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NFT token what is it? Protection of rights to NFT tokens

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Many business owners have long discovered the possibilities of using Blockchain technology to automate and simplify a number of business processes.

However, the world does not stand still and new opportunities appear for the use of this technology and earnings. For example, through the creation of NFTs, or non-fungible tokens, which are now regularly in the news, some of which are sold at auctions for huge amounts. 

Sion NFT Tim Berners-Lee

A recent high-profile example is the release by Sir Tim Berners-Lee, inventor of the World Wide Web, of a small number of NFTs containing a portion of the source code of his original Internet invention in the form of an unusual timestamped file. Files along with animated renderings and digital code posters. Let’s take a closer look at what an NFT token is, how to create it, protect it, what is it for, and, of course, how to make money on it?

Blockchain and nft token 

In order to understand NFT, first let’s talk a little about Blockchain technology, which, first of all, is recognized as the underlying technology underlying the Bitcoin cryptocurrency.

The most innovative part of Blockchain is that it is decentralized: not controlled by any one person or company. It’s transparent in the sense that anyone can view the ledgers (if you know where to look). Blockchain technology can be used in multiple applications and is not limited to cryptocurrencies. For example, it works great in Ethereum smart contracts.

Non-fungible tokens (NFT) are the latest prime example of the widespread adoption of this new technology. Once created, NFTs are considered immutable because the information entered into the Blockchain is permanent and irreversible.

What is nft token 

NFT is a digital asset, the authenticity of which is confirmed in the blockchain registry (picture, illustration, scientific article, drawings, etc.). 

Sion NFT What is it

The term “non-fungible token” means unique or one-of-a-kind. Although they both use Blockchain technology, NFT is different from cryptocurrencies. Cryptocurrencies like Bitcoin, Ripple, and Ethereum are fungible tokens, which means that each unit of cryptocurrency is the same as any other. 

Like regular government-issued money, these tokens are fungible and indistinguishable. If you have one unit of Bitcoin, it doesn’t matter which Bitcoin you own. In the same way, a five hundred hryvnia banknote in your pocket has the same value as any other five hundred hryvnia banknote.

On the other hand, with non-fungible tokens, each unit is clearly identified and defined by metadata protected in the Blockchain registry, which includes a unique role, function and value.

NFT Token and Intellectual Property

Owning an NFT is like owning an autographed movie star photo stuck to your bulletin board. Only you can be the owner of this photo. Likewise, only one person can own an NFT. 

However, the original creator of this photograph may own basic intellectual property rights that permit him to make copies, prints or derivative works of this photograph.

An NFT is a cryptographic tool capable of verifying the ownership and identity of an underlying asset, usually in digital form. Like their cryptocurrency counterparts such as Bitcoin, NFTs are created (or “minted”) and recorded using Blockchain technology. Digital Asset and Blockchain platforms such as EX1P Digital Asset Creation Platform can be used to create and dispose of NFTs. These NFTs can then be bought and sold on marketplaces that are associated with the underlying Blockchain technology.

Examples of NFT 

For the IT industry, NFT is not a new technology. In fact, video game developers have been using NFT in games for years. A prime example of previous NFT applications is CryptoKitties, which was one of the earliest adaptations of non-fungible token technology and allowed players to collect and trade digital cats using NFTs. They can also be used in game environments to represent game assets that can be controlled by the user rather than the developer. 

Sion NFT CryptoKitties

At the same time, the copyright for the illustration of all cats belongs to the developer company and the appearance of various clone sites can significantly reduce the cost of the original digital asset. 

NFTs often include images of art or designs or other creations that have been previously created and captured in another form or medium. 

All of these examples can lead to difficulties in terms of use rights, where the owner of the NFT may not necessarily own the intellectual property rights of the underlying creation, or may not be licensed at all for these basic rights.

Implications of NFTs on Intellectual Property

When considering the implications of NFTs on intellectual property, it is important to distinguish between ownership of NFTs and ownership of underlying intellectual property. The rights granted by an NFT merchant depend on the rights granted through a license or assignment and may differ from one NFT to another. 

Sion NFT LeBron James

You may, for example, own a certain photo of LeBron James on an NFT uniform, but the NBA holds primary rights. In the context of copyright, ownership of fundamental rights is only transferred if the author of the original work expressly agrees to transfer those rights to the owner of NFT. 

Generally, without such an agreement, ownership of NFT does not give ownership of the underlying content or any associated intellectual property rights. As a result, the owner of NFT may be prohibited from reproducing, distributing copies, publicly performing, displaying or creating derivative works based on the original. Instead, the copyright owner retains exclusive rights.

However, all these issues can be settled before the launch of the project or to correct errors in already running projects, preventing fraud or loss of intellectual property rights. 

Startup and NFT The  

growing interest in NFT is also driven by the potential for generating new revenue streams. NFT and Blockchain technology offer asset owners the opportunity to generate significant income in a new and innovative way, for example, by creating and selling portions of assets in the form of digital representations. 

Assets that were previously difficult, if not impossible, to sell, such as tweets or source code, can be monetized by issuing an NFT. Asset owners can even sell the NFT in relation to the digital representation of the physical asset while still owning (or selling separately) the underlying asset.

NFTs offer exciting opportunities for digital data creators as well as sellers and buyers. However, it is important in this thread not to forget about the protection of intellectual property. Ignoring this issue, there is a chance not only to lose the asset and money itself, but also to fall under criminal prosecution for fraud. 

NFT – the best industry for investments in 2022 

According to the online channel “Invest Foresight” in 2021, investors have invested almost $ 2 billion in the NFT sector. Some startups have already paid off. 

Experts from CB Insights predicted that capital investment in the NFT industry will also continue to grow in 2022. 

Therefore, special attention should be paid to this industry for artists, scientific developers and other creative people, because unique opportunities open up for them to profit from the results of their intellectual, creative work. 

Our offer

Being at the peak of activity in the NFT sector, our company offers the following unique services for the protection of intellectual property: 

  • Analysis of an NFT project for the possibility of losing intellectual property (IP) rights to tokenized objects;
  • Development of a strategy for the protection of rights;
  • Writing smart contracts in compliance with the protection of IP rights, taking into account the goals of the project (license, assignment of rights, sale of content, etc.);
  • Fixing the fact of the first disclosure of the tokenized object;
  • Development of strategies for online payments of royalties, royalties; 
  • Schemes for taxation of online payments (“convenient” jurisdictions). 
  • Attraction and support of registration of investments in an NFT startup. 

We guarantee reliable protection for your NFT project on the Internet. To agree on the time of the consultation, write to us by email: info@sion.ua

Author:

Nataliia Riazanova

managing partner, patent attorney, PhD in law

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