Mike Winkelmann is an artist known worldwide as Beeple. Until October 2020, the most expensive work he created was worth $100. Everything changed on March 1, 2021, when his collage, Everydays: The First 5000 Days, sold at the renowned Christie's auction house for $69,346,250 (sixty-nine million, three hundred forty-six thousand, two hundred fifty dollars), approximately $15,000,000 more than Monet's Nymphéas sold at auction in 2014. This event contributed to Beeple's recognition as one of the most valuable artists in the world.

In recent weeks, examples have been steadily increasing. Grimes, a Canadian composer and singer, sold her War Nymph for $6 million. Jack Dorsey, the billionaire co-founder and CEO of Twitter, created an NFT containing his certified first tweet, which he then auctioned for $2,900,000.

NFTs, like cryptocurrencies like Bitcoin and Ethereum, are a type of cryptocurrency token that operates on a blockchain architecture. However, that's where the similarities end. Unlike the aforementioned cryptocurrencies, NFTs are "non-fungible" tokens—what does this mean in practice? Each NFT token is a representation of digital property, representing a digitized item, both tangible and intangible. A created or even minted token can contain any digital item, such as:

• graphic works, animations (from images, through memes, to Nyan Cat GIF),
• video materials (movies, animations or even a compilation of the best NBA actions),
• collectibles (e.g. the previously mentioned first tweet of the co-founder of Twitter),
• virtual avatars, items related to a specific game, or an access key to a specific game (here it is worth mentioning the increasingly popular Axie Infinity project),
• music, or materials prepared by celebrities (various types of tokens containing music, animation, graphics and other content were released by Snoop Dogg, the singer of The Weekend, or even the band Kings of Leon).

The above examples explain the "non-fungibility" attributed to NFT tokens. Each NFT token is unique or exists only in a limited edition. Exchanging one bitcoin for another simply means possessing one bitcoin, worth exactly one bitcoin at any given time. Each NFT token has a different value, as one depicts a Gucci Ghost worth $3,600, while another depicts LeBron James's February 6, 2020, dunk during the Los Angeles Lakers vs. Houston Rockets game, worth $250,000. To better illustrate, NFT tokens can be compared to one-of-a-kind trading cards that exist only in the digital realm. Instead of receiving a physical item (a painting, a sculpture, a signed DVD, or a game box), the buyer receives only a digital file.

Owning a non-fungible token means exclusive ownership. Each NFT token, by definition, can only have one owner, but the unique properties of an NFT token allow for easy verification of the token's ownership and its transfer between parties (of course, in terms of a crypto wallet address, not personal data).

What does it mean to own an NFT?

A quick search using any preferred search engine will allow you to view, listen to, or download most of the works, artworks, graphics, and animations that have recently sold for unprecedented sums. So what's the point of acquiring incredibly expensive artwork by deadmau5 and Mad Dog Jones when I can see the painting for free? Just as in the world of "physical" art, true value is only achieved by works deemed original. To confirm this, an NFT token is essential. The data comprising a given token will often include a certificate of authenticity, along with the artist's "signature." Of course, with enough determination, we could persuade a local artist to perfectly replicate Giovanni Bernini's Pluto and Proserpina, but they'll never reach the value of the original, which resides in the Galleria Borghese in Rome. At this point, the world of "tangible" art found in the real world meets that of the virtual world. Purchasing and owning an NFT token does not mean that we own the copyright to the acquired work. As an NFT buyer, we certainly become the owner of the content comprising the token, but this does not equal a transfer of copyright, the ability to use the token in any field of exploitation, or permission to exercise derivative rights to the work. Of course, appropriate certification of the token in this regard may allow for this.

NFT tokens currently serve primarily as a way for artists, content creators, and anyone else to monetize their work, bypassing galleries and auction houses, which typically charge substantial commissions. This technology ensures complete security of stored content, allows for direct transfer between parties, and is anonymous. While NFTs are currently inextricably linked to art, we will undoubtedly discover much more about this technology in the coming months. If we can mint a token containing a compilation of artwork created 5,000 days in a row, why not try it with a digital vehicle passport, official documents, or virtual voting?

This alert is for informational purposes only and does not constitute legal advice.

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