFT collection in the top 25 platforms by market capitalization has attempted to confer intellectual property rights to the purchasers of digital arts, the report added.

According to the report, the majority of NFT operators apparently have ‘misled NFT purchasers’ about the extent of their rights, and this has faced some backlash from the buyers. However, NFT players have come out in defence.

The question of ownership, both intellectual and actual, when talking about an NFT is way more nuanced than it is with physical art and assets, they said.

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View Details »An NFT is a receipt of ownership for the buyer of unique art or concepts. However, in many cases, the original creator must maintain a stake in the final work to maintain its rarity.

The core definition of NFTs is ownership based on smart contracts written on a blockchain. Any digital asset bought as an NFT gives the owner sole rights on the blockchain NFT, said Arijit Mukherjee, Founder, Yunometa.

“While content creators and digital artists have made millions of dollars on their sales, NFTs can sometimes have ownership clashes with popular culture and art forms,” he added.

The report mentioned that without improvements in the on-chain representation and transfer of intellectual property rights from NFT issuers to NFT token holders, the expansive vision of Web3 will remain unreleased.

The report analysed major NFT projects, like the Yuga Labs project Bored Ape Yacht Club (BAYC), Gary Vaynerchuk’s VeeFriends, World of Women, and social platforms Decentraland and Sandbox.

Kameshwaran Elangovan, Co-Founder & COO, GuardianLink, said that there are shortcomings that any technology transformation has to go through in its adolescence.

We should not be looking at discrete pockets of change but rather at a wholesome wavefront of transformation that impacts the entire spectrum and ecosystem.

Buying NFTs without checking the previous owner can sometimes lead to situations where buyers might feel they have been shortchanged, Mukherjee from Yunometa said.

NFT holders should fight for their rights over IP as the industry is in a very nascent stage but there is a lack of regulatory framework which can provide them with any relief amid the increasing adoption.

However, one should understand that NFTs can only represent ownership or possession of the token itself. The art or object purchased as an NFT does not grant users ownership of the underlying item.

The question of ownership, both intellectual and actual, when talking about the most common claim about NFTs is both misleading and also close to being accurate, said Vijay Pravin Maharajan, Founder & CEO of bitsCrunch.

“Crypto-enthusiasts commonly claim that NFTs are essentially unique and exist on a blockchain,” he added. A user who has purchased it essentially owns the digital asset. There is only one token of its kind, and users have it in their crypto wallet, signifying ownership.

Owning an NFT does not convey ownership of the assets’ storage, copyright, or usage rights. NFTs usually provide links to the asset that is hosted on a different site. Rights and advantages should be clearly mentioned with NFT ownership.

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