Non-fungible tokens, or NFTs, are a one-of-a-kind digital asset stored on a blockchain. Think about it like rare artwork, a rare expensive car, or something as common as a collectable baseball card. Because they exist on a blockchain, their uniqueness is secured by way of their digital nature. Unlike cryptocurrencies, which are another form of digital investment, they cannot be traded for something similar.
If you trade one bitcoin for another, you will get the same type of digital product. Trading an NFT would give you something entirely different. For artists, this is a new market to sell their creations that is increasing in popularity. For buyers and collectors, it is a way to support artists that you like, and a way to add to your digital wealth portfolio (particularly if you have experience investing in cryptocurrency).
The way in which NFTs are stored is in a Smart Contract, which is a line of computer code that limits exchange and ownership unless a certain set of conditions are met. Smart contracts can be combined with other forms of unique identifying metadata (such as the owner’s identity), so that the security of the blockchain establishes ownership and authenticity of the item. Smart contracts preserve the supply chain, or transaction history. In many ways, this is no difference from contracts like real estate mortgages or insurance. In terms of preserving the supply chain, the preconditions required by smart contracts are tied to the original creator and the purchaser. Often you will find that your smart contract includes a royalty clause, whereby the seller/owner must pay a fee to the creator upon the sale or trade of the NFT.
Smart contracts are a way to preserve the disparate rights to the NFT. While purchasers take ownership, they will not possess the copyright to the NFT. That remains with the author, unless it is a part of the contract’s stipulations. Smart contracts can outline the rights of the owner and the purchaser, such as giving the purchaser the right to display the art digitally, which is increasingly being done with profile pictures on Twitter, Facebook, and Instagram. In other situations, the smart contract would allow the purchaser to use the NFT to incorporate the art in merchandise that they have created. When you get a divorce, even an uncontested divorce in Shelby County or anywhere else in Alabama, then it is important to talk to an uncontested divorce lawyer where you live.
The Ethereum blockchain is the most common location for NFT smart contracts. When an NFT is created it is known as minting, and that writes the code and standards for the smart contract. This simultaneous process ensures the unique qualities of the NFT, and the contractual stipulations, when they are added to the blockchain.
NFTs and smart contracts are not only applicable to digital art. They can also be used in lieu of paperwork in family law contexts. If you have transferred documents like titles, deeds, wills, and other similar documents to a digital form, you may be able to transfer ownership in a more streamlined way. Other documents that can exist through a smart contract include divorce and separation agreements, property settlement agreements, alimony agreements, and child support orders. Since Smart contracts have preconditions, this limits the opportunity for the contract to be broken and makes transference irrelevant.
Attorney Steven A. Harris regularly blogs in the areas of family law, bankruptcy, probate, and real estate closings on this website. Mr. Harris tries to provide informative information to the public in easily digestible formats. Hopefully you enjoyed this article and feel free to supply feedback. We appreciate our readers & love to hear from you!