Non-Fungible Tokens (NFTs) have emerged as a way to collect digital art as well as an investment vehicle. Despite having been popularized only recently, NFT markets have witnessed several high-profile (and high-value) asset sales and a tremendous growth in trading volumes over the last year. Unfortunately, these marketplaces have not yet received much security scrutiny. Instead, most academic research has focused on attacks against decentralized finance (DeFi) protocols and automated techniques to detect smart contract vulnerabilities. To the best of our knowledge, we are the first to study the market dynamics and security issues of the multi-billion dollar NFT ecosystem. In this paper, we first present a systematic overview of how the NFT ecosystem works, and we identify three major actors: marketplaces, external entities, and users. We perform an in-depth analysis of the top 8 marketplaces (ranked by transaction volume) to discover potential issues associated with such marketplaces. Many of these issues can lead to substantial financial losses. We also collected a large amount of asset and event data pertaining to the NFTs being traded in the examined marketplaces. We automatically analyze this data to understand how the entities external to the blockchain are able to interfere with NFT markets, leading to serious consequences, and quantify the malicious trading behaviors carried out by users under the cloak of anonymity.
Technical methods of intellectual property protection are reviewed and combined in the essay in the discourse of historical development — from man-made signatures of Renaissance artists to non-fungible tokens (NFT). The proliferation of NFTs is analyzed from the point of view of the commercial law: NFTs are discussed as objects that simultaneously have the characteristics of independence and a derivative nature in relation to intellectual property being the underlying digital asset. The self-sufficiency of NFTs as legal objects is provided by their commodity properties, which arise not only from the value of the underlying asset, but from the phenomenon of crystallization of the unique fixed version of the asset in a non-interchangeable and irreproducible token. The derivative nature of NFTs, figuratively correlated with the derivative contracts in financial markets, is manifested in the symbolization of intellectual property as an underlying asset and the loss (in full or in part) of its usual significance for a potential acquirer when placed in an NFT-image. Despite the variety and a specific evolution of legal approaches to the understanding of intellectual property, we can state a long-standing conceptual rejection by legal scholars from the simplest proprietary theories of transferring real rights constructions to intellectual property. However, some absolute property features of the NFTs, ensuring both internal and external legal aspects of the property, raise the question of a new legal life of “proprietarism” in the conditions of digitalization and information capitalism.
We propose Environmentally Smart Contracts, a new kind of smart contract for non-fungible tokens to solve the prudential-moral dilemma facing digital artists. The current proof-of-work-dominated non-fungible token environment requires artists to trade off the prudential benefits and the environmental costs of selling their art on blockchains. By fully correcting for environmental externalities, Environmentally Smart Contracts will allow artists to reap the sales benefits of non-fungible tokens without contributing to environmental degradation. Concrete steps to encourage the development of Environmentally Smart Contracts are discussed.
Non-fungible tokens (NFTs) make it technically possible for digital assets to be owned and traded, introducing the concept of scarcity in the digital realm for the first time. Resulting from this technical development, this paper asks the question, do they provide an opportunity for fundraising for galleries, libraries, archives and museums (GLAM), by selling ownership of digital copies of their collections? Although NFTs in their current format were first invented in 2017 as a means for game players to trade virtual goods, they reached the mainstream in 2021, when the auction house Christie’s held their first-ever sale exclusively for an NFT of a digital image, that was eventually sold for a record 69 million USD. The potential of NFTs to generate significant revenue for artists and museums by selling effectively a cryptographically signed copy of a digital image (similar to real-world limited editions, which are signed and numbered copies of a given artwork), has sparked the interest of the financially deprived museum and heritage sector with world-renowned institutions such as the Uffizi Gallery and the Hermitage Museum, having already employed NFTs in order to raise funds. Concerns surrounding the environmental impact of blockchain technology and the rise of malicious projects, exploiting previously digitised heritage content made available through OpenGLAM licensing, have attracted criticism over the speculative use of the technology. In this paper, we present the current state of affairs in relation to NFTs and the cultural heritage sector, identifying challenges, whilst highlighting opportunities that they create for revenue generation, in order to help address the ever-increasing financial challenges of galleries and museums.
Murat Tunç, Thomas van den Heuvel, Hasan Cavusoglu, Zhiqiang Zheng
Startups adopt non-fungible token (NFT) standard on Ethereum network and create marketplaces for collectible assets, trading cards and digital art. NFTs minted on blockchain must be paid a gas fee to miners at delivery. Due to increased traffic on Ethereum blockchain network, the constant upsurge in cost of minting bear hard on monetary security of token creators. As a potential cure for ever-rising minting cost, NFT platform managers adopt resale royalty which is a practice that transfers a fixed percentage of future sale amount to the creator of digital good. The adoption of resale royalty is seemingly beneficial for token creators as it provides a recurrent cash flow. However, it may have unintended consequences on the sale prices, which, in turn, affects the commission revenue for the platforms. In this paper, we develop several hypotheses for the impact of resale royalty on average sale prices on the primary and secondary markets. We leverage a panel dataset from a popular NFT marketplace and test our hypotheses using instrumental variables estimation. We find that the resale royalty leads to a significant decrease in the average primary sale price. We also find evidence that the average secondary sale price significantly increases with resale royalty. Our estimations suggest that token creators benefit from NFTs with resale royalty only after they are sold on the secondary market numerous times. Contrary to the conventional wisdom, re-sellers are better off when they make investments to NFTs with resale royalty even after adjusting for the royalty premium. We argue the managerial implications of the adoption of resale royalty for platform managers, token creators and re-sellers.
Henrico Hernandes Nunes dos Santos, Eduardo Meireles, Miriam Pinheiro Bueno
O presente trabalho tem como objetivo analisar a protecao juridica da propriedade intelectual sobre obras de arte digital desenvolvidas com utilizacao de NFTs (non-fungible tokens ou tokens nao fungiveis), por intermedio da tecnologia blockchain. Justifica-se a investigacao por se tratar de um novo cenario tecnologico com potencial economico, juridico e social, que pode impactar significativamente no meio artistico. Esse trabalho tem como base a literatura pertinente mais recente, tanto sobre blockchain e NFTs, como acerca dos aspectos juridicos do direito brasileiro, inclusive a legislacao vigente. Para tanto, procede-se com pesquisa qualitativa, aplicada, descritiva, bibliografica e documental. Desse modo, observa-se que as normas juridicas brasileiras vigentes aplicaveis propriedade intelectual garantem razoavel tutela juridica sobre obras de arte digital desenvolvidas com utilizacao de NFTs, e que a blockchain direcionada a este setor pode garantir a validade juridica relativa, inclusive, aos negocios celebrados com tais ativos intangiveis. Permite-se concluir que o arcabouco juridico brasileiro se mostra suficiente a apto para tutelar satisfatoriamente a propriedade intelectual sobre os NFTs de obras de arte digital.
In recent years, there has been an increase in the interest in non-fungible tokens (NFT) to purchase digital art and has shaped a new form of art collecting. The art community has a long history of challenges and opportunities with the commercialization of art. More recently, there has also been an interest in the purchase of game art as investments or collecting. With the advent of blockchain currencies, NFTs have introduced a way for investors, collectors, and game developers to purchase or sell game art. However, the potential of NFT for the games and game development industry is manifold. In this paper, the authors will reflect on the potential of NTF’s for game developers and content creators.
Natkamon Tovanich, Nicolas Soulié, Nicolas Heulot, Petra Isenberg
We present a visual analytics tool, MiningVis, to explore the long-term historical evolution and dynamics of the Bitcoin mining ecosystem. Bitcoin is a cryptocurrency that attracts much attention but remains difficult to understand. Particularly important to the success, stability, and security of Bitcoin is a component of the system called "mining." Miners are responsible for validating transactions and are incentivized to participate by the promise of a monetary reward. Mining pools have emerged as collectives of miners that ensure a more stable and predictable income. MiningVis aims to help analysts understand the evolution and dynamics of the Bitcoin mining ecosystem, including mining market statistics, multi-measure mining pool rankings, and pool hopping behavior. Each of these features can be compared to external data concerning pool characteristics and Bitcoin news. In order to assess the value of MiningVis, we conducted online interviews and insight-based user studies with Bitcoin miners. We describe research questions tackled and insights made by our participants and illustrate practical implications for visual analytics systems for Bitcoin mining.
The remediation of analog trading card games into digital platforms troubles notions of ownership and highlights the flows of capital through the ecologies of TCGs that previously relied on material artifacts. $2 is a digital trading card game that utilizes Non-Fungible Tokens to address concerns over ownership. However, in the wake of the sale of a $69 Million dollar NFT at Christie's art auction, crypto-art has been embroiled in discourse with respect to artist exploitation, environmental, and other concerns endemic to blockchain and cryptocurrency technologies. This paper examines the implications of NFTs in digital card games via the material histories of trading card games and the way digital TCGs accelerate the extraction of capital from player communities by bypassing traditional secondary markets. $2 proposes to solve these issues of ownership and assure players their cards will retain their value. However, the game relies on the continued existence of the publisher's platform, blockchain infrastructure, and player interest. The game also ignores how cards become valuable. Despite mimicking the artificial scarcity associated with TCGs, it does not take into account the impact metagame trends have on the value of cards. By looking at NFT implementations in games such as $2 we can identify several issues with the technology that might otherwise be overlooked in favor of more common critiques. This also highlights several implications remediation and adaptation herald for digital versions of analog games.
Abstract We investigate the significance of extreme positive returns in the cross-sectional pricing of cryptocurrencies. Through portfolio-level analyses and weekly cross-sectional regressions on all cryptocurrencies in our sample period, we provide evidence for a positive and statistically significant relationship between the maximum daily return within the previous month (MAX) and the expected returns on cryptocurrencies. In particular, the univariate portfolio analysis shows that weekly average raw and risk-adjusted return differences between portfolios of cryptocurrencies with the highest and lowest MAX deciles are 3.03% and 1.99%, respectively. The results are robust with respect to the differences in size, price, momentum, short-term reversal, liquidity, volatility, skewness, and investor sentiment.
Marko Suvajdžić, Dragana Stojanović, Iryna Kanishcheva
In this exploratory text the authors review different ways in which Blockchain technology intersects with Artificial Intelligence (AI), and with art, and how it connects to a more and more frequently mentioned area such as contemporary art industries. These intersections are pointing at the two aspects worth exploring – the first one being a way in which technology (here Blockchain and AI) can be used in various fields and industries, and the other one following art as it opens its world to the new technological possibilities, enriching its forms, topics and manifestations, and questioning the status of the author as well. The art examples and case studies exhibited here will illustrate a couple of problems that can be solved and/or improved with Blockchain and AI technology. These include transparency, art data authenticity, art data monetization, smart contracts with artists, investment opportunities of NFT (non-fungible tokens), roles and activities of curators, psychology of aesthetics, and exploration of creativity.
Abstract NFTs (Non-fungible tokens) have been thrust into the spotlight as companies, people and artists seek to monetise creations, from artworks to tweets. Philippe Gellman, co-founder and CEO of Arteïa, talks to Johanna Hamilton about his creation of ‘the first Digital Catalogue Raisonné supported by blockchain’ and how cutting-edge tech is changing the art world.
The current streaming music ecosystem provides a mature and prevalent platform for artists to publish music products and for listeners to consume music services. However, as the main power of streaming content producers, artists have little to no control over their musical works after assigning their copyrights and management to third parties, especially for long-tail artists. The booming development of blockchain technology in recent years brings a fresh change to the music industry. The clear copyrights recorded on-chain attract more and more artists to stand in line, although blockchain-based music platforms are still in their early stage of development. As the number of users and artists keeps increasing, some platforms continue to use the recommendation design of the current streaming music ecosystem. The shortage in this system could cause a long-tail phenomenon again. In this work, we proposed a novel music recommendation system by considering the value of three parties on the platform. Through designing two scheme-based recommendations by leveraging the flexible agreement design of smart contracts, we proposed an effective music promotion strategy for the blockchain-based music platform. It has been verified that the new model has attained significant improvement in the loyalty enhancement of platform users.
As the technology that powers cryptocurrencies like bitcoin, blockchains are associated with volatile and (as yet) largely unregulated financial trade, but they are also about more than money. This capacity to help automate, incentivize and authenticate global trade has numerous potential applications. Blockchain technologies promise efficient transactions, greater accountability of trade and increased/direct payment for creative enterprise. As such, despite their lingering technical challenges, these nascent technologies are already being employed within a wide variety of creative innovation processes. Based upon research into their potential applications within Scotland's digital creative industries, this study explores the ways in which these emerging technologies might disrupt digital creative industries, such as digital media production, digital art, web/interface/experience design, application development, extended reality and gaming, both in Scotland and beyond. Of particular interest are the ways that these emerging technologies might transform value exchange and intellectual property management. Early results indicate that blockchain technologies are poised to substantially disrupt the sale and distribution of creative digital works. Yet, whilst these emerging technologies can encourage open innovation, it also seems likely that they will just as often be used to streamline existing systems designed to control and potentially exploit creativity. The implications for digital disruption theories are discussed, highlighting the need for frameworks that can also account for second‐order disruptions.
Article Das Kunstwerk im Zeitalter der technischen Reproduzierbarkeit – NFTs (Non-Fungible Tokens) in rechtlicher Hinsicht — Was Blockchain-Anwendungen für den digitalen Kunstmarkt bewirken können was published on August 1, 2021 in the journal Computer und Recht (volume 37, issue 8).
This article considers the notion of shared guardianship in the context of digital museum objects and blockchain technology, arguing that this technology can contribute to the production of value in digital museum objects that goes beyond the monetary. Shared guardianship is understood to be a process of prioritizing the experience of others and forming a diverse set of stakeholders that transforms understandings around ownership; meanwhile, a blockchain is a type of distributed ledger technology which can be used to identify digital files and so make them feel ownable and authentic. As such, this paper argues that blockchain technology could create a new layer of materiality and value in digital museum objects which could support the formation of shared guardianship. This question will be analysed in relation to the theoretical underpinnings of digital materiality and a case study project at the National Museums Liverpool, UK, which investigated how to implement blockchain technology in the museum context in order to produce collective ownership and meaningful, connected digital objects.
Ghassen El Montasser, Lanouar Charfeddine, Adel Benhamed
This paper compares the degree of cryptocurrency market efficiency during the pre- and post COVID-19 pandemic with the bubble and non-bubble periods of cryptocurrency markets. Furthermore, it examines and clusters eighteen cryptocurrencies by exploring their market efficiency similarity. Comparing the cryptocurrency bubble periods with the COVID-19 pandemic, the results indicate that this pandemic has the highest impact on cryptocurrency market efficiency. Interestingly, using the dynamic time warping clustering approach, we found evidence on the presence of three clusters that essentially represent mining coins, non-mining coins and token categorizations .
In April 2020, the US government sent economic impact payments (EIPs) directly to households, as part of its measures to address the COVID-19 pandemic. We characterize these stimulus checks as a wealth shock for households and examine their effect on retail trading in Bitcoin. We find a significant increase in Bitcoin buy trades for the modal EIP amount of $1,200. The rise in Bitcoin trading is highest among individuals without families and at exchanges catering to nonprofessional investors. We estimate that the EIP program has a significant but modest effect on the US dollar–Bitcoin trading pair, increasing trade volume by about 3.8 percent. Trades associated with the EIPs result in a slight rise in the price of Bitcoin of 7 basis points. Nonetheless, the increase in trading is small compared to the size of the stimulus check program, representing only 0.02 percent of all EIP dollars. We repeat our analysis for other countries with similar stimulus programs and find an increase in Bitcoin buy trades in these currencies. Our findings highlight how wealth shocks affect retail trading.
Blockchain technology is being successfully applied in the cultural sector to enable the lawful distribution of works. This paper studies copyright related issues regarding the two basic characteristics of the specific technology: its nature as a ledger where information related to ownership is registered and the fact that it provides smart contracts functionality. We are addressing questions related to the legitimacy of the existence of a registry (ledger) and the significance of smart contracts for copyright law.
Salomé Cuesta Valera, Paula Fernández Valdés, Salvador Muñoz Viñas, Salvador Muñoz Viñas
Digital technology, which appeared in the '80s and consolidated itself in the following decade with what was called the “third industrial revolution”, has transformed not only our daily environment, but also the way in which we produce and experience the artistic work. Digital art, a subcategory of the so-named art of the new media, presents multiple forms and is in continual evolution, parallel to the devices which make it possible; but its commercialisation in the contemporary art market becomes complex, so digital works present a series of characteristics such as the paperless ofice, obsolescence and reproducibility which may be considered to be not particularly profitable by collectors. Despite this, in recent months the sale of some digital artworks, to which numerous texts are referred to under the name of cryptoart, have increased notably, reaching figures in the millions for the first time in auction houses. The commercial success of these pieces is due to the fact that, together with the work's archive, they include a type of cryptographic certificate, the non- fungible-tokens or NFTs, which collect the the work's data and inscribe them in a blockchain; transforming a multiple and disseminated work into a digital item that is unique and traceable, whose property can be transmitted as one would do with any other object in the offline world. Although they favour in principle the creation and sale of digital art, NFTs present their own problems, especially related to their access, use and sustainability; are NFTs a permanent tool or only a method of fleeting speculation? How does this certification affect property and the author's rights? Is it possible and will it be sustainable to employ them as a strategy for the preservation of digital works? This article carries out an analysis of the principal characteristics and problems of digital art in a general sense, as well as the solutions and preoccupations which the cryptographic certificates offer in all aspects in the life of a work of art: production, dissemination and preservation.
David Sanz Bas, Carlos del Rosal, Sergio Luis Náñez Alonso, Miguel Ángel Echarte Fernández
Cryptocurrencies have been developing very rapidly in recent years, and their use is becoming more and more widespread in different areas. The use of digital currencies for legal uses is advancing along with technological development, but, at the same time, criminal activities are also emerging to take advantage of this boom. The aim of this paper has been, first, to analyze the various ways in which individuals and criminal organizations have taken advantage of the phenomenon of cryptocurrencies to carry out fraudulent activities such as laundering money of illicit origin and, second, to provide an overview of the legal tools that have been developed in this regard in Europe and, more specifically, in Spain to combat these activities. Undoubtedly, cryptocurrencies bring great benefits to the economy, but it is also necessary to know the risks and abuses that have been developed to prevent them.
In the ongoing march of industrial evolution there comes along technologies that have the power to transform businesses as we know it. The Internet revolutionized business/marketing in the nineties and today and bockchain has the potential to do the same for commercial transactions. Blockchain is a peer-to-peer model that can speed up processes resulting in robust tracking and reducing costs of transactions. Given the implications of this far-reaching technology, it is essential for marketing students to understand its significance in the conduct of marketing activities. Consequently, it is imperative that faculty comprehend aspects of the technology and its applications in marketing to integrate them in marketing courses. The purpose of the paper is to enlighten marketing faculty on the concept of blockchain in a non-technical manner along with highlighting its applications in marketing that can be imparted through their courses. To do so, the paper is structured around three research questions relating to (a) understanding the idea of blockchain technology; (b) expounding on the importance of the technology in marketing applications; and (c) illustrating how marketing faculty can integrate the concepts and application in marketing courses.