CoinEx Academy: What Does the NFT Deal Offer?

NFT, a big hit, sparks curiosity in many. But when googling it, you find many believe that buying NFT offers only an address or an arrow that directs to a piece of artwork. Though owning the address, you are unable to prevent others from copying or using the artwork, nor the author from selling an NFT of the artwork again. That confuses many users: Isn’t NFT unique? So what do we get for buying an NFT?

1. Does NFT include the copyright of a work of art?

The answer is no. Despite slight differences, all countries protect the artwork copyright nearly the same. For example, the Copyright Law of the People’s Republic of China stipulates that the rights contained in copyright include personal rights (Subclauses 1–5) and property rights (Subclauses 5–17) of the copyright.

The copyright-related personal rights, i.e. the right of publication, the right of authorship, the right of modification, the right to protect the integrity of the work, and the right of reproduction, are not legally transferable. In other words, even the copyright buyout involves only property rights as stipulated in Subclauses 5–17. Buying an artwork could not change its creator.

So is there copyright involved in an NFT sale? Take an NFT on OpenSea as an example:

The artwork chosen is an animated NFT, created by Yat. Its price is 0.03 ETH. Below are the license clauses that state the rights included in the NFT:

In simple words, you have the right to use the artwork for non-profit purposes, for example: downloading the artwork to watch and posting it on Moments to show off. Yet you cannot use it for any commercial purposes such as renting, selling, lending, advertising, or transferring. Apparently, this NFT does not grant the buyer the copyright of the artwork.

2. Do all NFTs forbid the commercial use of corresponding artworks?

Not really. Bored Ape, which sells the second-best in all NFT collectibles, allows the buyers to use it for some commercial purposes. In addition, buying a Bored Ape gains the buyer the membership of the Bored Ape Yacht Club. It’s up to the original author to set the rights and interests of an NFT. Investors must be clear about the rules before payment.

3. Do I can get the original artwork after buying an NFT?

The answer is no in most cases. For some NFTs, the creators own not only the original digital artworks but also material artworks. You might also ask, can I get both after buying an NFT? Neither. You cannot stop the original author from selling the original digital artwork or the physical artwork.

Is it possible that an NFT deal offers the physical artwork? Still, if the NFT rights involve it, then yes; if not, no. NFTs are basically digital artworks, and there are no material artworks or original electronic files.

Here is another problem. Can I buy a physical painting, turn it into an NFT, and then burn the physical painting? The answer is that you can burn the painting, but you can’t generate or sell an NFT. Unless you buy out the copyright of the physical painting, you are infringing others’ copyrights. Those online reports that someone bought expensive paintings, burnt them, and then generated NFTs are ridiculous. Things are not that easy.

4. Can you stop others from using the NFT-related artwork after buying the NFT?

No. Buying an NFT does not grant you the copyright of the artwork. If others use the artwork, the right to prosecute belongs to the original author, rather than the NFT buyer.

5. Can buying an NFT stop the original author from generating another NFT of the artwork and selling it to someone else?

No again for the same reason. The NFT deal does not involve the copyright of the artwork. The original author can still generate NFTs and sell them to others on other blockchains. But wouldn’t that hurt the rights of the previous NFT buyer? Is there any way to deal with it? There are two solutions.

First, counting on the original author to follow the rules. If the author sells different NFTs of the same artwork many times, he will be bankrupt in reputation and no one will buy his NFTs later because they are no longer unique. Second, relying on the NFT trading platform to review and supervise the NFTs. But it is said that OpenSea does not audit the uniqueness of an NFT. This is an implicit risk of NFT investment. But for those traded on more “centralized” blockchains, for example, Alipay Antchain, an agreement will be entered into with the original author to ensure the NFT uniqueness.

6. What is the ownership of the NFT?

After buying an NFT of the artwork, we own the NFT, but not the artwork. What does it mean? This is like when buying a Harry Potter novel by J.K. Rowling, we only own the book and can sell it to others. Yet we are not allowed to transfer the content of the novel to others.

7. What can we get when buying NFTs?

It is a wonderful thing if some NFTs offer additional commercial rights and other rights attached to the artwork or NFTs. But most of the time, buying an NFT gets us only the unique carrier of artwork and part of the rights. Is it a fair deal? Does the unique carrier matter? Absolutely. Why do we buy the book of a favorite writer and ask him to sign on it? It is to make the carrier unique.

And if the carrier itself is unique and scarce, it is valuable. This is the same reason why collectors like to collect rare, out-of-print paintings.

The Global Digital Coin Exchange. Visit us at: coinex.com. Join our community: t.me/TheCoinEx. Send us a Ticket for help at support.coinex.com/hc/requests/new