Art in the world of NFTs

NFTs (Non-Fungible Tokens) are still relevant. By 2025, the number of NFT users had grown from 0.15 million in 2018 to 11.64 million, with Thailand and Brazil leading the way in terms of acceptance. The global NFT market reached a size of 342.94 billion dollars in 2022, with forecasts of nearly 247 billion dollars by 2029 (source: https://coinledger.io).

What is an NFT?

At its core, an NFT is a digital proof of ownership, similar to a certificate that confirms the origin and authenticity of, for example, a work of art. This proof is recorded in a blockchain, which irrefutably states who owns which NFT. ‘Non-fungible’ here means that each token is unique. This differs from exchangeable cryptocurrencies. With an NFT, you are buying the proof of ownership of a specific digital object. You store that proof in a digital wallet; every transfer is transparently recorded, including the price paid. Often, the linked work is also unique, but this is not a requirement.

NFTs have grown from niche products for digital collectors to a billion-pound market that influences sectors such as fashion, art, gaming and real estate. It is still a popular investment category. Well-known examples are status symbols such as the Bored Ape Yacht Club: expensive profile pictures that are used as avatars on social media and are very costly – tens of ETH (ethereum coins). Starting as a means of trading digital art and collectibles, (parts of) real estate were also offered via ‘fractionalised NFTs’ and even luxury goods such as superyachts. Platforms such as Instagram are working on integrating NFT functionality.

NFTs in the art world

The technology is shifting power relations, including in the art sector: a new, entirely online universe is emerging alongside the traditional offline art world. Digital art has been developing since the 1970s/1980s, parallel to the rise of computers. With the internet, it became easy to display digital work worldwide and copy it endlessly. On the one hand, this provided reach, but on the other, it made it difficult to control use and enforce revenue. NFTs are changing this: they make digital files “assignable” to a specific owner, thus creating scarcity. It is striking that this often concerns art that exists exclusively online, in addition to NFTs that are linked to digital representations of physical objects.

An important legal point: anyone can “mine” an NFT from any digital file. This can lead to someone creating an NFT from someone else’s work without permission. The NFT may be “real” as a token, but legally it constitutes a “counterfeit” of the underlying artwork.

Copyright and NFTs

Under copyright law, the creator (or their employer) automatically becomes the copyright holder as soon as a work meets the legal requirements. This is “a right” and is independent of the physical or digital medium. For example, someone who buys a statue receives it in bronze, but not automatically the copyright. And the exploitation or reproduction of the work remains reserved to the artist until 70 years after their death. But NFT ownership is different from copyright. As already mentioned, an NFT is essentially a digital proof of ownership. That principle therefore applies to NFTs. The owner of the NFT has the ownership right to the digital “certificate”, but does not automatically acquire the copyright to the image or animation.

The artist can continue to use, display or sell the work – of which an unauthorised NFT has been created – unless otherwise agreed. This can be confusing, because no tangible object is transferred upon purchase, only digital proof.

Anyone can share or copy the image of your NFT online; there is only one blockchain-registered owner, and that is you, provided that the NFT itself has been created lawfully. NFTs therefore offer certainty about the authenticity and transferability of the proof of ownership, but say nothing about who is legally entitled to exploit the work.

How do you buy an NFT?

What do you need to purchase an NFT?

• A blockchain wallet with the right cryptocurrency.
• Access to a platform such as Rarible or OpenSea.

The purchase process is technically simple. The challenge is choosing a “good” NFT. Buyers pay attention to, among other things:

• floor price and price development;
• reputation and vision of the provider;
• transaction costs (gas fees);
• the unique characteristics of the image;
• the edition and scarcity;
• the ratio between the number of owners and the number of tokens;
• community activity (e.g. via Slack, Discord).

The position of an author/creator

For artists, NFTs offer direct access to a global market, without the strict necessity of a gallery. They retain control over sales, contact with buyers and the image of their work.

An important advantage is the ability to automatically record resale rights via smart contracts. For example, creators can stipulate that they receive a 12% royalty on every subsequent sale. Unlike the existing resale right, which is limited to certain art categories, minimum prices and sales through professional dealers, these NFT agreements are more flexible and applicable worldwide.

In addition, the blockchain provides insight into the history of a work: who were the previous owners and how did the price develop? Previously, this information was mainly available at galleries and auction houses, but now it goes directly to the creator.

Role of galleries, museums and auction houses

NFTs seem to make traditional intermediaries redundant, as artists can sell their work themselves. However, in practice, galleries and auction houses (e.g. Christie’s) continue to play an important role as “trusted third parties”. Their name acts as a seal of quality: they confirm that an NFT is genuine and authorised by the artist. That trust is often crucial when large sums of money are involved.

Museums are discovering NFTs as an additional source of income; for example, an NFT of Van Gogh or Monet as an NFT. These are often works whose copyright has already expired and which are in the public domain. NFT sales then effectively generate ‘easy money’ and also appeal to a new audience that is less interested in avatars but more interested in classical art.

Legal pitfalls and future

The rise of NFTs raises legal questions, e.g.:

• How do you deal with platforms without a quality mark or clear control over creators?
• What if you pay but the NFT never appears in your wallet, or if the link to the file disappears?
• What if someone creates and sells an NFT of your work without permission?
• Which law applies and which court has jurisdiction in disputes?

There have been cases of phishing, theft of NFTs and undelivered tokens, sometimes worth millions. Due to the decentralised structure and the lack of a supervisory authority, as a victim you are dependent on criminal proceedings if the investigation services have time for you.

Despite these risks, NFT technology seems to be having a lasting impact on the art world. It is changing how art is created, traded, valued and legally structured. This means that NFTs are not just a short-lived “hype”.

Questions

Do you have any questions about this article or other legal questions? Our specialised lawyers will be happy to assist you. You can reach us by email, telephone or via the contact form.