NFTs: Do you fully own an NFT when buying it?
Non-fungible token, or NFT, is a unique digital asset representing ownership of items like video clips, music, drawings, and more. NFT first came into the limelight in March 2021 when digital collagen fetched millions of dollars in a Christie's auction. Many people have since embraced these digital certificates of ownership, which can be purchased or sold using cryptocurrency.
However, many don't know that you don't fully own an NFT when you buy it—spending money on items auctioned or traded as NFTs doesn't make you the owner of the media associated with that particular token. Blockchain technology keeps track of who owns the tokens, which is very difficult to change. If you buy an NFT, the original owner will still have some control over it.
The reality of NFT control and ownership is both positive and negative. On the one hand, you won't have absolute power over the NFT, and the owner can still have a say. On the other hand, the original owner can't make all decisions by themselves without your approval. Understanding your ownership rights in NFT is critical. You must also know the rules, regulations, and restrictions to avoid disappointments.
Limited rights to NFTs
NFTs allow owners of a collection or piece of work to reach their target audience. Many creators could not claim ownership of unique items like the first-ever video uploaded on YouTube or the first Instagram post. But with NFTs, that's a thing of the past. Today, people can claim ownership, provided they are the rightful owners or creators.
The creators are the copyright owners, meaning they can do what they choose with their work. When you buy an NFT from an owner, you become a holder of a digital certificate, also known as the NFT. However, you do not have other rights over the piece of work, such as the right to share or make copies.
The same applies to buying a physical collectible. You may own wall art, but you don't have the right to make it available to the public. You also don't have the right to prevent someone from reproducing the image on the art without your consent. The only way to obtain rights over such work is to get the copyright transferred to you by the creator. Of course, the other ways if you are, in fact, the actual owner.
The biggest challenge of digital content is that it can easily be shared and reproduced online. Doing so is considered copyright infringement. However, the NFT license sometimes includes terms for assignable rights.
Some NFT creators allow buyers to use the copyright to their work in a limited way, while others don't permit the commercial use of their work.
Buyers need to understand that purchasing an NFT is mainly to have something unique owned by a celebrity, famous brand, or anything. Until terms are changed, buyers will continue having limited rights to share or reproduce creative work. Terms, copyright, and rights differ depending on the NFT smart contract.
However, there are cases where the blockchain cannot determine if a piece of work is authentic. In some incidences, other people's work has been tokenized as NFTs, leading to copyright infringement. It's essential to ensure that you're buying an NFT from the original creator.
Reasons why NFT rights are limited
The main reason rights over NFTs are limited is to prevent creative works from being stolen. Another reason is to regulate the use of NFTs, which ultimately protects them from non-permissible usage. This restricted use also helps to ensure NFTs benefit individuals who need to use them, such as artists.
Limiting rights on NFT makes it easier to use them. For instance, it's much easier to sell a product or item if you know the person you're selling it to will use it as intended. Selling to people you know is particularly important if you exchange products and services using NFTs.
The restrictions on NFT can also protect you from making bad decisions regarding your property. For example, if someone else owns an NFT of your property, they could prevent you from taking action that could work against the interest of both parties.
NFT rights are limited in various ways. One is using a smart contract, where specific restrictions are put in place and followed before using an NFT. Another way is using a trust, where an appointed person known as a "trustee" regulates the rights buyers and sellers have on NFTs. Regardless of your chosen method, ensure that the restrictions are fair enough and will not have any people who own the NFTs outright.
NFT technology is relatively new, but NFTs are certainly here to stay. As technology advances, we should expect more growth in this new exciting area of the blockchain industry.
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