{"id":2484,"date":"2021-10-04T11:10:22","date_gmt":"2021-10-04T03:10:22","guid":{"rendered":"https:\/\/www.boasecohencollins.com\/?p=2484"},"modified":"2021-10-04T11:10:31","modified_gmt":"2021-10-04T03:10:31","slug":"nfts-the-new-digital-kid-on-the-block","status":"publish","type":"post","link":"https:\/\/www.boasecohencollins.com\/zh-hant\/%e7%b6%b2%e8%aa%8c\/nfts-the-new-digital-kid-on-the-block\/","title":{"rendered":"NFTs: the new digital kid on the block"},"content":{"rendered":"\n

By Susan Cheung and April Kong<\/strong><\/p>\n\n\n\n

Hong Kong, 4 October 2021:<\/strong> Intellectual property is one of the most dynamic and fluid practice areas in the legal profession and nowhere is this better illustrated than in the rapidly growing and highly lucrative world of non-fungible tokens (NFTs).<\/p>\n\n\n\n

With the NFT global market now generating billions of US dollars, these new forms of digital asset have gone mainstream and, particularly, mark a fresh development in the way artists can promote and sell their works. But legal professionals are grappling with issues surrounding this new phenomenon and copyright law.<\/p>\n\n\n\n

What are NFTs?<\/strong><\/p>\n\n\n\n

First, we need to understand what is fungible and what isn\u2019t. Items that are fungible can be substituted or exchanged for similar ones. For example, a HK$20 banknote can be exchanged for any other HK$20 note (or, indeed, two HK$10 notes) because they have identical value. Ditto company shares or commodities.<\/p>\n\n\n\n

On the other hand, a movie ticket is non-fungible in that it specifically states the film, date and time, cinema and seat number. It is unique. Diamonds, land, houses, these are all non-fungible assets because they each have their individual qualities.<\/p>\n\n\n\n

NFTs have grown out of blockchain technology. A blockchain is an expanding list of records, divided into \u201cblocks\u201d, that are linked together using cryptography. This results in a shared, immutable ledger that records transactions and tracks assets. The information it provides is immediate and transparent to those with access.<\/p>\n\n\n\n

NFTs are cryptographic assets on a blockchain with unique identification codes and metadata that distinguish them from each other. Hence, each NFT has a particular value and only one owner. Much of the NFT market revolves around digital art, but NFTs can include videos, sports highlights, GIFs, video game items, music and writing.<\/p>\n\n\n\n

Lucrative market<\/strong><\/p>\n\n\n\n

Last March, an NFT of a digital artwork, \u201cEverydays: The First 5000 Days\u201d by American digital artist and graphic designer Michael Winkelmann, known professionally as Beeple, was sold by auction house Christie\u2019s for almost US$70 million. In the same month, Twitter founder and CEO Jack Dorsey sold an NFT of his first tweet \u2013 which simply read \u201cjust setting up my twttr\u201d for US$2.9 million.<\/p>\n\n\n\n

Online trading platform OpenSea, the most popular peer-to-peer marketplace for crypto collectibles and non-fungible tokens, processed more than US$3 billion in NFT-related transactions in August alone.<\/p>\n\n\n\n

Sports organisations are getting in on the act. The National Basketball Association in the US launched Top Shot \u201cdigital collectibles\u201d in October last year. Within eight months it reached a million users and notched more than US$700 million in sales. A video clip of superstar LeBron James scoring a single-handed dunk sold for more than US$200,000. The company behind Top Shot, Dapper Labs, is now valued at more than US$7.5 billion.<\/p>\n\n\n\n

NFTs and copyright<\/strong><\/p>\n\n\n\n

As you would expect, there is no legislation in Hong Kong that specifically targets NFTs. However, since they represent digital content, they fall under the Copyright Ordinance (Cap. 528) as the work is:<\/p>\n\n\n\n