Non-Fungible Tokens

"Non-fungible” more or less pertains to anything and everything that is unique and can not be replaced with something else. For example, cryptocurrency is fungible — trade one for another, and you will have exactly the same thing. An unique trading card, however, is non-fungible. If you traded it for a different card, you will  have something completely different. Non-fungible tokens (NFTs) are cryptographic assets on a blockchain with unique identification codes and metadata that distinguish them from each other. Unlike cryptocurrencies, they cannot be traded or exchanged at equivalency. This differs from fungible tokens like cryptocurrencies, which are identical to each other and, therefore, can serve as a medium for commercial transactions.

NFTs can really be anything digital (such as drawings, music, or if I may use Sheldon Cooper's thoughts from the sitcom Big Bang Theory, your brain downloaded and turned into an AI), but a lot of the current excitement is around using the tech to sell digital art.

This is where things start getting interesting. If NFTs are all about owning, transferring and trading/transacting in unique items like videos, piece of art, music in digital format, what is the ownership structure and copyright. One can always copy a digital file as many times as you want through the open internet media, including the art that’s included with an NFT. NFTs are designed to give you the ownership of the work, which can’t be copied, although the artist or creator can still retain the copyright and reproduction rights, just like with physical artwork. To put it in terms of understandable tangible physical art collecting, anyone can buy a Hussain or a Van Gogh print, but only one person can own the original.

So who does a NFT interest? As an artist, it gives you an avenue to sell work that otherwise might not have much of a market for, in spite of demand or aspiration. NFTs have a feature that can be enabled to be paid a percentage every time the NFT is sold or it changes hands, much like a royalty, making sure that if your work gets super popular and balloons in value, you’ll see some of that benefit. On the other hand, as a buyer, one of the obvious benefits of buying art is it lets you support the artists you like  or adore, considering believe it or not, NFTs are way trendier than, like, WhatsApp stickers or the likes. Buying an NFT also usually gets you some basic usage rights, like being able to post the image online or set it as your profile picture, along with the bragging rights of owning an original piece of art or creation, with a blockchain entry to back it up.

With the explosive development of decentralized finance, and uptrend in the adoption of NFTS, we have witnessed a phenomenal growth in tokenization of all kinds of assets, including equity, funds, debt, and real estate. It has been successfully applied to digital fantasy artwork, games, collectibles, etc. However, there is a lack of research in utilizing NFT in issues such as Intellectual Property. Applying for a patent and trademark is not only a time-consuming and lengthy process but also costly. NFT has considerable potential in the intellectual property domain. It can promote transparency and liquidity and open the market to innovators who aim to commercialize their inventions efficiently.