What is NFT? Part 2: Q&A
When you know ins and outs in some area, sometimes, it is hard to explain everything in simple words. I have faced such situations myself and found a good way out — welcome questions and answer them. The more questions you get, the better your answers become.
This article is the continuation of the previous topic, and it is based on real dialogues, though the names are changed.
Eliza: Hi. I tried really hard to understand what NFT is from your previous article. It’s really interesting for me, and as a rule I manage to sort out everything myself. But here my brain fried. It seemed to be kind of rocket science. As I understood it is connected with cryptocurrencies, and these are some kind of relations, which are sold. Am I right? Or I understood nothing at all. :-(
Hi Eliza, basically, you are right. Just have a look. I have designed an art object, which produces a small optical illusion.
Then I created NFT on OpenSea marketplace, which contains a digital artwork of this object and the rights to use it in commercial and non-commercial purposes. Passing this NFT to someone, I also pass such a right.
Eliza: Parry, sorry, I mean KaizenSailor. And how to restrict others from using this art?
These restrictions exist by default. You can not use somebody else’s photos without permission. Sure, they can be stolen. But it is illegal.
This NFT may be electronically passed to other people (and it will be electronically proved). And you can see the real owner of NFT. So, having bought NFT with related rights, I can print the image on my t-shirt or design a collection of t-shirts with this print.
Having sold NFT, I can no longer produce t-shirts. But it can be done by someone, who now owns NFT.
Eliza: Can I call it — to get the rights on something?
Yes, it is so. It doesn’t differ from standard intellectual property rights. When you pay for a stock photo, you get some rights. But there is one pitfall.
Eliza: OMG
Nowadays, most NFT creators do not describe what rights they pass. The market is not mature, it is just being created. When you pay for an NFT, you might not get any rights (if the creator of NFT hasn’t noted it). It makes sense to double check what you get.
I believe in the next few years we will see new licenses and legal solutions in this area.
In terms of my NFT, I added the license, based on NFT License 2.0, but decided to pass more rights.
One more thing. Now NFTs are basically not sold, but exchanged. In other words some crypto tokens (NFTs) are exchanged to other crypto-tokens (Etherium, Bitcoin and so on).
While tokens are not equal to money in most counties, it is not a purchase, but an exchange.
Eliza: I see. How to estimate the price of NFT?
It is a very complicated question. It depends on who you buy from. If you buy the first artwork of an unknown artist, in 10–20 years they might become well known and the value of your purchase will shoot up. But it may also turn out to be just one more ordinary artwork.
Some NFTs may be connected with different unique events, people or supported by communities. The more people are emotionally tied to the author or event, the higher the value of this NFT will be. So, it does not differ much from the price for usual things. The price is formed by demand first of all.
In the next articles we will talk about the possible value and utility of NFTs.
P.S. Actually, the NFT abbreviation has become so widespread that it is included into dictionaries (Collins English, Merriam-Webster) and Collins English Dictionary named it word of the year for 2021.
