Is NFT the IP of the future?
“The future belongs to those who can imagine it, design it and execute it” as said once by Sheikh Mohammed Bin Rashid Al Maktoum, Vice President & Prime Minister of the United Arab Emirates. Based on this vision, UAE is set to position itself as the country of the future, the destination of innovation and the hub of virtual asset ecosystem through digital technologies including cryptocurrencies, block chain which will contribute to the growth of the economy.
If we consider metaverse the future of the social media, and crypto the future of the currency, is NFT the future of Intellectual Property (IP)?
NFTs stand for Non-Fungible Tokens that are created or minted on a blockchain using cryptography with a unique identification code. This code makes it impossible to have two similar or identical NFTs. As owner, NFT will allow you to attach value to both digital and real assets.
Just like IP, NFTs cryptographic assets, can be bought, sold, or exchanged on any NFT market based on the same blockchain. It is the scarcity and uniqueness of the token created on a blockchain as digital asset that leads to its high value, where attributing the value to an NFT is still the big unknown.
How this work?
Digital market platforms, just like an online store, provide three primary services for trading NFTs where you, as user, can browse these platforms and select the items (NFTs) posted for sale or even buy it through auction. On top, the digital market platforms give users the chance to create or mint and post their own NFTs for sale.
As NFTs are hosted on blockchain, most marketplaces require a crypto wallet for users to store their NFTs post purchase as NFTs ownership will be transferred from the seller to the user who bought it just after purchase. This trade process will implicate a network transaction fee, a reason why user needs to own some cryptocurrency. Most marketplaces list NFTs in ETH (Ethereum) as it is the most widely used digital currency. Owning an NFT tied to a real piece of work (art, music, moment, video snap…) does not give you a full ownership over intellectual property rights of the piece or the digital asset, where a smart contract may set the term for that.
In 2021 NFTs market was estimated of $ 40 billion, where the most expensive NFT sold ever was a piece of work for the artist Michael Joseph Winkelmann for $69.4 million at Christies auction. Is this the beginning of a booming business?
In UAE alone, NFT ownership numbers have risen to about 28,000 individuals (according to a survey conducted by finder.com). Seeing the fast transition to the digital world on the national and global levels and the surge of NFTs purchase, sale, and creation that are taking place in the country, this number is expected to grow.
In honour of its 50th Federal National Day in December 2021, the UAE is the 1st country to issue an NFT stamp in the region using blockchain technology to commemorate the day. Is this the beginning of the transition of IP into NFTs in the metaverse?