“NFTs, these new tools that herald a virtual revolution”

FIGAROVOX/TRIBUNE – The growing success of NFTs tends to redefine our relationship to the market and to collectibles, says Laure-Alice Bouvier. For the lawyer, these digital assets will shake up our society, even if they are not yet part of the daily life of the general public.

Laure-Alice Bouvier is a doctor of law and a lawyer at the Paris bar.

Whether you are generation “X”, “millenial”, “xennial”, or even “baby-boomer”, you surely remember the time when unique or almost unique copies of collectibles sold for very high prices: sports shoes in limited edition, one-off Barbie dolls, Funko Pops (these little dolls that must not be taken out of their packaging!), but also melon labels (whose lovers call themselves cucurbitacistes), eggshells ( passion of ologists) and other objects apparently of no interest to the uninitiated.

Today, all that is over… or almost. “Modern” collectors are no longer looking for Pokémon cards or other postage stamps but for digital objects, more precisely digital files. And even collectors of works of art are slipping into this virtual world that we now call digital art or “cryptoart”.

Artificial intelligence obliges, intangible objects of all kinds are fashionable and virtual collectibles, the most serious as well as the most wacky, nestle in the most unexpected corners of our society or even of our imagination. They are called NFTs, i.e. “non fungible tokens“, in French of” non-fungible tokens “, that is to say objects whose value is inestimable and therefore theoretically not transferable on a market.

The original aim was to protect digitized works of art made available to the public on the internet and likely to be plagiarized. Now, whether these works are virtual or material, they are now, whatever one may say, considered as a good that can be bought or sold on a market. In other words… they are integrated into economic circuits like any other commodity. They are rare and unique collectibles that have a certificate of authenticity and ownership. This is how this virtual art whose presence is growing day by day interests more and more investors if not speculators in search of big profits.

As we have understood, the concept of NFT seems however to have lost its initial meaning when the objects (artistic or not) that it designates have become perfectly fungible, that is to say exchangeable on a market for a commodity of equivalent economic value, whether a quantity of currency or other material or immaterial good.

For this reason, it would therefore be relevant to stop using this qualifier which corresponds to a reality which, in fact, has never been able to impose itself because it is based on an old misunderstanding, that of the artist and his work in the beyond the contingencies of money and all forms of commodification. It would actually be more accurate to speak of protected fungible token (PFT) or why not legal artifact bond (LAB).

From the purchase of ape portraits at the Bored Ape Yacht Club, and as the seller indicates, the purchaser of a portrait then has club membership access.

Laure Alice Bouvier

While NFTs are already very popular, they are not yet part of everyday life for the general public. The fact remains that today they are everywhere and it is sometimes surprising that thousands of Internet users are ready to buy these digital objects for very high sums when they may seem of no interest to ordinary mortals.

For example, the first object to have an NFT Certificate of Ownership and Authenticity was artist Kevin McCoy’s 2014 artwork “Quantum” which was auctioned in June 2021 for $1. .5 million dollars.

You can also buy portraits of monkeys at the Bored Ape Yacht Club, all similar in terms of the structure of their faces, but unique in terms of facial expressions or colors. From this purchase, and as indicated by the seller, the buyer of a portrait then has access to membership in a club “whose benefits and offers increase over time”. The monkey is an identifier to open digital doors.

Note that some of these NFTs are traded for considerable sums through auctions that take place on platforms ad hoc. For example, a work by American crypto-artist Mike Winkelmann (aka Beeple), “Everydays: the First 5,000 Days,” fetched nearly $69.3 million at Christie’s in 2021.

Ghozali Everyday is certainly the source of one of the most surprising NFTs. This is an Indonesian who offered for sale on the OpenSea platform 1000 selfies of himself and who managed to collect more than a million dollars. These selfies were taken by him from 2017 to 2021, in other words from the age of 18 until he was 22.

Such enthusiasm for NFT markets without any real substance may come as a surprise. The fact remains that fortunes are made and broken on exchanges between Internet users, some passionate about the novelty of the device, others only interested in possible gains which can be substantial and almost instantaneous.

NFTs are at the crossroads of an unexpected revolution.

Laure Alice Bouvier

Be that as it may, it is time to realize that we are in the presence of a complex phenomenon which is both the sign and the product of a change in the model of society.. It is therefore necessary to better identify it, to understand how it works, not only to give it a framework to avoid abuses, but also to appropriate the keys to evolve in the new space it occupies. .

Let us remember that the device was first practiced without worrying about defining it precisely. It is only since 2017 that a serious concern for conceptualization has appeared. It must be said that the NFT market represents increasingly colossal sums. Such a space of commercial exchanges correlated with blockchains, of which we know the advantages but also the risks, could not remain without definition and without a minimum of standardization. However, more needs to be done in this direction.

Further, especially since NFTs are at the crossroads of an unexpected revolution. For example, to date there is no taxation that is perfectly adapted to these new products, which generates a high risk of litigation. While it may seem logical at first glance to attach NFTs to the tax regime for digital assets, there is nothing optimal, however, given the complexity of the situation. For example, what about the application to NFTs of the tax regime for works of art? It is difficult to decide since the legal definition of these works remains vague in terms of digital goods. The question may also arise if it is decided to consider that NFTs are intangible movable property and, for example, active cryptos comparable to cryptocurrencies. But are NFTs really cryptocurrencies? Once again, nothing is less certain.

The problem also arises in the field of intellectual property. Indeed, the texts are still incomplete concerning the NFT, in particular concerning the transfer of the moral and economic rights of the work, and consequently generators of uncertainties and risks.

In these times of concern relating to the energy crisis, the same is true in the ecological field. Creation (mintage) of NFT is particularly energy-intensive and therefore likely to be very expensive. Attention should be paid to development projects tending to set up “green” blockchains such as Wax or The Merge, which should make it possible to lower the energy cost of NFTs.

With NFTs, a new stage in the virtual revolution is underway.

Laure Alice Bouvier

Finally, the place occupied by the penal question is far from negligible. In addition to the issues related to NFT thefts that have hit the headlines in recent months, another concern is emerging. Until now, we knew well about rapes, assaults and other sexual abuses “in real life“. From now on, the danger is everywhere, including in our living room: in the metaversesthese seemingly innocuous virtual universes, young women (or men!) today reveal attacks that can be highly traumatic.

However, the law is still hesitant. For example, when there is no body of flesh and blood but an avatar, can we speak of rape within the meaning of the penal code? Currently, this is not the case. We are more in a form of psychological violence, a concept once again very vague, but whose immersion sometimes pushed to the extreme for victims wearing virtual reality helmets urgently requires greater protection for the youngest as well as for the younger ones. Let’s not forget either that the increasingly tenuous boundary between real and virtual is likely to lead to increasingly violent acts that are increasingly difficult to contain.

With NFTs, a new stage in the virtual revolution is underway. He is likely to be talked about for better or for worse. Unless he collapses on himself, victim of an extreme emptiness.

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“NFTs, these new tools that herald a virtual revolution”

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