Nine Questions on Legal Analysis of NFT Market

A legal analysis of nine aspects of the NFT market.

Nine Questions on Legal Analysis of NFT Market

I. What does the hotness of the NFT market indicate?
The current NFT market is very hot, on the one hand, NFT technology does have the ability to solve problems, including the identification of rights, object specificity, intelligent digital object transactions, on the other hand, it also shows that through the application of NFT technology to achieve the artist directly facing the market, so that consumers can easily trade, release the potential of transactions and other functions, the market potential is huge, the industry has good prospects, so that many people in the relevant industries see the hope of solving their business difficulties and industrial difficulties, which is the real reason for “out of the circle”.

Second, how to view the possible legal risks of the NFT market?
The development of the digital economy includes the digitization of industry, digital industrialization and digital governance, the core is the digitization of transactions, ecological digitization, which necessarily includes the digitization of goods and services and their transaction methods. Many people see this trend from NFT applications.

However, in reality, due to the different degrees of understanding and realization of the technical characteristics of NFT and the legal nature of NFT, the different degrees of business pain points solved in NFT applications, as well as the different interests of each of the different NFT industry application scenarios, and other various reasons, the NFT market this field may contain and accumulate some legal risks. Therefore, many people are concerned about the legal risks implicit in the current NFT industry is based on some basis.

Third, how to view NFT from a legal perspective?
NFT is a technical protocol that numbers tokens or Tokens, and the purpose of numbering is to distinguish the specific metadata content associated with each token, which may contain unique information, and these unique information, such as the combination with the subject knowledge structure, specific application scenarios, will generate innovative solutions to problems or even intelligent solutions.

The token represents the authority and rights, while the data content represents the real or virtual material conditions to which its rights and interests are linked. In this sense, each token combined with its associated metadata forms such a combination, which we call digital goods, with similar legal status and legal nature as the concrete goods existing in reality.

Fourth, why use NFT?
Because the technical characteristics of NFT can achieve the specificity of data content and the corresponding rights of traceability and other functions, and then in some applications and transactions in the scene can effectively reduce costs and improve efficiency, to achieve the traditional technical conditions can not be achieved under the application, transaction. This is the starting point and anchor point that we should have when we engage in NFT industry-related operations.

But in the application scenario we may not need to overemphasize is NFT technology, because this can lead to ignore its practical utility. Of course, the market has just emerged, many people emphasize NFT is to attract attention, but we should pay more attention to what we have made by applying NFT. NFT is only a technical tool, in the application scenario we may only need to clarify whether digital collectibles or digital art, game props, domain names, such as NBA TOP SHOT to achieve the digital trading of cards, Crypto Kitty realized the digital self-propagation of pet trading, based on SuperRare can realize art works to facilitate the application and trading, etc.

V. Token number is NFT?
The numbering of tokens or Tokens is not necessarily NFT. if the metadata content associated with the number, the unique information contained therein, and the resulting solution is not unique, then it is not really NFT, and naturally does not have the legal properties of a digital object, or its primary property is not an object property. the more important characteristic of NFT is to combine with the program to achieve its data content The more important characteristic of NFT is to combine it with the program to realize its data content application. For example, if we number 10 million shares of a listed company from one to 10 million, this is not what we understand by NFT, because the NFT corresponding to each share is basically the same in terms of data content, the rights and obligations it carries, and the risks it bears.

Six, NFT is a digital currency?
When someone asks this question, the question he actually implies is whether NFT should be regulated in the same way as other digital currencies, especially FT? So this is a legal question, not primarily a technical one. There is little point in answering this question purely technically, as it does not address the legal nature, legal risk and legal liability. Based on the previous analysis, if technically speaking NFT is undoubtedly a kind of digital currency, but from the legal point of view I think it is different from FT in terms of legal properties and legal risks.

Seven, how to view the NFT sky-high transaction?
Any real transaction should be protected by law. However, some NFT items, especially art market frequently appear sky-high prices, which reflects the market heat, but at the same time may also produce some hidden worries. Because sky-high transactions on the one hand can not reflect the advantages of NFT technology in the application of scenarios, on the other hand, if involved in false and fraudulent situations, will likely contain greater legal and regulatory risks. It is generally believed that the current astronomical transactions may be more out of publicity, momentum, but if the future is linked to money laundering, terrorist financing, then this involves legal and regulatory risk is still very large.

We believe that NFT its application value and industrial value is from its lower transaction costs, release potential transaction demand, especially in the realization of some small high-frequency transactions on the advantages of more obvious, its advantages are not in the promotion of large amounts of low-frequency transactions.

Eight, what is the biggest problem in the application of NFT technology?
At present, the NFT protocol is still at a relatively early stage, and many of our ideal digital object application scenarios, including the full realization of the license transfer of copyright and other rights and interests, cannot be fully realized ideally, but the industry seems to have not yet moved to this aspect of focus. This may lead to detachment from applications, leading to industrial “involution”, which may lead to a series of legal issues, and may lead to a path of conflict with public interests or other interests, which may be the biggest problem.

We believe that NFT is a native element of the digital world, and its real importance lies in the effective integration with applications, and in the ability to more effectively protect the rights of user data. If the digital goods more through the program and other scenarios in the application of effective combination, will be a broader prospect for the application of NFT technology.

Nine, how to view NFT financial operation?
Many people want to carry out NFT securitization or other forms of financialization, but if we carefully analyze the risk characteristics of the participants in some scenarios, we will find that in many cases will involve regulated financial activities.

Logically speaking, NFT is the particularization of digital goods, and the purpose of particularization is actually trading. Therefore a healthy ecology of NFT necessarily needs to include an active trading market. We have already seen some platforms for collective bidding transactions on NFT items, and there are also some operations to securitize NFT items into many FTs, and there is also a great deal of interest in smart contract-based auctions of NFT items. From the legal point of view, we are concerned about the legal constraints involving human operations, how to protect the interests of users or participants, how to maintain a fair, open, transparent and healthy competition in the market order, so in this process we may need to closely integrate technology and law to accomplish this goal, which scenarios and links need to be strictly based on license management including financial licenses and other specific The operation of the business model license, which scenarios and links can control the risk of market participation through technical devices such as smart contracts, which requires us to carefully study.

As for other financing projects packaged as NFT projects, this situation hopes that friends open their eyes. If someone advertises that NFT are digital currencies, just the government regulators have not yet clarified the attitude of NFT, the original can not do the project, can not do the financing and operation into NFT can do, such behavior is undoubtedly the black sheep of the industry, we all have the responsibility to make these acts into a street rat and everyone shouting.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/nine-questions-on-legal-analysis-of-nft-market/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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