In addition to collectibles, NFTs might be in the notary public offices of the future

Would you pay more than USD 3,000 for a GIF? Or more than USD 300 for a small United States NBA basketball league movie? The first tweet in history, by Jack Dorsey, CEO of Twitter, has a USD 2 million bid at an auction. All of these things are traded on the NFT market (non fungible token), which grew almost 300% in 2020, according to a survey by L’Atelier BNP Paribas and Nonfungible.com. And this must only be the beginning.

“The application is almost infinite”, says Felipe Dannemman, from the law firm Dannemmann Siemsen, which works with intellectual property. NFTs represent non-fungible assets, that is, unique and irreplaceable assets. This is true for a specific song, painting or apartment. Thus, based on blockchain, it is possible to track their authors and verify their authenticity.

This possibility has been attracting the art industry to NFTs. Last week, the American band Kings of Leon announced that they will release an album using the technology. The singer Grimes sold tokenised digital art for USD 6 million. Regarding the use of a song or an image, NFTs facilitate the payment of royalties.

“Today, even if you want to pay a royalty for using a .jpg, for example, you won’t be able to, because you can’t track the artist”, says Samir Kerbage, CTO of Hashdex, a company specialising in managing in cryptoassets. “With NFT, the artist can be paid directly, using the token”.

This opens up space not only for independent artists to monetise their work, but also for market speculation. Imagine buying a Van Gogh painting while he was alive, in the 19th century – when it was worth very little. In 2018, one of the Dutchman’s works was sold for EUR 7 million euros. The same can happen with cryptoart, represented by an NFT.

There is nothing to prevent a buyer of an NFT from reproducing its content on the internet – ultimately, NBA clips are on YouTube and no one would need to buy the digital asset. But the blockchain behind them is what gives the piece exclusivity and originality, giving status to what was bought. The luxury brand Louis Vuitton, for example, already uses the technology to track its articles.

Beyond the arts

Although still niche, NFTs may invade everyday life before we think. “It can be used to record the possession of any unique asset”, says Kerbage. That is, real estate and used cars can enter the game. Digitilisation would allow the purchase of homes anywhere in the world, in a much faster and less bureaucratic manner than today. “It changes global liquidity”.

In terms of legislation, the changes required would also be minimal, says Dannemman. There are already international precedents for the judiciary accepting evidence linked to blockchain, and, in relation to intellectual property, this type of transaction is more secure. “It’s a path of no return”, says the lawyer. “We will have to make small adjustments to adapt, but it is already a reality”.