Non-fungible token
Proponents claim that NFTs provide a public certificate of authenticity or proof of ownership, but the legal rights conveyed by an NFT can be uncertain.
[4] NFTs have been used as speculative investments and have drawn criticism for the energy cost and carbon footprint associated with some types of blockchain, as well as their use in art scams.
[11] However, the extralegal nature of NFT trading usually results in an informal exchange of ownership over the asset that has no legal basis for enforcement,[12] and so often confers little more than use as a status symbol.
"[21] Certain NFT projects, such as Bored Apes, explicitly assign intellectual property rights of individual images to their respective owners.
McCoy registered the video on the Namecoin blockchain and sold it to Dash for $4, during a live presentation for the Seven on Seven conferences at the New Museum in New York City.
Most of Etheria's 457 purchasable and tradable hexagonal tiles went unsold for more than five years until March 13, 2021, when renewed interest in NFTs sparked a buying frenzy.
[31] in November 2017, the widely acclaimed blockchain game on Ethereum known as CryptoKitties launched and is credited with pioneering what is considered to be the first bona fide non-fungible token standard, known as ERC-721.
[42] Ultimately, through Entriken's initiative under the moniker "Fulldecent," a vote was held during the paper's drafting phase to decide which word would be used in the published version and "NFT" was chosen by the stakeholders.
[41] While using the standard, CryptoKitties earned the recognition of being the first mainstream NFT dApp;[44] the game's usage was significant enough to have overwhelmed Ethereum's processing power at the time.
[48] Artist Beeple sold an ERC-721 NFT of his composite artwork known as Everydays: The First 5000 Days at Christie's for $69 million and was the first instance of a legacy arthouse dealing in NFTs.
[53] A September 2023 report from cryptocurrency gambling website dappGambl claimed 95% of NFTs had fallen to zero monetary value and 79% of all NFT collections have remained unsold.
[60] In March 2021, the blockchain company Injective Protocol bought a $95,000 original screen print entitled Morons (White) from English graffiti artist Banksy and filmed somebody burning it with a cigarette lighter.
[61][62] The person who destroyed the artwork, who called themselves "Burnt Banksy", described the act as a way to transfer a physical work of art to the NFT space.
Given the complexity and lack of regulation of the matter, the Ministry of Culture of Italy temporarily requested that its institutions refrain from signing contracts involving NFTs.
[67][72] Sotheby's and Christie's auction houses showcase artworks associated with the respective NFTs both in virtual galleries and physical screens, monitors, and TVs.
[73][74][75] Mars House, an architectural NFT created in May 2020 by artist Krista Kim, sold in 2021 for 288 Ether (ETH) — at that time equivalent to US$524,558.
[106] On February 28, 2021, electronic dance musician 3lau sold a collection of 33 NFTs for a total of US$11.7 million to commemorate the three-year anniversary of his Ultraviolet album.
[153] Financial theorist William J. Bernstein compared the NFT market to 17th-century tulip mania, saying any speculative bubble requires a technological advance for people to "get excited about", with part of that enthusiasm coming from the extreme predictions being made about the product.
[156] NFTs can be used for wash trading by creating several wallets for one individual, generating several fictitious sales and consequently selling the respective NFT to a third party.
[157] According to a report by Chainalysis these types of wash trades are becoming popular among money launderers because of the largely anonymous nature of transactions on NFT marketplaces.
[160] The Royal United Services Institute said that any risks in relation to money laundering through NFTs could be mitigated through the use of "KYC best practices, strong cyber security measures and a stolen art registry (...) without restricting the growth of this new market".
Several NFT exchanges were labeled as virtual asset service providers that may be subject to Financial Crimes Enforcement Network regulations.
One collector quoted by Vice compared the value of a purchased NFT (in contrast to an unpurchased copy of the underlying asset) to that of a status symbol "to show off that they can afford to pay that much".
[25] NFT purchases and sales have been enabled by the high energy usage, and consequent greenhouse gas emissions, associated with some kinds of blockchain transactions.
[175] The proof-of-work protocol required to regulate and verify blockchain transactions on networks (including Ethereum until 2022) consumes a large amount of electricity.
[181][182] As the NFT market continues to mature, with a focus on sustainable practices and long-term value, platforms like Klever are leading the way by incorporating energy-efficient technologies.
Klever use of the Delegated Proof of Stake (DPoS)[183] consensus mechanism significantly reduces the environmental impact of NFT transactions, aligning with the market's shift towards more responsible and sustainable practices.
[190] Log files revealed that Voiceverse had generated voice clips using 15.ai's platform, specifically of characters from My Little Pony: Friendship Is Magic, then altered the pitch to obscure their origin for use in their marketing materials.
The developer of 15.ai, who had previously stated their opposition to NFT integration in December 2021, responded with a tweet saying "Go fuck yourself," which went viral and garnered widespread community support.
[194] In February 2023, artist Mason Rothschild was ordered to pay $133,000 in damages to Hermès by a New York court, after a jury sided with the copyright holder, for his 2021 digital depictions of the brand's Birkin handbag.
