With the advent of the metaverse, it is now possible for us to become economically active in a virtual world. Bitcoin, a virtual currency, was invented for anonymous financial transactions and attracted a lot of attention. NFT’s are the latest digital trend to be making an impact on the world. In fact, Collins Dictionary, identified the NFT or “non-fungible token” as ‘The Collins Word of the Year 2021.’ They said, “The unique digital identifier that records ownership of a digital asset which has entered the mainstream and seen millions spent on the most sought-after images and videos, has been named Collins Word of the Year 2021.” So why are NFT’s so important?

▲ The First NFT’s to Came with the Game CryptoKitties from Dapper Labs (Photo from Bitcoin Insider)

   NFT’s first came to being with the game CryptoKitties from Dapper Labs. Unique digital cats were created and sold using digital currencies. Each NFT is stored primarily on the same Ethereum blockchain technology as cryptocurrencies. The blockchain security technology wards off forgeries and assigns value to the digital assets. An NFT digital asset can be anything from a photo to videos, and files. They have unique identifying codes making them a one of a kind item like a work of art. Physical money or cryptocurrencies are fungible assets. This means they can be traded or exchanged for one another. Their value is one for one. NFT’s are digital assets that are hard to reproduce and exchange, making them irreplaceable and unique. Their value is self-contained. The attraction to the NFT market is because like art, you can own an original, a one of a kind item. For example, 10 seconds video clip made by digital artist ‘Beeple’ was traded for 6.6 million dollars. This despite the fact that anyone can watch it for free. The attraction is for people to own the original for themselves. Today, the range of applications for NFT’s is growing and the ownership of assets is being definitized.

   Plenty of image files, such as a meme from Korea or somewhere else, are being sold through NFT auctions. For example, a reaction image file of popular comedian Sin Bong-sun was traded for 3 million won. Observing this sensational phenomenon, game businesses are profiting from their in-game items being published as NFT products. Roblox, a global metaverse platform recently sold a Gucci bag item that only exists in the virtual world for 4,115 dollars. It was the ‘Gucci Queen Bee Dionysus’ Although no one can touch or use the bag, its price increased form the first list price of 475 Roblox (about 5.5 dollars) to 350 thousand Roblox (about 4,115 dollars) after auctioning on the open market.

   While the trend seems safe enough, some people are also expressing concerns. They worry that there is no effective or forceful law or institutions overseeing the sale of NFT’s, a problem that is becoming more critical as the market continues to expand. Determining whether an NFT is an ownership or a right to use is ongoing as its characteristics are not covered by present intellectual property rights law. There are never-ending legal controversies related to their copyright. In the beginning, the creator and seller of a digital NFT were usually the same person or company, so there was rarely a problem with copyrights protection. But now, anyone can produce an NFT using sources freely available on the internet. As a result, creators are sometimes making NFT’s without the agreement of the original author. For instance, the fashion design house Hermes accused digital artist Mason Rothchild of infringing on their copyright by creating a ‘Meta Birkin bag’ based on their popular Birkin bag. A spokesperson from Hermes said they had never approved the reproduction of the virtual bad and argued that Rothchild violated their trademark and copyrights.

▲ Shinhan Bank and KT Signing Partnership for NFT and Metaverse Related Business (Photo from Newsis)

   Although there are many concerns about this new technology, many companies are jumping on board and collaborating on projects to design new NFT-related products. The Korean Intellectual Property Office is planning to apply patent and trademark rights to NFT products in order to encourage intellectual property transactions. They are also planning to create NFT’s from research and lab notes which contain inventions and creative processed to prove the originality and creativeness of the invention for historical record. As the Korean Financial Service Commission shows a moderate attitude toward NFT, many financial companies like Shinhan Bank and KB Kookmin Bank are applying NFT’s to financial products and investing in digital asset custody. NFT’s are also expected to be applied to real estate and stock markets to simplify paperwork and ownership transfer.

   Although this new technology is controversial, many corporations are showing an interest in it. According to JP Morgan Chase & co, it will take only a few years for the metaverse NFT market to grow to 1 trillion dollars. Now is time to get on board with this new technology and see where the NFT market will take us next.