What are the NFTs that everyone talks about and how you can do business with them

One of the many applications of technology and specifically of Blockchain is the possibility of create digital assets, that is, crypto assets known as ‘tokens’. Non-fungible ‘tokens’ are digital assets or versions that have the particularity of not being interchangeable with each other and that can function as proof of authenticity and ownership within the digital world. With the help of LABE Abogados, we answer the questions that arise regarding the ‘tokenization’ of assets. You can also see the news in this video.

QUESTION. What is asset ‘tokenization’ and how does it work?

ANSWER. It is a process by which the value of an asset, whether tangible or intangible, is digitized and becomes a ‘token’ under representation on a Blockchain platform, thus eliminating intermediaries in the commercialization of ‘tokenized’ assets. In this way, an electronic database is created where the ownership of each right is collected, which in turn will be modified each time the right is transmitted, specifying who is the new owner underlying the ‘tokenization’ process.

Q. What are the NFTs that are so much talked about?

A. An NFT is the acronym in English for ‘non-fungible tokens’, a unique and unrepeatable non-fungible cryptographic ‘token’ related to the use of Blockchain technology. NFTs are records in a Blockchain (normally the ethereum network is used) whose value is associated with digital assets such as images, videos, brands or even texts. Its importance comes from the fact that you can ensure its origin and introduce a code in the programming that allows you to remunerate the creator or artist with a percentage for each transmission of the same.

In this way, it is possible to represent digital and real objects in a unique and unrepeatable way with infinite business possibilities. However, NFT platforms are more susceptible to ‘hacks’, since ‘smart contracts’ and additional interfaces are used to control them.

Q. In which sectors is NFT marketing relevant?

A. The exponential growth of NFTs affects real estate, games, gold reserves, works of art, financial instruments such as stocks and bonds, collectibles, sports-related goods and even agricultural products. It also affects soccer players (Ronaldo is the best known case), sports teams, ‘youtubers’ or ‘influencers’. Leyre Millán, an expert legal consultant in obtaining financing and investment, explains that, nowadays, venture capital investors are beginning to invest in the NFT market, being the basic element in both traditional finance and in the markets of cryptocurrencies that represent a novel economy based on digital property.

Q. What risks does the lack of regulation entail at the legal level?

R. From a legal point of view, it would be necessary to determine the responsibility that it may entail and to whom it is attributed, whether to the user or to the platform where a digital work is uploaded, to make these NFTs. The lack of regulation of ‘tokenization’ encounters problems at the tax level, in relation to intellectual property rights, image rights or data protection. However, many countries are already adapting to these digital market models so that the ‘tokenization’ of assets on the Blockchain is regulated for all kinds of assets.

In Spain, the National Securities Market Commission (CNMV) has been granted the necessary powers to regulate advertising related to cryptocurrencies, which could also apply to NFTs, since the necessary mechanisms are established so that the CNMV can regulate the advertising of crypto assets or other assets or instruments presented as investment assets that are currently outside the perimeter of financial regulation.

El Confidencial, in collaboration with LABE Lawyers, offers its readers a legal office where they can solve all their doubts in the legal field. For more information, you can consult their website or send an inquiry.

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