Understanding the fascinating world of NFTs: A View from a digital lawyer’s Perspective

NFTs, an acronym that translates to “Non-Fungible Tokens,” have gained popularity in recent years as a unique way to own and trade digital assets. The beginnings of NFTs date back to 2012, when software developer and entrepreneur Vinay Gupta coined the term “Non-Fungible Token” in his article titled “The Non-Fungible Blockchain”.

Vinay Gupta is a well-known software developer and entrepreneur with extensive experience in technology and blockchain. He was born in Scotland and has worked in various projects and fields related to technology and innovation.

Gupta is known for his pioneering work in applying blockchain technology and smart contracts. In 2012, he coined the term “Non-Fungible Token” in his article titled “The Non-Fungible Blockchain”. This term has become the standard name to describe unique, indivisible tokens that represent digital assets on the blockchain.

In addition to his contribution to the NFT world, Gupta has worked on various projects related to technology and sustainability. He has been involved in initiatives such as the Ethereum project, which is an open-source blockchain platform that enables the creation of smart contracts and decentralized applications. He has also worked on sustainable energy and community resilience projects.

However, it wasn’t until 2017 when NFTs started to take center stage thanks to the launch of the CryptoKitties platform. 

CryptoKitties allowed users to buy, breed and sell virtual cats on the Ethereum blockchain. Each cat was represented as an NFT, meaning that each was unique and could not be replaced by another.

From that point on, NFTs quickly expanded into other areas, such as digital art, virtual collectibles and gaming. Artists and creators began auctioning digital artworks as NFTs, allowing them to certify their authenticity and ownership. This opened up new possibilities for digital artists, who could now receive fair compensation for their work and control its distribution.

In 2021, the NFT market reached an unprecedented level of popularity, with million-dollar sales of digital art and other unique digital assets. NFTs of popular memes, featured sports video clips, music, music videos, and more were sold. This explosion of interest also brought with its debates about the sustainability and carbon footprint associated with NFT transactions, as well as the speculation and volatility of their value.

NFTs have proven useful in a number of areas in today’s world

Here are some of their main utilities:

As we have already mentioned, the main one is Digital Art based on limited collections. NFTs have revolutionized the digital art world by allowing artists to sell and own unique digital works. NFTs provide a way to authenticate and verify ownership of a piece of digital art, which was previously a challenge in the digital realm. In addition, artists can benefit from secondary sales of their artwork, as they can receive a commission each time it is resold.

Being primarily digital collectibles, NFTs explore their potential by taking the form of trading cards, virtual items and in-game collectibles. NFTs allow players and collectors to own and trade unique digital assets, which adds a level of rarity and exclusivity to these objects.

Another very important factor is that of Authenticity and Ownership of Digital Assets. NFTs provide a secure and verifiable way to certify the authenticity and ownership of digital assets, such as images, videos, music, news articles and more. This is especially relevant in a world where digital copying and distribution is easy, as NFTs allow the legitimate ownership of a digital asset to be tracked and verified.

They are also frequently used as payment currencies or access and membership tokens. In various projects and communities, NFTs are also used as access and membership tokens. For example, NFTs can grant exclusive access to virtual events, online platform memberships or special community benefits.

Their utility translates to being used as alternative investments in tokenized assets. NFTs have opened up new investment and value creation opportunities in the digital world. Some people see NFTs as a way to invest in unique digital assets, such as art or collectibles, with the potential for future returns. In addition, NFTs have also been used to tokenize real-world assets, such as real estate and physical works of art, allowing for fractional ownership and liquidity in the market.

It is important to note that the NFT landscape continues to evolve and undergo change. While they have proven useful in a number of areas, there are also challenges and issues related to sustainability, copyright protection and market volatility. As a result, the adoption and long-term impact of CLS in today’s world is still being explored and debated.

Despite the critics and challenges that have arisen, NFTs continue to evolve and explore new applications. These digital tokens offer a revolutionary form of authenticity, ownership and transfer of digital assets, and their impact on culture and the digital economy continues to be studied and explored.

The future of NFTs is fascinating and full of possibilities. As this technology continues to evolve, it is difficult to predict with certainty how it will develop, but here are some trends and possible directions that could define its future:

  • Expansion into new sectors – NFTs have proven their usefulness in areas such as art, collectibles and gaming, but they are likely to expand into other sectors. We could see tokenization of real estate, music and movie copyrights, educational certificates and more. NFTs have the potential to transform the way various types of assets are bought, sold and owned.

  • Interoperability and standards: As the world of NFTs grows, the need for interoperable standards and protocols is likely to emerge. Currently, NFTs are primarily associated with the Ethereum blockchain, but we could see the adoption of standards that allow the transfer and use of NFTs between different blockchains. This would open up even more opportunities and liquidity in the NFT market.

  • Immersive digital experiences – With the advancement of technology, it is possible that NFTs could be integrated into more immersive digital experiences. This could include the use of virtual reality (VR) and augmented reality (AR) to interact with digital assets represented as NFTs. Imagine being able to walk through a virtual gallery and admire unique digital artwork or play in a virtual world where objects and collectibles are NFT.

  • Governance and Holder Rights: As the ecosystem of NFTs matures, discussions and debates around governance and holder rights of NFTs are likely to arise. Holders of NFTs could have the ability to influence decisions related to digital assets, such as updates or modifications, and mechanisms could emerge to protect the rights of holders in this area.

Sustainability and carbon footprint: Sustainability has become an important issue in the world of NFTs due to the energy consumption associated with blockchain transactions. In the future, more sustainable solutions and approaches to mitigate the carbon footprint of NFTs are likely to emerge, such as the use of more efficient blockchain or emissions offsetting.

Undoubtedly, the future of NFTs looks promising and full of opportunities. As new use cases continue to be explored and current challenges are addressed, NFTs could become a more integrated part of the digital economy and the way we own and value unique digital assets.

NFTs represent a revolutionary alternative that has the potential to transform the economy and the distribution of wealth in the digital world. By emphasizing the value of astonishing and thrilling, rather than simply producing or hoarding, NFTs challenge traditional paradigms of exchange and ownership.

NFTs enable artists, creators and holders of unique digital assets to monetize their work fairly and control its distribution, opening up new opportunities for revenue generation and market share. At the same time, NFTs foster diversity and inclusion by enabling emerging artists and marginalized communities to find a platform to showcase and sell their talent.

In addition, NFTs have the potential to decentralize and democratize the digital economy by removing intermediaries and barriers to entry, allowing individuals to participate in the marketplace more directly and equitably. This can lead to a fairer distribution of wealth and greater autonomy for creators.

However, it is important to address the challenges associated with NFTs, such as sustainability and carbon footprint, copyright protection and market volatility. These issues require continued attention and a responsible approach by market participants.

Ultimately, NFTs represent an exciting frontier in the digital economy, where value is defined by creativity and the ability to emote, rather than the mere production or accumulation of goods. If managed properly, NFTs have the potential to transform the economy and open up new possibilities for participation, expression and wealth redistribution in the digital world.

Author: Martín Burbano de Lara

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