{"id":1274,"date":"2021-12-02T11:27:22","date_gmt":"2021-12-02T17:27:22","guid":{"rendered":"https:\/\/sites.imsa.edu\/hadron\/?p=1274"},"modified":"2021-12-02T11:27:42","modified_gmt":"2021-12-02T17:27:42","slug":"nfts-ip-rights-or-scams-and-at-what-cost","status":"publish","type":"post","link":"https:\/\/sites.imsa.edu\/hadron\/2021\/12\/02\/nfts-ip-rights-or-scams-and-at-what-cost\/","title":{"rendered":"NFTs: IP Rights or Scams? And at What Cost?"},"content":{"rendered":"

Written by: Gloria Wang<\/em><\/p>\n

On November 18, Francis Bacon\u2019s painting Pope with Owls<\/i> sold for $33 million. A week before, Van Gogh\u2019s Cabanes de bois parmi les oliviers et cypr\u00e8s (Wooden huts among olive and cypress trees)<\/i> sold for $71.3 million. While it isn\u2019t uncommon for paintings to sell for millions, a digital piece\u2060\u2014visual artist Beeple\u2019s Everydays: The First 5000 Days<\/i>\u2060\u2014sold for $69M. But why would anyone spend nearly $70 million on a digital copy of an illustration that can easily be screenshotted for free? Buyers don\u2019t even receive a physical print to hang up in their living room. The reason for the price-tag is a non-fungible token (NFT): a unique electronic identification record stored on a blockchain used to establish ownership of an easily reproducible digital file.<\/p>\n

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Property in the Digital World<\/b><\/p>\n

Before the invention of NFTs, there was no way to prove ownership of digital assets because it is nearly impossible to distinguish an original file from a digital copy. But without clearly defined ownership, transactions can\u2019t occur. If a million copies of a digital asset exist, it would be far less valuable than if there was only one, which is why NFTs are so special. Using NFTs, ownership history is embedded into the blockchain itself, authenticating ownership and differentiating between copies and the single, authentic file. In simpler terms, the NFT of a digital asset serves as the verified badge on social media platforms.<\/p>\n

But how does this affect artists and other content creators? Traditionally, artists have a hard time protecting their intellectual property rights due to the difficulty of detecting, and thus regulating, art forgery. Even when works aren\u2019t forged, the collector of an artwork often profits more than the original artist by increasing the resale value. In order to claim a portion of those resale values, artists have pursued the droit de suite<\/i>, or Artist’s Resale Right, for over a century with limited success.<\/p>\n

Few, like minimalist artist Sol LeWitt, are able to incorporate IP rights into the art itself. A Foreign Policy article describes how LeWitt\u2019s work \u201cis not the wall drawing but rather a certificate\u2026 purchase[d] that grants them the right to install a specific wall drawing wherever they please. Transactions were policed by LeWitt\u2019s studio and are now regulated by his estate\u201d (Greenwald 2021). Like LeWitt\u2019s certificate, a NFT serves as a permanent authenticator that can track all sales\u2060\u2014 including resales, which enables a kind of royalty contract where a percent of the resale price is transferred to the original artist.<\/p>\n

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Theft in NFT<\/b><\/p>\n

Just like with physical property, the sale of a NFT doesn\u2019t automatically include the sale of copyright\u2060. Whether the copyright is transferred or not is up to the creator. Copyright ownership is valuable, providing \u201cexclusive rights to the owner under 17 USC \u00a7 106 \u2014 the right to reproduce the work, prepare derivative works, distribute copies, to display the work publicly, and to perform the work publicly\u201d (Chinlund & Gordon, 2021). Yet with the easily reproducible nature of digital files, individuals can easily offer works as NFTs without the artist\u2019s permission and even knowledge.<\/p>\n

Figure 1:<\/p>\n

\"\"<\/p>\n

Birdcage<\/i>, 2019. Digital illustration. A girl\u2019s heart, represented by a small bird, is held behind her ribcage as she stitches it back together.<\/p>\n

Source: Twitter, @QinniArt<\/i><\/p>\n

Digital illustrator Qing Han, best known as Qinni, was diagnosed with Stage 4 Fibrosis Sarcoma cancer on December 28, 2019. She died just months later. But only a year after her death, scammers started taking an interest in her works. Her brother, Ze, was informed that someone stole Qing\u2019s identity and started selling her works as NFTs. One of her pieces, titled Birdcage<\/i>, was sold on the \u201cfirst NFT marketplace\u201d Twinci. Posted months before her death, the piece represents her struggles with heart disease which caused her to suffer through four open-heart surgeries. While the NFT was removed after Ze and Qing\u2019s Twitter fanbase reported the listing, the rise of NFTs has been followed by countless scammers profiting off artists\u2019 works. In a post on April 18, Ze tweeted, \u201c\u2018Please stop profiting off my dead sister\u2019\u201d (Han 2021).<\/p>\n

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Environmental Cost<\/b><\/p>\n

Besides the questions of morality and authenticity, the billion dollar industry of NFTs poses a massive environmental cost to the planet. Ethereum mining\u2060\u2014 the blockchain most NFTs are based on\u2060\u2014 consumes about 26.5 terawatt-hours (TWh) of electricity per year, nearly equivalent to the 26 TWh consumed by the entire country of Ireland in 2017 (Somvichian-Clausen 2021). This is because Ethereum, like most major blockchains, is built on a \u201cproof of work\u201d system where \u201cminers\u201d solve complex puzzles to add verified transactions to the blockchain ledger. The intentionally inefficient system reduces incentives for individuals to mess up the ledger, but also requires a massive amount of computational power to run.<\/p>\n

Ethereum\u2019s developers plan to shift to a less carbon-intensive form of security in 2022 via a blueprint called Ethereum 2.0 which uses a \u201cproof of stake\u201d\u2060\u2014 where users deposit some of their own cryptocurrency tokens into the blockchain as a \u201cstake\u201d instead of solving computationally intensive puzzles. This would \u201cessentially mean that Ethereum\u2019s electricity consumption will\u2026 drop to almost zero,\u201d Michel Rauchs, a research affiliate at the Cambridge Centre for Alternative Finance, explains to The Verge (Calma 2021). But whether or not the shift will occur remains a question.<\/p>\n

A more obvious solution to the environmental costs of NFTs is using clean energy. If blockchains start to run on renewable resources instead of fossil fuels, emissions will decrease drastically. But some experts, like de Vries, argued that \u201crelying on renewable energy isn\u2019t a perfect solution for proof-of-work cryptocurrencies either. If mining for tokens continues to be extremely energy intensive, it will continue to put pressure on electricity grids and eat up renewable energy that could otherwise go toward something arguably more urgent \u2014 like heating or lighting homes\u201d (Calma 2021).<\/p>\n

 <\/p>\n

Conclusion<\/b><\/p>\n

As the future of blockchain technology remains uncertain, so does the potential impact these technologies have on Earth. While NFTs may provide a platform for digital artists and other creators to receive compensation for their work, it also provides a platform for scammers to profit off of others\u2019 work. Whether NFT platforms will be able to successfully help digital content creators receive proper payments for their work in an environment-friendly way remains unknown. But NFTs are likely here to stay.<\/p>\n

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 <\/p>\n

References and Sources<\/strong><\/p>\n

Raybaud S. (2021, November 12), \u201cVan Gogh\u2019s masterpiece from late American oil tycoon\u2019s collection fetches US$71.3 million,\u201d The Value<\/i>, https:\/\/en.thevalue.com\/articles\/christies-new-york-cox-impressionist-collection-sale-result-van-gogh<\/a><\/p>\n

Raybaud S. (2021, November 18), \u201cFrancis Bacon’s “Pope” painting stars in Phillips’ record US$139 million sale,\u201d The Value<\/i>, https:\/\/en.thevalue.com\/articles\/phillips-new-york-20th-century-contemporary-art-evening-sale-bacon-pope-with-owls<\/a><\/p>\n

Chinlund G. & Gordon K. (2021, October 29), \u201cWhat are the copyright implications of NFTs?,\u201d Reuters<\/i>, https:\/\/www.reuters.com\/legal\/transactional\/what-are-copyright-implications-nfts-2021-10-29<\/a><\/p>\n

Han, Ze (ZirocketArt). \u201cSomeone I know informed me that someone is selling my sister @QinniArt’s art as NFTs. Regardless of what side of the debate you’re on about that, that’s just a morally shitty thing to do. So, please stop profiting off of my deceased sister.\u201d 1:34PM, April 18, 2021. https:\/\/twitter.com\/zirocketart\/status\/1383851496412880904<\/a><\/p>\n

Greenwald D. (2021, June 21), \u201cAre NFTs Always Bad?,\u201d Foreign Policy<\/i>, https:\/\/foreignpolicy.com\/2021\/06\/21\/nfts-nonfungible-tokens-bad-art-world\/<\/a><\/p>\n

Calma J. (2021, March 15), \u201cThe climate controversy swirling around NFTs,\u201d The Verge<\/i>, https:\/\/www.theverge.com\/2021\/3\/15\/22328203\/nft-cryptoart-ethereum-blockchain-climate-change<\/a><\/p>\n

Somvichian-Clausen A. (2021, March 24), \u201cHeard NFTs are bad for the environment? Here’s what that means,\u201d The Hill<\/i>, https:\/\/thehill.com\/changing-america\/sustainability\/energy\/544778-heard-nfts-are-bad-for-the-environment-heres-what-that<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

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