Non-Fungible Tokens
The concept of the collectible is fundamental to the human spirit. Children start collecting things before they can walk. The fascination with collecting only increases as we get older. For most, a collection is fairly simple. Baseball cards, luxury cars, toys, comic books, art, merit badges; sure; but people also collect paychecks, royalties, credits and ratings. A collection can in fact be just about anything. It is no wonder than that seemingly innocent non-fungible tokens, each known as an “NFT,” present one of the most confusing concepts delivered by distributed ledger technology. In fact, misunderstanding of how NFTs function, what they represent and how they are legally characterized is a dangerous trap awaiting the unwary.
What is an NFT? Think of it as a digital VIN (vehicle identification number) where the car can be anything.
Technically, an NFT is a discrete information set written into a blockchain by way of standardized software code to represent an asset, and to allow transfer of that asset subject to a predetermined set of rules. The asset associated with the NFT can be anything and could be stored in the NFT itself, stored electronically somewhere else, or a physical tangible asset. The NFT will usually include the information required for the owner to locate the asset and avail themselves of the rights evidenced by ownership of the NFT. The NFT cannot be divided…
