NFT and the legal challenges of contemporary creation

The whole world was surprised by the successful result of the auction organized by Christie's on March 11, 2021. The work NFT Everydays: The First 5,000 Days reached an unexpected price of 69.3 million dollars (just over 62 million euros).

With this sale, Mike Winkelmann (whose stage name is Beeple) became the third most valued living author in history , just behind Jeff Koons and David Hockney. The great difference in the present case lies in the nature of the work. While Koons broke the record with his sculpture Rabbit , sold for $91 million in 2019 (more than €80 million), and the previous year Hockney's oil painting Portrait of an Artist ( Pool with Two Figures ) raised bids to 90.3 million, Beeple made history with a digital work also sold online .

Post-pandemic digital art

2021 has been revealed as the true year of post-pandemic art. Digital artists are beginning to occupy positions never thought of for works that are not materialized in a tangible medium. Undoubtedly, the movement restrictions derived from covid-19 have transferred to the virtual sphere a large part of the business and professional activity that had traditionally given preference to face-to-face interaction. The art market has not been immune to this trend.

However, what is surprising is not the significant increase in the volume of sales made online in a sector as sensitive to sensory perception and emotional connection as the artistic sector; but the appearance of a substantial technological innovation that has come to change the very conception of digital art. We are referring to non-fungible assets ( Non-Fungible Tokens, or NFT) and blockchain technology .

The blockchain has been with us for more than a decade and its practical applications have only increased. Its birth is associated with the launch of the first cryptocurrency that managed to settle successfully after other failed precedents: bitcoin.

A decentralized and secure system

The blockchain is intimately connected with cryptocurrencies and this relationship explains the use of terms typical of the world of finance, such as coining to refer to introducing a work in the block chain. Without denying that the field of natural expansion of this technology is that of virtual finance and banking, it is remarkable how quickly its uses have spread to other spheres such as the world of art.

To understand this versatility, the primary purpose of this technology must be taken as a starting point: to create a decentralized network of verified and shared data that ensures the authenticity of the information stored. The blockchain responds to an essential need to offer reliable data with guarantees of permanence and immutability.

Precisely the decentralized operation of the block chain avoids systemic failures, as it does not depend on a central nucleus that controls the entire structure. The democratization of the data verification process allows the preservation of information even in cases where one of the network nodes fails.

The construction of the chains, in successive and interdependent blocks, ensures that the data will remain unchanged. Any tampering attempt would result in the absolute invalidity of subsequent blocks. Therefore, with this idea in mind, it is easy to understand that blockchain technology has rapidly extended its uses to other spheres in which having truthful, secure and immutable information is of vital importance.

Certification of the works

Regarding the art market, this technology found one of its first applications as a certification method. In this way, certificates of authenticity of works of art could be issued and all transactions and changes of ownership that took place in relation to said pieces could be registered. This information was stored in the blockchain with full guarantee that it would not be altered or manipulated. This allowed a more transparent and clear knowledge about the history of the works, their authorship and their veracity.

We must remember at this point that one of the elements on which the art business is based is trust in the veracity of the information and the value attributed to such relevant concepts as authorship, authenticity, the unique character of the works, their true origin and the legality of the transactions carried out.

Any error in the attribution of the pieces or any doubt regarding their origin or transmission can lead to a vice of consent and the absolute nullity of the operations. Being certain about the identity of the artist and that the pieces are unequivocally made by him are fundamental issues in this ecosystem.

Although the difficulties of identification or attribution seem to be foreign to the world of contemporary art, the truth is that the market has inherited deeply rooted practices whereby agreements are closed purely verbally or authorship is certified with private documents, many times issued by the gallery that sells the piece.

These methods can lead to long-term problems when, over the years, the artists have died and can no longer certify the authenticity of their own creations or the works fall, due to age and value, into a category protected by heritage regulations. cultural.

The certification and registration of transmissions through blockchain technology is a valuable tool that allows not only to avoid and anticipate the resolution of these potential problems, but also to positively influence a change in these business protocols and contribute to a greater professionalization of the sector. .

NFT in the art world

There is no doubt that the use of blockchain for the creation of NFT works is the application that has achieved the greatest importance and impact in the field of digital contemporary art. We are facing a technological implementation that has served to respond to an unattended and unsolvable need for many artists who work on intangible supports and with programming language.

The ease of diffusion and distribution of works through the network, together with the ability to create identical copies of these digital files, led in practice to an absolute impossibility of marketing these creations. And the reason rests on the same elements that make up the essence of this market: the absence of a system that would guarantee the authorship of the works and, even more so in this particular case, distinguish an authentic copy from any other that was also accessible to the public, debunked the structural values ​​of this sector, based above all on the unique, exclusive and irreplaceable nature of the work of art.

Although non-fungible tokens, since they are based on the same blockchain technology , can be applied to other types of values ​​or assets for which the needs of authenticity and veracity are fundamental, it is in the field of artistic creation where they have found a field. of natural expansion. Through the minting of works, that is, the creation of an NFT work hosted on the blockchain , artists can publicly certify that it is this copy of their digital work and not any other available copy that they consider authentic, unique and true.

It should not be forgotten here that, on numerous occasions, the minted works will coexist on the Internet with other identical copies that all users can equally enjoy. However, the conversion of a coin into NFT introduces a qualitative distinction between some copies and others, since it is the author himself who declares that he accepts the minted work as true and not all the other available ones.

This seemingly subtle difference is actually an extraordinary conceptual twist. It enables authors to certify their own work and exploit it economically through sale and transfer of ownership. For contemporary digital creation, this technological incorporation marks a before and after in the professional development of many authors who are finally facing a previously utopian reality of being able to monetize their work. In this way, only the minted work, the NFT, will be the authentic piece capable of legal business and with its sale the ownership of the token is transferred.

At this point we must clarify that the means of digital creation does not change the configuration of the intellectual property rights that correspond to the author of a work or the powers that assist him to exploit it. The confusion of spheres is understandable, due to the wide diffusion of these works, the ease of access to the contents and the possibility of sharing and reproducing them without limitations.

Shadows of NFTs

No one ignores, however, that because digital works of art are publicly accessible, it must be deduced that their author has renounced their exploitation rights if there is no express declaration in this regard.

Although the appearance of NFT development does not change this hyperconnected reality and the confusion that it sometimes produces in users, it contributes to strengthening the position of artists by allowing them to consciously distinguish the unique work from the simple copy. From this perspective, the number of identical replicas that circulate on the network does not matter, since there is only one authentic piece, which is the one that the author has converted into NFT.

Faced with the innumerable advantages that NFTs bring to contemporary creation, we should not disdain the negative effect that a twisting use of this technology can generate.

The novelty of these uses forces the law to lag behind reality. Despite not yet having a specific regulation that covers these figures, we must judge their performance and potential uses with the sensible eyes of the experienced jurist who will apply the existing protectionist provisions until specialized regulations are issued.

To give an example: what would happen if a person coins someone else's work as his own? Do NFT platforms have a system that avoids plagiarism or appropriation as much as possible? As we can see, although non-fungible tokens have responded to many needs, they also raise many unknowns.

We have before us a fascinating field of exploration waiting for solutions, for questions not yet formulated. Contemporary creativity is not limited exclusively to the field of artistic production. The legal world must prepare itself to work in a more demanding and fast-paced environment without ever losing its mission of protection and social justice.