The buzz surrounding non-fungible tokens (NFTs) reached a fever pitch with the US$69 million sale of an NFT by digital artist Beeple in March 2021. While artwork has remained the predominant use of NFTs – and generated a good deal of media hype along the way − companies across a variety of industries are coming up with new and innovative use cases for NFTs – and turning to our multidisciplinary global team for guidance in the uncharted territory surrounding these digital assets.
First: What Is an NFT?
NFTs are unique tokens based on blockchain technology. Unlike cryptocurrency tokens such as bitcoin, which are fungible, NFTs are digitally unique – no two NFTs are alike. The unique nature of NFTs, as well as the security and other advantageous features of blockchain technology, provide a number of unique benefits, including:
- Verification of ownership and authenticity
- Driving of value of digital assets through scarcity
- Built-in smart contracts for re-sale royalties for artists and other NFT creators
- Decentralization of digital asset ownership, management and transfers (in other words, independence from large platforms)