I don't understand it that well myself, and what I do understand looks kinda worrying.

Basically there's some crypto blockchain magic which can be used to prove that you've paid X amount for a specific piece of digital art. It's proof that you "own" this art, which is independent of any legal jurisdiction - it's based on mathematics, not on legal institutions. Of course, traditional legal jurisdictions might not decide to recognise this right, and then you don't actually "own" it as far as they're concerned.

So it looks like the NFT craze is basically a lot of people with far too much money, betting that this way of defining art ownership will eventually dominate over traditional legal institutions, and trying to amass a collection with a good chance of containing some piece that will be worth a lot in some future legal jurisdiction. For example they might imagine that in the future the law might enforce that anybody sharing one of these images might have to pay them a tiny amount just to do that, and they want to be in with a chance of owning Ceiling Cat or that image of DiCaprio smirking from Jango Unchained.

Imagine that some rich guy in the time of Leonardo Da Vinci had a vision that somebody was right then making a painting which would one day be worth so much that it would be guarded more zealously than any living person; and he was convinced that this vision was true, but he didn't know what it would look like or who was painting it. So he went around buying up any painting he could find that looked like anyone was interested in it. That's what I think is happening here, except that it's lots of rich guys at once. And they're doing this kind of gambling because the monetary system is overloaded with centralised capital that has nowhere to go for an ROI that its owners are prepared to get out of bed for.

The other side of the story is a gold rush for content creators (and art thieves) to try and get a piece of this crazy cash which is being thrown around.

If I understand it correctly it's a platform for viewing art, and it makes it illegal to view this art outside of the platform. (Or at least it proves that you bought a legal copy.)  So it is some kind of artificially created scarcity. It's like DRM on steroids. Buyers are people who like the "intellectual property" concept and want something precious.

Some explanation is here:

https://www.forbes.com/advisor/investing/nft-non-fungible-token/

I personally think it's crap, but I understand that others think different. But it might be useful for buying tickets for a concert or for a sports event.

Greetings

Peter

Here is my understanding, which is incomplete and probably incorrect in some ways:

NFTs seek to create the difference between unique originals and reproductions in digital art. In physical artwork, there is much greater value attributed to the original than on any reproductions. The Mona Lisa, for instance. You can purchase a print of it in many gift shops for a couple euros, but the original "real" Mona Lisa is worth hundreds of millions of dollars. Even though the copy is visually identical, it is only worth what they charge for it in the gift shop. 

NFTs (sort of) do this, but for digital art. Copies of digital art aren't just visually identical, they're actually identical in every way. There is no way to tell the difference between the "original" file and a copy of it. There is provenance in who had the file first, sure, but there can be no real difference in value if two files are indistinguishable from one another. NFTs encode a file so you can tell it hasn't been changed nor another copy of the file has been encoded before, so you can designate the NFT token as "proof of original". Nothing really stops someone from using or viewing other copies of the art. The token *says* a specific person owns the "original", but who enforces that? There are (currently) no laws that enforce copyright or ownership of NFTs over any other copy of the art.

From that point, it's a bit like PeterX's analogy of charging people for tickets to a concert. The band may actually be playing the gig for free. There's just some dude nearby saying you have to buy a ticket to see the concert. There isn't even any walls for the venue; the concert is being played in a public park; there aren't fences or anything preventing anyone from just walking in and celebrating. "Some dude" might yell and threaten to call the cops on people who aren't buying tickets, but there's not actually any authority other than the people who believe the tickets are legit.

"Some dude" may argue that, without the ticket stub, you have no proof that you attended the concert. You have no souvenir with which to remember the experience. He's right about that, but sentimental value is the only value it really has.

If you want to own a peice of digital art for it's sentimental value to you, and for the presteige of owning a unique peiece of art that no one else can say they own, NFTs have value. I enjoy the visual aspects of prints just as much as the visual aspects of original works, but I also like owning paintings for their uniqueness and singular rarity. Also, it shows appreciation to the artists. In treating digital art like collectable physical art, NFTs are useful and cool. 

There is also a good use for them as collectable items in games. In Magic The Gathering (MTG) collectible card game, the cards themselves are physical. A large portion of each card's value is determined by it's rarity. If everyone had a Black Lotus card, each one wouldn't be worth much. Wizards of the Coast (WotC), the company that makes MTG, ensures that rarity by simply not producing or circulating very many of them (They produced a few back in the day and no longer produce them at all, thus the scarcity). There are a lot of attempted fakes, but experts are able to spot subtle differences between fake and real cards. No such differences exist in digital files, so MTG had trouble guaranteeing the value of player purchased cards in their digital version of the game. Is this card really worth this price? If I buy it, what stops the company from just "printing" more digital copies within the game and selling it to other players? What stops other players from duplicating thousands of digital Black Lotus cards and selling them to other players? 

NFTs to the rescue. I'm not sure WotC actually made all their digital cards into specifically Non Fungible Tokens, but if not, they were discussing something very similar to ensure cards were unique and not duplicable. Each digital card is owned by a specific player, so duplicating any and trying to sell the duplicates would reveal themselves as fakes rather quickly. The ledger for who-owns-what with NFTs is public, so WotC couldn't just "cook the books" and add a few lines claiming "uh, yeah- we've actually had 300 Black Lotuses in circulation this whole time!" Everyone would see it and call foul. 

Any similarly collectable items in digital games would benefit from NFT technology to ensure the value and authenticity of digital items, giving them real-world value as if they were real-world objects.

I have no idea why some dudes are NFT-ifying random bits of digital art with no context for their application. That boggles my brain. It is annoying that some dudes are claiming "ownership" over artwork they didn't even create or pay for, but honestly that's all it is as far as I'm concerned; Annoying. That's all those people are; just some dudes. There is no legal enforcement or actual copyright involved. Digital art can be copyrighted of course, but ownership of copyright and "ownership" of NFTs are mutually exclusive.

what happens if I post a piece of artwork that I made and siomeone takes it and NFTs it. Does that mean I lose copyright of my piece because they have the proven original or can someone eventually say you cant use that its mine I own the original. should artists be worried? I know there is no enforcemnent of it now but what happens if there is later and it is used as proof of copyright ownership.

Can someone say "you can't use that it's mine I own the original"? Well, they can say it, but it won't be true.

I can't predict the future, but I'm predicting that there will never be retroactive* legal enforcement of NFTs as proof of copyright. As I said above, copyright and NFT ownership are mutually exclusive. NFTs could be used to help prove copyright with the right legislation, but they aren't currently being used that way. They're being used to fake copyright ownership right now. Bleh!

*the legal system may, at some point, support NFTs as a way to reinforce copyright going forward, but it won't validate NFTs that were created before such a law went into effect. If they did, this would work: "I just NFT'd the concept of NFTs, Therefore I hereby own every ownership claim staked by all NFTs everywhere. Fight me."

@Malifer It could potentially happen either way.

Basically, right now somebody can sell an NFT of a piece of art that they don't have the rights to, and there's very little concrete to stop them. But as it says in the Forbes article linked above, "caveat emptor" applies. Just like anyone who fences stolen goods, the thief is not just stealing from the creator but also from the buyer.

If the piece later turns out to be actually valuable, a digital art historian could come along tomorrow and use the Wayback Machine or other internet archives to prove that the seller didn't have the rights.

If they've laundered the money effectively then they'll be long gone, and the buyer could easily wind up out of pocket, like anyone else who buys stolen goods. If they want to keep this bit of their wealth then they're going to have to try and bully the system into retroactively and unfairly giving the rights to them - there are various nefarious ways that they could go about this.

If the seller hasn't laundered the money effectively, then they run a pretty high risk of copping consequences; their identity is right there in the ledger, and it might be much easier for the buyer to go after them than to try and squish the original creator. What's more, this could happen even if the piece is never really worth anything, because then the buyer can potentially get some of their money back by proving that the seller never had the rights. They might actually hire the art historian to do so.

How expensive is it to create an NFT from a piece?

If the cost isn't significant, then somebody is right now running a crawler bot which is making NFTs of every file that it can find on the web. Also, all sites (especially ones like OpenGameArt) will eventually run code that automatically NFTs everything uploaded to it.

I don't think you can nft a file which copyright is by someone (Who didn't give the right to nft it). You can technically but it is illegal. The copyright holder can sue the person who nft-ed the file. At least that's my understanding. I think NFT is simply a form of DRM.

Greetings

Peter

"what happens if I post a piece of artwork that I made and simeone takes it and NFTs it."

You will need to contact the persons that have done it an request that they takedown, then contact the website that is hostng and tell them about it. Either as an written request or DMCA.

9/10 time the websites will take them down, well some of the more popular ones anyway. But it's down to you to remain vigilant and make the case.

These NFT marletplaces run on a 'peer to peer' system, which basically means anyone can upload anything, because the uploads are not 'vetted' or moderated by anyone. Although some say they will remove if they find any infringing work, we know thats not reallt going to happen. It's a time consuming job checking everyday, every possible site for your own work. no one has the time to do it so it's of no surprise that many NFT's will find there way oin the marketplaces.

Copyright

The problem with NFT's is that a lot of people that buy them think that they own the copyright to the work. It's not so much about owning the artwork, it's about owning the NFT of the artwork.  All they are doing is buying a piece of 'encryted code' that has an image attached to it somewhere, kept on record by a 'ledger' which is created and maintained by the blockchain. As medicinestrom wrote, its an 'original', the first and only one of its kind. Any others will be duplicated efforts, although original in themselves as NFT's, they are not the original, only an original of a duplicated work. Therefore not really having any value, IF the person looking to buy it understands what it is they are buying. BUT some do have certain 'license' terms if you like, and some may grant full ownership of work, but this is held in something called a 'Smart Contract'. Smart contracts are created by the development team built by the person/persons looking to create the NFT's, or collection of NFT's. Usually it's the smart contracts are more designed in a manner where when an NFT is made and someone buys it, the 'royalities' or a small percentage of the sale will actually go to the creator of the artwork,or the creator of the NFT and this happens EVERY time someone else buys the NFT. (this is why the gaming industry is pushing NFT in games, as they can allow 'community' creations in games, let them sell, and get a percentage of the reward, as well as creating colectable exclusives in game)

What makes NFT's hard to find or to even police is NFT creators are creating their own websites and having available to buy and 'mint' before they even get to the official NFT marketplaces. i some cases wont make the marketplaces, and instead just kept in community circles on places like Discord. This allows artwork to be easily taken without being seen by anyone, only seen by followers of the creator.

Should any infringing work be found, and the following the above things, the owner of the of the original work could sue the uploader of the NFT, but not only that, they could sue every buyer that has purchase the infringing NFT, and claim back all the money(if any) made from the sales, because every transaction is recorded on the blockchain ledger. This is less likely to happen, and the choice is for marketplaces to take them down as soon as possible, but because its very early days, copyright is going to need to cacth up, as for the meantime its a very grey area on many things. Copyrights and licensing is a bit messy, and coupled with the fact that the entire scene isn't regulated by anyone.

"How expensive is it to create an NFT from a piece?"

This depends,

1) If the artwork is actually being done by an artists, then its only their time and costs to create the peice. Then theres the fee's charged by the marketplaces themselves, such as 'gas' fees, which ive read is quite expensive the first time, especially when 'minting' and NFT. but then you don't have to pay for any others, or their is another fee which is a lot cheaper than the first. Other fees like 'gas' are charged to the buyer, but i guess it is dependant on the marletplaces(i havent research them all yet)

2) Artwork being created by non artists, and commissioning artists instead to create works for an NFT project. this cost is variable depending on any agreements for licensing, the work involved and the rates at which the artist charges. Plus the fee's mentioned above.

3) You just take artwork from the internet, create deriatives by modifying them using algorthmic software, and upload.

The other big cost is the environmental impact NFT's, and blockchain have on the global climate. It's no secret that most are aware of this, but theres hasn't been any concrete evidence to support it in a 'official' way as its hard to 'measure' due to different varients, such as software, and what fossil fuels are being used to power the servers for runing blockchain, and 'minting'. This is probably the biggest concern for most for why everyone is against NFT's and the blockchain architecture.

https://digiconomist.net/ethereum-energy-consumption/

https://digiconomist.net/bitcoin-energy-consumption

in my opinion. :)

Note that NFTs do not solve the problem of art theives. We fight the theives when we find them, of course, but if someone is willing to break the law to abuse our art, NFTs don't magically stop them from using the same art just because there's suddenly a minted token containing a URL to an asset.

Speaking of, it looks like most methods of NFT don't encode the asset itself, just a url to one copy of it. If the asset is moved, or the hosting site changes, that NFT is now pointless. If someone makes a copy of the asset and hosts it on a different place, it is viewed as a separate asset totally unrelated to the one minted as an NFT, even though both are pixel-per-pixel identical. So anyone trying to use NFTs to safeguard assets against duplication or ensure uniqueness outside the context of a specific marketplace (like an in-game item) will find it is just as strong a defense as a vault with a really really good lock, but who's walls are made of paper. Someone, please tell me I'm wrong about this. 

There is discussions about changing the license on artwork to prevent NFT shinanigans. I get that, but copyright laws and the current license(s) already make it illegal to claim ownership without permission from the artist. Saying "no NFTs without permission" is the same as making a new law that says "don't commit crime"; If they're willing to break the rules, how will such new rules help?

As chasersgaming outlined; the danger isn't that NFTs make it legal to steal art, its that NFT purchasers think they own the art. The artist still owns their own work.

This  entire situation reminds me of back when the web was a baby and not many companies had a website so there was a time when folks rushed the domain name registration system doing things like registering sites like cocacola.com and the like hoping one day since they owned the domain these large companies would pay them large sums of money to have their domains back. People were registering every company.com website they could think of that didnt have a website yet. This ended up being a waste of time due to new laws preventing people from holding companies hostage of the domains for companies that they owned. this situation with NFTs kinda reminds me of that for some reason.

A useful tweet from @Reuben_Wu:

PSA: reporting stolen artwork on Opensea doesn't work, but emailing a cease & desist letter will get it taken down within an hour or so of submission. This is the way.

-- Reuben Wu (@Reuben_Wu) November 23, 2021

• Use a free template online and email it to copyright@opensea.io

And here is a template in text form:

Attn: Copyright Agent, Open Sea.

Pursuant to 17 USC 512(c)(3)(A), this communication serves as a statement that:

1. I am {name}, the exclusive rights holder for "{asset name or asset collection}" first publicly revealed on {asset publication date} at {url to original asset publication} and then released in full on {optional official publication date} at {optional official publication url}
2. These exclusive rights are being violated by material available upon your site at the following URL {url to opensea.io collectible/NFT}
3. I have a good faith belief that the use of this material in such fasion is not authorized by the copyright holder, the copyright holder's agent, or the law;
4. Under penalty of perjury in a United States court of law, I state that the informaiton contained in this notification is accurate, and that I am authorized to act on behalf of the exclusive rights holder for the material in question;
5. I may be contacted by the following methods: {offical contact methods such as phone number, email, mailing address}

I hereby request that you remove this material as it appears on your service in as expedient a fashion as possible. Thank you.

Regards, 

 

{name}

 

{signature or additional identifying information}

I don't know much about NTFs either, but some people have said NTFs don't actually sell the copyright. The only way to transfer copyrights is a seperate contract. NTFs remind me of those websites that let you "buy a star" and name it. The name obviously only appears on the website that is selling it" because your not actually buying it.

That is correct. The reason it's become such a mess is because the implication by the sellers, (and subsequently the assumption by the buyers) is that NFTs do encapsulate the copyrights.

Haha! the "buy a star" analogy is a good one. I was gifted a star back when that was a popular thing. They were definitely trying to make everyone think it was this offical astronomical database recognized and endorsed by scientists the world over. I was still touched by the gift, but also pretty disappointed in the underlying worthlessness of it.