What do you know about NFT agreements and the laws associated with NFTs?
NFTs, also known as non-fungible tokens, are stored on the blockchain as digital files. An NFT has its own unique identity that you can sell or trade online. An NFT can be a video, image, real estate, piece of art, audio recording, etc.
Essentially, NFTs are digital certificates of authenticity that you purchase with cryptocurrency. Only one person can own a single NFT at a time.
Today, NFTs are continuing to grow in popularity. And with this rise in popularity comes about many legal challenges, particularly when it comes to copyright laws.
If you purchase an NFT, it is critical to understand the whole agreement. The agreement should address all ownership rights to avoid copyright issues.
When someone purchases an NFT, they buy the digital certificate of authenticity, but they do not own the copyright or the right to reproduce it. So while the buyer owns the certificate, they cannot reproduce it.
Read on to learn more about what you need to know about NFT agreements.
What You Need to Know About NFT Agreements
So, what needs to go into NFT agreements?
When an NFT is created, it is crafted with a smart contract stored on the blockchain. This contract contains essential information about the NFT, including the original creator, if anyone is entitled to royalties whenever it is sold, and the NFT’s history of ownership.
A smart contract is essentially a sale agreement between the buyer and the owner of the NFT. The contract verifies that terms are met.
An NFT agreement should always consider who the owner of the original work is and if (and how many) digital copies can be re-created. The agreement should also outline the rights the NFT owner has and whether the owner of the NFT is granted the copyright of the original work.
The agreement should also outline who has access to the NFT. If marketing is involved, the agreement should include the sales outline, pricing, and if royalties will be paid to the original artist.
If you are buying an NFT, it is critical to review the NFT agreement to fully understand the terms of the NFT’s sale. The agreement should always state whether the buyer gets the copyright with the purchase and if the seller has the right to sell other versions related to the NFT.
It’s essential to understand what terms go into NFT agreements before purchasing one.
It is also critical to ensure that during the purchase of an NFT, the person selling it has the rights to the work. You also have to confirm the work’s authenticity to ensure you do not buy something that has violated another artist’s copyrights. You must ensure the seller has the legal right to transfer the NFT.
Get help from a business law professional.
If you’re thinking about buying an NFT, it is critical that you understand copyright laws, what you are purchasing, and any rights that are attached to the NFT you are purchasing. It can be a complicated process, which is why it is critical to speak to an attorney who has experience with NFTs and copyright challenges and opportunities.
If you have questions about laws that apply to NFTs – including ownership and copyright laws – and want help developing a legally binding contract, we can help. Don’t hesitate to call 303-780-7333 or schedule an appointment online.
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