A Brief Insight into Non-Fungible Tokens (NFTs)

In recent months, Non-Fungible Tokens (NFTs) have gained significant attention, with digital assets selling for substantial amounts, including recent sales by Nigerian digital artists for 9 ETH and 13.2 ETH. This emerging trend raises questions about the nature of NFTs, how they differ from cryptocurrencies, and their legal implications. In this article, we will explore what NFTs are, their distinct features, and their growing relevance in intellectual property protection.

What are NFTs?

When something is said to be “non-fungible” it means that thing is unique and cannot be replaced with something else. For example, a naira note is fungible in that you can barely identify the difference between two naira notes, and you’ll have the same thing. NFTs can really be anything digital that represents a wide range of tangible and intangible items (such as drawings, music, virtual sports cards, real estate, etc.). Unlike regular cryptocurrencies, NFTs cannot be directly exchanged with one another. This is because there are no NFTs that are identical – each non-fungible token has its specific information and it is impossible to exchange it with another.

Difference Between NFTs and Cryptocurrencies

The key difference between NFTs and cryptocurrencies is that currencies allow fungible trade, which means that bitcoins can be exchanged for another and they are identical. While NFTs are designed to uniquely restrict and represent a unique claim on an asset. NFTs are coded with smart contracts that govern the verification of ownership and manage the transferability of the NFTs.

NFTs and Intellectual Property

The wave of Non-Fungible Tokens (NFTs) raises legal questions that concern digital ownership, intellectual property, royalty collection and regulatory issues in the digital ecosystem. NFTs are protected by smart contracts and through a minting process that assigns a unique identity to the digital asset and creates a contract that cannot be changed by anyone. This process protects the intellectual property of the owner and prevents the ownership to be claimed by someone else unless granted to another party.

Conclusion

NFTs are becoming so popular, but it’s unclear how they fit into the existing legal and regulatory frameworks that govern the financial, technology and cryptocurrency industries in Africa and Nigeria because cryptocurrency transactions in Nigeria have been stifled by regulations. We look forward to the financial regulators creating a framework to govern the use of NFTs in the digital space.