Detailed explanation of NFT content and licensing types

php Editor Banana is here to answer a hot topic: "What exactly do you buy when you buy NFT? What are the types of NFT authorizations?" NFT (Non-Fungible Token), as a popular digital asset in recent years, has attracted widespread attention Follow and discuss. However, for those who are unfamiliar with NFTs, they may be confused about what exactly they are buying by purchasing NFTs. In addition, NFT authorization types are also a topic of great concern, because different authorization types have different restrictions and regulations on the use and transaction of NFT. Next, we will answer these two questions in detail to help you better understand and use NFT.

What exactly do you buy when you buy NFT?

Many people think that buying an NFT is buying a JPEG image, which is the digital artwork you see on OpenSea. However, the reality is that the issuer of the NFT project retains ownership of these images, which Galaxy Research mentioned at the beginning.

Galaxy Research believes that the difference between NFT and the digital content that NFT refers to is not widely understood. Many people mistakenly believe that when purchasing an NFT, they are actually purchasing a digital image associated with that NFT, a picture that is stored on a blockchain, such as Ethereum or Solana. However, in fact, NFT represents irreplaceable digital assets, which can be virtual artworks, music, videos, game items, etc. These digital assets are verified and traded through blockchain technology, and each NFT has a unique identity and proof of ownership. Therefore, the value of an NFT lies in its uniqueness and scarcity, not just the number associated with it. However, this notion is not correct. When you buy an NFT, you are actually buying a combination of two different things.

1. A digital token:

Usually based on the Ethereum ERC-721 standard, each cryptographic address contains a unique identifier and stores some metadata on the blockchain superior. This metadata is not the image itself, but data describing the location of the image. Typically, this location information is stored off-chain, using Amazon Web Services or IPFS.

2. An authorization:

is given to the NFT owner by the NFT project party that created the image, so that the NFT holder can display the image or use it commercially in specific circumstances.

What are the types of NFT authorization?

However, there are various types of authorization. Galaxy Research lists the main four types:

1. Commercial rights:

Can be disclosed anywhere, in any form, and for any time. Earn income from art with no upper limit on income.

2. Limited commercial rights:

You can make money from artworks, but there may be income, form or time restrictions.

3. Personal use only:

You cannot profit from the artwork in any form, and the right to display is also limited.

4. Creative Commons:

The artwork is in the public domain, and both holders and non-holders have the same rights.

Mainstream NFT project authorization

Yuga Labs

The ecosystem created by Yuaga Labs has many well-known projects, including BAYC, MAYC, BAKC and Othersides. In addition, it also acquired the IP (intellectual property rights) of CryptoPunks and Meebits from Larva Labs in March. Currently, Yuga Labs’ NFT collection is worth more than $4.2 billion, accounting for more than 63% of the top 100 NFT projects.

However, Galaxy Research said that there are contradictions in the authorization provided by Yuga Labs to NFT holders. Yuga Labs describes its license as unrestricted, worldwide, royalty-free, allowing full commercial use, which falls under the above-mentioned "commercial rights" classification. In addition, regarding the statement of ownership, Yuga Labs stated: When you purchase an NFT, you fully own the boring ape behind it, which is the artwork.

On the surface, this statement states that NFT holders own the IP of their NFT, but in reality it is the copyright owner who has control over the IP, that is It says that copyright owners hold the right to grant the use of their IP.

Yuga Labs indirectly acknowledges that NFT holders do not actually own the artwork by explicitly granting license rights in the regulations.

Compared to the Boring Ape series' potentially misleading and unclear narrative, CryptoPunks and Meebits' new official license (released on 8/15) gives its owners The author has the same IP license rights as the Boring Ape series, and also acknowledges that they have the right to unilaterally update or modify the project's licensing terms. There is no misleading content similar to the above, and the ownership and licensing terms are more professional and clear.

Finally, let’s talk about Yuga Labs’ metaverse project Othersides. It is the only project that has not been granted commercial rights and only enjoys the transfer rights of NFT. However, Koda, a creature that may appear on the land of Otherdeeds, has the same business rights as BAYC.

Moonbirds

As the sixth-largest project in terms of market value, there is a bigger gap between Moonbirds’ advertising and actual authorization. On the Moonbirds website, it is clearly stated that NFT holders own IP. However, this is not consistent with the original authorization. Moonbirds holders will not obtain IP.

Recently, Kevin Rose, the founder of Moonbirds, announced that the licensing of Moonbirds will be transferred from commercial rights to CC0 in Creative Commons (CC0 conditions are the most open and anyone can use them. Any secondary creation or commercial use without authorization).

Galaxy Research stated that the official alone can unilaterally change its licensing terms, further proving that Moonbirds NFT holders do not actually own the IP.

In addition, Galaxy Research also stated that although the CC0 authorization completely transfers intellectual property rights to the public domain, it means that no one really owns the IP. While CC0 does cause the issuer to give up the IP, it does not transfer it to the NFT holder.

World of Women (WoW)

WoW is the only one among many blue-chip projects that attempts to completely transfer IP to NFT holders. According to its copyright transfer regulations, whoever holds the NFT owns the copyright.

However, Galaxy Research believes that this is still unclear in the regulations, because it is not clear whether the WoW NFT secondary market seller needs to transfer the IP to the buyer.

Unless both the original minter and the secondary market buyer agree to these terms, the transfer of their IP cannot be guaranteed. In addition, WoW's copyright transfer regulations only appear on its official website, and secondary markets such as OpenSea neither display nor have any functions to facilitate such authorization transfers.

Decentraland and Sandbox

The two most well-known Metaverse projects, Decentraland and Sandbox, both retain land-related IP and only allocate usage rights to land holders.

However, the IP of the items created by the user is in his own hands, but will be transferred to the secondary buyer after the sale.

However, Galaxy Research also stated that no matter how these metaverse developers handle IP, they all have the right to ban or delete game content. As long as these developers are unwilling to support user-created content, no matter how much users create, it will be useless.

Three major directions for future development

After observing the above projects, we can find that the IP of most projects is in the hands of publishers, and some projects have misleading advertising. Even if there are projects willing to completely transfer IP to holders, the incomplete market framework will also discount the effectiveness of IP transfer.

In order to improve the current situation, Galaxy Research proposes the following actions that can be taken in the future:

1. NFT holders should defend their IP rights:

Through the tracking of information on the chain, NFT holders should be aware of the ownership and IP authorization of NFT, rather than relying too much on the issuer. In addition, if the NFT issuer sells the IP to a third party or is acquired, the new holder can unilaterally restrict, change or delete the original authorization.

2. Develop complete specifications and modify inappropriate content:

Since the NFT community is still in its infancy, it is necessary to start formulating complete specifications and correctly grant users IP rights before large-scale adoption. . Otherwise, in the current situation, these NFTs are just Web2 products packaged in Web3 marketing.

3. The decentralized metaverse needs fewer restrictions:

If decentralized digital assets are not owned by users, but are left to others to decide whether to authorize or not, then the so-called There is no essential difference between the decentralized virtual world and the world being built by Web2 giants such as Meta.

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