In my view, ignoring all the froth due to fools thinking NFTs are a get-rich-quick scheme that might actually work, it is all governed by the usual copyright, trademark and contract laws and what matters is what a court is likely to decide when someone sues.
Suppose a case goes to court to decide who own the copyright on an MS-paint badly drawn cat. Party A says they bought it from scam-see dotcom and they have an emailed receipt and payment record. Party A says they never sold it. They can subpoena records from scam-see
Party B says that they bought the NFT from a Russian hacker on IRC, they have a secret magic number that they could use to add an entry to blockchain. Party B says that means they own the copyright.
The judge is going to ask Party B if they have a signed contract.
The judge is going to ask Party B if they can point to the section in copyright law that says knowing a magic number means you own the copyright of an image.
In my view, the judge will rule that party A owns the copyright.
At that point all the blockchain bullshit falls apart.
If someone wants to sell the copyright on a badly drawn picture of a cat outside of a 'crypto market' then they can write a contract on a piece of paper and have both party's sign it, perhaps getting a notary to stamp it and getting someone to witness the signing.
In my opinion, that is likely to be more expedient then hoping you can convince a judge that whoever has the newest secret magic number owns the copyright.
I don't care that much about the copyright (although this depends on the license the artist gives the piece), but I do care about provenance, and for me NFTs give me clear proof of it.
Outside of the get rich quick schemes, there are plenty of legitimate artists selling their stuff at reasonable prices.
In the same way, when you buy an NFT you're buying the provenance without buying the actual art. The art is understood to be easy to reproduce, you can download it and print it yourself if you want to hang it up on a wall.
What does provenance even matter if you don’t actually own the art? If you want to support the artist and you don’t want / can’t afford the actual piece, just donate to them and you’d have the same effect.
When you buy art as an NFT, you do own an actual piece of art. Unless you think a non-physical art like say The Clock inherently cannot be sold outside of a copyright transfer, and that has been untrue long before NFTs.
Sure, the artist could do something dishonest like sell the same piece twice, but I'm assuming good faith from the artist, or at least from the ones I buy from.
The thing that makes something like bitcoin decentralized is that it's built on consensus between participants: when you make a transaction, you publish "I'm sending $x coins to from $y to $z", signed with your private key, and once enough participants agree to add your transaction to the chain, it's "real". This is why bitcoin transactions can often take radically longer than other forms of payment to resolve. NFTs work the same way: You say "I'm paying $x from $y to $z to buy this picture of a monkey".
If you were separating the payments from the items, you need some entity that agrees "yup, nytesky paid for this item and so they own it". And once you need an entity for it... you may as well skip the blockchains and just use a database.
For what it's worth: this is functionally how most NFTs end up working. The entity selling them just takes payment via ethereum or other coins, but at best what they're storing on that chain is a pointer saying "oh yea, nytesky bought this thing that we store elsewhere".
If it's starting to sound like a big scam... that's because it is. "NFTs" is basically just a fun buzzword for "we figured out how to hype up and grift assets without actually having to like, have assets to sell. We can just generate them out of thin air and then convince gullible people to drive the price up".
The thing that I never understand when people make this complaint: Do you think my purchase of the "monkey picture" is now more real, because someone else paid for Ethereum nodes to physically store the bytes to it, instead of a link? Do I own it "more"? Does it have to be stored in a particular location within the Merkle tree? Can I upload it myself to make my ownership of my monkey more "real"?
What if I store it in the Arctic World Archive instead, does it now have more or less permanency than on the blockchain?
The line of critique inherently seems to make no sense; it's IMO a strong sign that it is fundamentally flawed.
If you’re OK with “ownership” being “I paid somebody to write down that I am the only person who owns this asset, and they won’t give it to anybody else”, you don’t need any blockchains. You can own the monkey picture in the same way that I own my domain name, or my RuneScape account. If OpenSea decides to change the deal, they can just do so, because while they’re using a blockchain, they are the sole entity that controls how it interacts with the Ethereum blockchain. So other than for the “NFT” hype, they may as well just run a MySQL DB with “item” and “owner” columns.
By contrast, the thing that Ethereum actually does, for better or worse, with on-chain contracts, is that the consensus of the chain is what counts. If you hold ETH according to the chain, it’s yours. The only way for another entity to take it away from you is to have your private key, or convince 51% of the participants to agree with them.
So is my NFT! No one can take it away from me. There are a couple things that could happen:
- The artist can mint an additional copy; this could mean my own copy loses value, or it could mean the community doesn't care, and continues to value the original one. Similarly, the folks that issue some ERC-20 token can decide to issue a new one and abandon their old token. In fact, vitalik et al could advocate for a fork for ETH. This is just how the social layer works.
- The media file associated with the NFT could be lost or changed. This can be a problem, but can also be addressed (IPFS), and can also be art: https://publico.pob.studio/piano
Larva Labs, the pioneers behind Cryptopunks, didn't even bother to put a link into their NFT at the time: it literally is a item/owner table. They didn't forget the link, they correctly understood that what the token represents is defined at the social layer.
In that way, people could pay with card and obtain the NFT without ever having to deal with a crypto wallet or any cryptocurrency. But with the same distributed benefits that any other NFT has.