One of Korea’s biggest internet companies Kakao, a Hive entertainment company in Korea, where international K-pop idol BTS belongs, META, Disney and even the New York stock exchange, has jumped into the same field called NFT.
To understand NFT with ease and specifically, we should understand the concept of Blockchain and cryptocurrency. First, let’s learn about blockchain. Block means data. Blockchain is a technology making a system to connect these data to allow everybody to confirm so that nobody could manipulate. Using the blockchain technique allows people to make important transactions without an institution that has central authority like the government or bank. Exemplify a money transaction as an example. A currency made by utilizing blockchain is called crypto currency represented by Bitcoin. The background of Bitcoin came from the action of people trying to do financial transaction s with no privilege anywhere. Because when the internationally financial debacle came in 2008, people started to doubt financial institutions’ safety and transparency.
As the technology was established, virtual currency has occurred. Wikipedia, it refers to virtual currency is a digital currency or electronic money used in electronic form in a specific virtual space connected by a network without real objects such as bills or coins. You would have heard of Bitcoin, one of the well-known virtual monies. Blockchain has gotten lots of attention and it is inspired by Bitcoin.
Now it is possible to buy and sell things virtually. Transaction reciprocally in virtual has happened and it has spread to the art consumption area. People selling artworks practically became well known in 2021, and it’s called NFT.
What is NFT?
NFT is an abbreviation of the non- fungible token. This token uses blockchain technology to prove ownership of digital property. By block chain technique, applies inherent code like the fingerprints concept that saves information about when did this work was created, who owns, and even about sales amount. Furthermore, inside the token, there is an the the address that indicates address of digital files like paintings or images used for a purpose to show inherent originality and ownership of work. Existing digital files were able to copy and paste ultimately, which had no value of scarcity and uniqueness. Still in contrast, with NFT, it made possible to have the values and originality guaranteed. It is simply, called as some virtual authenticity. It is currently very popular in the art auction market because if the code is planted in digital artwork, it is hard to reproduce.
NFT was inspired by Bitcoin. As Bitcoin got famous and popular, people’s attention got raised too. The idea of spending virtual money became wide, and the transaction has become activated. Now people started to think about selling something rather than only spending? How about creating a virtual market where trade happens? And this is how the NFT industry has come out. Besides Bitcoin, the next most in high-demand category were NFT. Art cannot be separated from human beings from the past. As we can remember in history, when the first human beings appeared, they even drew drawings with their fingers on the cave wall and ceilings. Everything around us is related to art. Art can be used everywhere, and it has value as property and investment too. The art industry and the market always have massive demands, which help the art business keep running. Nowadays, news and articles are talking about NFT. In the past, people used to think dealing with the virtual systems would be not familiar, but compared to that, now, it is so natural and does not come to people if it is hard or unfamiliar.
Problems of NFT
NFT was rising in the digital industry because due to the function that proves as the digital file is only, and it made it possible to claim the ownership of it. It was reasonable for NFT to be welcome and popular in many creative industries such as art, game, and music. Even though NFT has been rising but it also has lot of problems coming out. First, there are IP that is not save in the blockchain. NFT is a token that saves meta data on the blockchain. As I mentioned above, due to the attribute of NFT, NFT was able to develop to prove of digital property. It led to a massive success, but it does not mean that NFT has all the data of digital contents in the blockchain. Mostly NFC only has unique identifier data and where the digital content is storage. The rest of the information is held in the open chain, which means a centralization server, because to store huge amount of information costs massive time and money. In addition, the problems that could happen from it are if the company stops managing or if the server disappears suddenly, the data that constitutes NFT will disappear even though the link and identifier data stays. Alternatives to NFT storing problem would be trying to diverse the data or using a decentralization market. The second NFT market is so centralized. Despite the various companies that deal with NFT exchange, few companies have monopolized the market. Through this, we could see a centralized market infrastructure. A company called Open Sea has the most NFT exchanges. They dominated users’ transaction fees. Furthermore, they even sensor the token on its own, and if they think it is inappropriate, they can stop the listed NFT deal about it. It brought lots of criticism from the users.
Third ownership and copyright problem. In the NFT market, there are lot of laws that are not mentioned explicitly. When we think that the NFT market be vitalized for only five years in vast, it is not a surprise that there are some problems. Among all the problems, ownership and copyright of NFT is the biggest issue. In general, when a buyer buys NFT, the buyer also gains ownership and copyright. Regarding copyright the copyright buyer gets, and legal copyright is different. Legal copyright means the artist who created the work uses for by itself or allow other to use it to earn financial profit. This right of copyright separated as a legal right. This means if it is not specifically mentioned on the contract, even though the buyer buys NFT buyer would not acquire legal copyright. The buyer would only get ownership, and the copyright would still be affiliated with the artist. Therefore, when attempting to buy NFT, we should always be aware of this otherwise, there could be a serious matter. If you are willing to buy NFT to use for the commercial reason, you should check if it is written about. When a buyer acknowledges NFT as they gain ownership, the buyer would get legal copyrights also, so whenever buyer uses it for commercial reasons buyer wouldn’t need permission from the artist. There was an actual example that happened. In real, larva laps did not hand over the copyright of crypto punk to holders, which caused controversy. This was a decisive opportunity for BAYC to follow the price of crypto punk.
In conclusion like all the innovative technology, NFT has problems to improve. Case of NFT matters of the way of storing data, centralized infrastructure, NFT’s screening process of marketplace and copyright have remained as major problems to overcome. However, I think these problems could be solved as the market becomes more mature. The value NFT offers in the market would make market participants search for and make better solutions. The recently NFT market has been showing adjustment. Quotation from Marcus Goldman he once said whoever turns crisis into opportunity. As following wise saying hope NFT recognizes their problem in this chance and problems be solved so, NFT can advance.
References
-Hamiltom. (mar 3rd 2022). The Beginning Of NFTs – A Brief History Of NFT Art. Available: https://www.zenofineart.com/blogs/news/the-beginning-of-nfts-a-brief-history-of-nft-art
-Wikipedia. Non-fungible token. Available: https://en.wikipedia.org/wiki/Non-fungible_token
Robyn Conti, John Schmidt. (April 8th,2022). What Is An NFT? Non-Fungible Tokens Explained. Available: https://www.forbes.com/advisor/investing/cryptocurrency/nft-non-fungible-token/.
