What Exactly Is Included In The NFT You Are About To Purchase?

March 4, 2022
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There is no definitive answer for what exactly is included in an NFT purchase. This is because every marketplace, blockchain network, collection, and seller may have different purchasing agreements and protocols to follow. It’s also because the entire industry is still in its infancy. 

Therefore, the only way to know what is really included in the NFT you are about to purchase is to carry out due diligence and conduct research about the smart contract, copyright ownership, hosting, and future accessibility. Consumers should take careful consideration of the fact they will likely be engaged in a largely decentralized and unregulated market structure when dealing with NFT transactions. 

Below are a few reasons why any responsible buyer should have a firm understanding of the inner workings between cryptocurrencies, blockchain technology, and smart contracts, before making any significant purchases. 

Smart Contracts

Non-fungible tokens contain code that is referred to as a “smart contract”. Take the time to familiarize yourself with the relevant details of an NFT’s smart contract before making any purchases. Smart contracts layout details regarding the terms of sale between the original purchaser and seller, as well as future resales. Think of your smart contract as your guide as to how the blockchain will record the sale. Smart contracts represent the specific terms of each and every NFT and are embedded in the code of all digital assets. 

Additionally, buyers should be aware of the terms of resale outlined in the NFT smart contract. If these details are not included, purchase at your own risk. A good smart contract always includes information detailing resale commission, associated royalties, and other information pertinent to the future sale or resale of any NFT. 

Pro tip: Use the blockchain search engine Etherscan.io to verify transactions on the Ethereum decentralized blockchain. By entering data (like a token ID) into the search box, you can view the information regarding contract execution, as well as the balance, value, and the entire transaction history for that specific entry. Users can conduct similar searches by filtering a search by Address, Txn hash, Block, Ens. 

Copyright ownership 

When it comes to copyright ownership, all NFTs are different. Perhaps even more confusing, is that copyrights are not even part of the sale in many cases. If the person buying the NFT wants to own all commercial rights to the digital asset, there is a good chance they will need to file for copyright ownership with the current holder. Under other circumstances, the new buyer may only be required to get permission, or even better, copyright ownership can be transferred automatically from one owner to the next. 

The main thing to consider is that the rights to the NFT and its actual copyright ownership are not necessarily the same thing. Copyrights in NFTs are often separate from the affiliated digital content. A good rule of thumb is to approach NFT copyright ownership on a case-by-case basis. While popular platforms like Mintable prominently display copyright and resale information for each item, others do not. 

Hosting and future accessibility 

In the realm of digital assets and blockchain technology, where an NFT is stored and how it can be accessed in the future are of the utmost importance. Buyers should take the time to consider if the digital asset they are about to purchase is stored on a privately owned server (centralized) or within a peer-to-peer network (decentralized) by way of blockchain. 

When applicable, platforms like OpenSea provide information regarding an asset’s metadata which can be found at the bottom of the ‘Details’ tab for a selected asset. If an asset’s metadata has been permanently locked and stored away in decentralized file storage, the metadata will be marked as ‘Frozen’. 

Therefore, if the source hosting your NFT becomes compromised there is a good chance the NFT will no longer be accessible to the buyer. In order to circumvent issues with hosting and potential inaccessibility buyers should carefully examine all the details contained in the smart contract pertaining to continuous accessibility for the buyer. Without this information, the seller has no guarantee that any media files associated with the purchased NFT will remain fully accessible. 
 

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