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What to know before you mint

This article covers digital property rights as they apply to NFTs.
Woman in VR headset reaching out to neon streaks swirling around her
© RMIT 2022

Before you mint your first NFT, it’s important to know a little bit about digital property rights as they apply to NFTs. This will be covered in more detail during week 4 of this course.

For now, here is a baseline explanation of digital property rights to help you start thinking about and avoiding accidental infringement.

Non-Fungible Tokens (NFTs) have been around since 2014, but only more recently gained popularity, particularly during 2021. Some call 2021 the year of the NFT. It was the year that NFTs cemented their place in the public consciousness. “NFT” was the Collins Dictionary’s word of the year in 2021. In the same year, respected public figures such as Canadian ice hockey deity Wayne Gretzky and established brands such as Marvel comics also launched their own collections.

But the legal status of NFTs with regards to intellectual property rights remains murky.


“Non-fungible” means that the item is unique and can’t be copied. Every NFT is a unique token. While it’s easy to copy the related image, the creator’s wallet address cannot be faked. “Minting” showing a direct line of provenance and minting an NFT registers a particular user as its creator and the first owner of that NFT token.

So, an NFT is basically a form of notary service: a tokenised tool for provenance, establishing and certifying the creator’s wallet address. They can help artists, musicians, and others prove they created something.

It is important to note that unlike a currency or a cryptocurrency, Non-fungible tokens are not made to have equivalent fractional values. An NFT is designed to have a unique exchangeable value. This is important for copyright and intellectual property and digital property rights. Although the Internet can be the Wild West in many ways, laws still exist for a unique item.

An NFT is unique. This uniqueness has driven the public’s perception of NFT digital scarcity. But it has also driven legal uncertainty around the use of a unique image. On the one hand, the uniqueness of NFTs as digital rights are important for artists. There have been decades-long disputes over artists’ resale royalty rights globally. NFTs present potential workarounds for artists in this respect.

On the other hand, the law remains complicated by the architecture of NFTs.

So what data is stored on-chain?

Both Fungible and Non-Fungible Tokens reside on a blockchain. The downside to this is that when dealing with larger files like a piece of artwork, the blockchain is unable to store the actual underlying digital asset.

The result, as described by one of the original NFT creators, Anil Dash is that, “[t]his means that when someone buys an NFT, they’re not buying the actual digital artwork; they’re buying a link to it”. So the sale of an NFT does not necessarily transfer the underlying copyright of the work. That copyright exists “off-chain” with the purchaser.

For example, the NFT itself might live on a blockchain but there are centralised repositories of data connected to the NFT, such as OpenSea. If the server went down, valuable data could be lost.

Due to this, the issue of balancing decentralisation and existing legal realities and frameworks currently remains unclear.

Could an NFT be something like a land asset registry?

The ownership history of NFTs is the blockchain equivalent of real estate property records or, in intellectual property terms, the assignment records held in the US Patent and Trademark Office, Copyright Office or registered through IP Australia. You have a clear proof of title (on chain), but there are still mostly untried ways of winning a legal dispute, or even of the exact nature of the legal asset (the NFT).

Michael Kong, CEO of Fantom Foundation, says NFTs show “the full audit trail, level of authenticity attached to each unique token that you can see previous ownership — people ascribe great value to that.”

NFTs mean much more than images of pixelated Punks. The possibilities for immutable provenance wrapped in an NFT are just starting to be explored as NFTs can wrap any data securely.

NFTs and open source culture

While the established Western law provides a certain conception of copyright and intellectual property (IP) protection, open source culture provides a different way of viewing NFTs as property rights. This is crucial to understand.

Cypher punk open source culture is crucial to the NFT movement. Open source advocates argue that copyright infringement is a key to training developers to start building on blockchains. Basically ‘imitation is flattery’ in NFT collections.

The potential collectible angle for original projects may be clear, but for clones of a popular NFT series, it’s a much more uncertain proposition. True open-source believers are keen to see progress in developing the space, and some argue for breaking down existing IP protection models.

We do know that clone projects have value and rake in funds (even if not at the level of their originals). Interestingly, almost nobody is being sold a fake believing it is the real thing. Though, as we will learn in Week 4, NFT copyright infringement can still result in a lawsuit.

Now it’s your turn

How do you think intellectual property laws should apply to NFTs? Should NFTs be afforded similar protections to other digital assets or should they be treated more as open source assets. Share your answer and your reasoning in the comments.

© RMIT 2022
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