A non-fungible token (NFT) is a special type of cryptographic token which represents something unique. NFT blockchain marketplace. Photo: Rokas Tenys/Shutterstock What Lawyers Need To Know About Non-Fungible Tokens: Part 1
This article takes a look at the developing legal landscape surrounding NFTs and the increased legal and regulatory scrutiny that lawyers should consider.
March 28, 2022 at 10:00 AM
9 minute read
Non-fungible tokens (NFTs) are the latest trend to sweep markets from the art industry to professional sports leagues. These digital assets have existed for several years but have achieved explosive popularity only recently. In fact, the global market for NFTs reportedly hit over $40 billion in 2021. Despite this, the legal frameworks governing NFTs—which could significantly impact the risks and rewards of buying or selling NFTs—are still catching up. In this series of articles, we will explore the developing legal landscape surrounding NFTs and the increased legal and regulatory scrutiny that lawyers should consider.
What Are NFTs?
If you have not yet familiarized yourself with the basics of blockchain technology, that is the place to start. At its core, a blockchain is meant to be an immutable ledger that records one or a series of transactions, with each transaction verified by a peer-to-peer network rather than a centralized organization. The network constantly checks and validates the accuracy of the blockchain. Once on the blockchain, the record cannot be reversed or erased; one can only add a new blockchain recording the new information. Within that ledger technology, there are (1) fungible tokens, meaning that one token can be replaced by any other token—a typical example is a cryptocurrency, and (2) Non-Fungible Tokens (NFTs).
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