04/2022
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04/2021
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The conflict between two systems
Chevonne Xue
NFT is a product built on blockchain technology, and blockchain is a decentralized structure where all content runs on trust and public records. In the days of FT, most of the content in the blockchain was produced and circulated through this system, such as Bitcoin. But NFT expands tokenized scope from FT to NFT, which stands for the non-homogeneous, unique, non-detachable token, first used to represent a series of digital assets.
However, these digital assets already exist in the current centralized society and are regulated and protected by the laws. Hence, the casting of NFT involves the notation of the centralized world in the decentralized society. The essential difference between the two systems makes it impossible to reconcile any issues. In the author's opinion, in the reconciliation of NFT and copyright issues, one will inevitably move closer to the other system.
Will NTF abandon its decentralized blockchain structure and become a centralized tokenized system. Or does the blockchain take the technology further and improve it enough to further protect the rights of every account holder in the chain in a decentralized manner. In addition, the author will analyze why tokenization of digital property is a very likely future from the perspective of surveillance capitalism.
But with the explosion of NFT comes all sorts of problems, one of which is essential: copyright issues. In early March of this year, Corbin Rainbolt, an emerging digital artist who often shares his creations on Twitter, discovered that several of his works had been made into NFTs for sale without his consent. He quickly reported blocking the NFT accounts he found were stealing his work and immediately deleted all tweets of his older work, adding watermarks and then re-uploading them to prevent re-stealing. In addition, many artists have complained about their work appearing on NFT's website without their permission.
On the blockchain, digital cryptocurrencies are divided into two categories: native coins and tokens. (Bamakan, 2022)The former, such as the familiar Bitcoin and Ether, has its main chain and uses the transactions on the chain to maintain the ledger data; tokens are attached to the existing blockchain and use smart contracts to record the ledger, such as the token issued on Ether. Tokens can be divided into fungible and non-fungible.
FT (Fungible Token) are tokens that can be substituted for each other and can be split into near-infinite pieces; for example, each of your bitcoins is essentially indistinguishable from each other, which is homogenization. (Kaulartz and Schmid,2021)
NFTs, on the other hand, are unique, non-splittable tokens, such as crypto-cats, tokenized digital tickets, etc. Currently, non-fungible tokens represent incorporeal digital property, such as art, music, video and digital collections. This "uniqueness," "authenticity," and "irreplaceability" of non-fungible tokens is why they are considered valuable.
According to Marx's theory, the value of a commodity comes from its exchange value, from the labour that is condensed in it. And the cost of production, which depends on human or material resources, is called the cost of delivery. The higher the cost of labour, the higher the commodity's price. The capitalists rely on the exploitation of surplus value, and to earn more surplus value, they constantly keep their costs down, including the cost of raw material and the cost of labour. Such a desire drives the capitalists to continually innovate on tools that have the possibility of mass industrial production. But in the age of the Internet, a change has occurred. That is the replicability of information. This reproducibility can significantly undermine the original model of capital. As left-wing writer Niklas Albin Svensson puts it, A problem arises for the capitalists when the labour required to produce a particular material object is very low. Still, the amount of work required to produce the plan or schema of the object is very high. (Svensson, 2013)Those electronic music, film, text, and other digital assets are hitting hard the traditional publishing industry, the film industry, and the music and entertainment industry.
This is where the principle of intellectual property rights (IPR) comes into play to solve this problem. The intellectual property applies the logic of scarcity in the real economy to the control of reproducible products, still treating the intelligent product as an exclusive "good" with a monopoly on its use so that copies of the original product can be valued. But in reality, this logic of scarcity is fundamentally contradictory to the nature of knowledge products. The use and exchange value of a physical good is reduced as the number of users increases or the usage becomes more extended, so the owner needs to monopolize the right to use the physical good. However, knowledge products, especially digital knowledge products, are inherently shared. A film will not damage its artistic value no matter how many people watch it, and its marginal benefit of promoting human thoughts will not change. The Internet is an efficient, open system where people can copy a code string from one computer to another computer for access. So digital content on the Web is often referred to as a "non-competitive product," meaning that one person's enjoyment, sharing, or reproduction of a file does not impede anyone else's right to use the work at all.
In addition, all of our human creations are creations built on the cultural heritage and public educational resources, and when the years specified in the copyright law are over. Those cultural and scientific heritages will belong to people worldwide and become public resources. Only with the immersion of a rich public culture will it be possible for humankind to create more works. Excessive privatization of artistic works will infringe on the vitality of public culture and eventually lead to cultural decay. Even big corporations like Disney, who draws inspiration from traditional fairy tales to create cartoon characters one after another. But this does not prevent other people or companies from using and creating those old fairy tales again. However, we must admit that many fairy tale images, such as Snow White or the mermaid, do have a monopoly due to the powerful influence of Disney. But it does not prevent the creation of other Snow White images. In addition, the re-creation of digital assets can help work spread rapidly in the Internet era. Many memes have allowed many works to explode in popularity from another angle. How to calculate the economic benefits of dissemination and whether we can offset the value of the "infringed copyright." It is still worth discussing how to calculate the financial account and exclude the profit part since only commercial activities bring about copyright issues.
Then how to solve the problem of survival income for authors of digital products? NFT technology provides a way out. In the past, the "infinite reproducibility" of digital products was the enemy of ownership in the digital product market. As a result, creators of digital works usually do not fully publish their works on the Internet to prevent them from being copied. NFT technology can achieve the separation of ownership and use of digital products. It is like granting an ID card to each work, registering ownership for each unique digital product and helping to identify its patent. No amount of copying by others can cause any damage to its ownership. (Guadamuz, Andres, 2021) Thus, the emergence of NFT has primarily made it possible to have ownership of digital goods in the virtual world. From production to trading to storage, the whole process is more fluid and natural as it is aligned with the transactions that occur in the real world.
However, these are only a kind of usage rights, and their ownership is guaranteed by blockchain encryption technology, which is in the hands of content creators. The underlying copyright will only be transferred if the copyright owner confirms in writing that they wish to transfer these rights along with the copyright. (Guadamuz, Andres, 2021) Similarly, in NFT, the copyright and ownership of the underlying digital asset remain with the author of that asset, and the purchaser of the NFT only receives the right to display the NFT, unless the smart contract governing the purchase explicitly mentions the transfer of the economic rights to the digital asset. In most cases, the copyright belongs to the author and the NFT holder is granted only limited rights of use, reproduction and display for non-commercial purposes. (Arvindan, Parikshith, 2022) In an assignment agreement, the intellectual property owner assigns all rights to the assignee. In contrast, in a license agreement, the owner authorizes the licensee to use the rights associated with it.
But again, NFT does not allow users in the blockchain to entertain themselves in a closed blockchain; he is making waves in the current market precisely because of the intersection with the centralized world. Let the electronic assets in the centralized world have the tokens in the blockchain. And the essential difference between the two structures, centralized and decentralized, is the main reason for the current problems faced by NFT.
The first problem is the authenticity of NFTs. While each non-fungible token is unique, they are often created by minting a pre-existing digital asset. Each NFT is relatively unique, but the digital asset they represent is indeed the same. However, the openness and anonymity of the blockchain give each user the ability to mint coins. Still, it isn't easy to trace who is the actual creator of this digital asset and who owns his copyright in the centralized world. Or, in other words, due to the decentralized nature of the blockchain, copyright is almost meaningless in this space. The existence of copyright relies on legal restrictions and centralized institutions. In the blockchain, on the other hand, if there is no central institution involved, then the first person to mint that digital asset can be the owner of that NFT under the record of all, just as the "code and law" that blockchain promotes
Now that more and more artworks are being made into NFTs without the author's permission, as in the case mentioned at the beginning of the article, the artists who should have profited the most from the NFTs are also being harmed by the benefits. They would have preferred to bypass the intermediaries and platforms and refuse to be exploited by the monopolies, but instead, they need to accept a more "primitive" order.
Is it possible to reconcile these two structural differences? There are already some more centralized platforms, such as Rarible and OpenSea, and these markets are centralized. Some platforms have begun to use manual verification to prevent infringing activity. Others have started to offer authentication services for NFTs, allowing buyers to be sure that a real artist created the NFT. (Bamakan et al., 2022) But this doesn't get to the root of the problem. Can a platform act as a hub for providing proof of authenticity? What kind of institution has the right to issue certificates? Second, wouldn't a centralized platform already violate the purpose of blockchain decentralization? Here, again, some issues of rights distribution are involved.
The entry of big capital and the media propaganda the emergence of many financial myths made the public momentarily confused about what they were buying and exactly what rights they had. But this wave of capital operation is not a coincidence. In the late stages of surveillance capitalism, when data as raw material has been divided up, capital desperately needs to expand into a new world. This world has now taken shape, but the meta-universe specific will be how to build and is still in exploration. But what is confirmed is that this world needs a raw material with a currency base, then privatizing digital assets and giving them artificial authenticity is inevitable.
Reference
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Arvindan, K. P. (2020). Non-Fungible Tokens-An Overlap between Blockchain Technology and Intellectual Property Rights. Jus Corpus LJ, 1, 357.
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Bamakan, S. M. H., Nezhadsistani, N., Bodaghi, O., & Qu, Q. (2022). Patents and intellectual property assets as non-fungible tokens; key technologies and challenges. Scientific Reports, 12(1), 1-13
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Çağlayan Aksoy, P., & Özkan Üner, Z. (2021). NFTs and copyright: challenges and opportunities. Journal Of Intellectual Property Law and Practice, 16(10), 1115-1126.
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Guadamuz, A. (2021). The treachery of images: non-fungible tokens and copyright. Journal Of Intellectual Property Law and Practice, 16(12), 1367-1385.
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Kastrenakes, J. (2021, March 11). Beeple sold an NFT for $69 million. The Verge. Retrieved February 24, 2022, from https://www.theverge.com/2021/3/11/22325054/beeple-christies-nft-sale-cost-everydays-69-million
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Peters, J. (2021, March 9). Jack Dorsey's first tweet may fetch $2.5 million, and he'll donate the NFTY proceeds to charity. The Verge. Retrieved February 24, 2022, from https://www.theverge.com/2021/3/9/22321464/jack-dorsey-nft-tweet-auction-bitcoin-donate-charity
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