NFT Explained — What are NFTs, How Do They Work, and How Are They Regulated?

NFT Explained — What are NFTs, How Do They Work, and How Are They Regulated?

Monday, 13 December, 2021

What are NFTs?

NFTs or non-fungible tokens are a form of digital asset that represent ownership of an item with unique characteristics. They are designed to be as scarce as possible, meaning that the tokens can only be owned by one person, making them useful for proof of ownership in games or applications that require it. They were initially designed to create unique items in video games and collectibles, but they have expanded into other industries since then.

Characteristics of NFTs

An NFT token is a unique item that is digitally scarce and can be transferred between users. They are easily transferable, fraud-proof, and are stored on the blockchain. There are various methods that are used to prevent any fraud or any sort of theft. The most commonly used method is the use of cryptography, which allows users to store their assets in a safe and secure manner.

NFTs legal regulations

The fact that NFTs are not explicitly regulated at present doesn’t mean they can’t be regulated. Indeed, existing laws and regulations will apply, and there are several commercial and legal issues that any business issuing, trading, or exchanging NFTs will need to consider.

  1. Financial regulation
  2. Intellectual property rights 
  3. Data security and ESG
  4. Contractual 

 

Source:

https://www.eublockchainforum.eu/sites/default/files/reports/DemystifyingNFTs_November%202021_2.pdf

 
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