A guide to non-fungible tokens (NFTs)
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The internet continues to expand its prominence in everyday life, with the most recent evolution of this being the so-called "Web 3.0", a new iteration of the internet which is based on blockchain technology. Out of this technology, a new class of assets has begun to emerge, the "cryptoasset" or "digital asset".
As of yet, there are no fixed definitions for this emerging asset class due to its rapid development. The Law Commission has identified five sub-categories of digital asset, with “crypto-tokens” being the only one it recommends as constituting a new form of personal property right (see Blockchain and digital assets toolkit: Terminology – blockchain, digital assets and cryptoassets). Non-fungible tokens (NFTs) are a type of “crypto-token” as categorised by the Law Commission but may also be referred to as “cryptoassets” or “digital assets” due to the flexibility of these terms. These new assets boomed in popularity in 2021.
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The above short guide is intended as an introduction to NFTs, with a background to the technology. It examines the legal and commercial implications of NFTs, dealing with intellectual property (IP) issues, regulation, smart contracts and consumer rights. It also addresses points to be considered when encountering contentious matters involving NFTs.
NFTs and the associated technologies continue to be experimented with and adopted in a number of sectors in novel ways. We expect this trend to continue.
This guide was reproduced from Practical Law with permission of the publishers. For further information visit www.practicallaw.com
Interested in hearing more about NFTs? Our specialist team produce a monthly litigation roundup blog that closely monitors the developments surrounding key NFT disputes to be aware of. Click here to view the archive and here to subscribe to the roundup.
