DNA Building, Denpasar - Bali

Introduction of NFT as Proof of Legality of Artwork to BSO DugCenk of Udayana University

Kepeng.io, DENPASAR – In April 2021, a sketch by renowned neo-expressionist artist Jean-Michel Basquiat attracted a lot of press coverage due to a potential copyright dispute. Basquiat, who died in 1988, was noted for his use of thematic juxtaposition, and as an example of an artist who died in his prime in tragic circumstances. His art was widely acclaimed, and often sold for very high prices. A painting titled Untitled sold for over $110 million USD in 2017, making it one of the most expensive art sales in history.

Day storm is an art collective that owns a Basquiat mixed media work called Free Comb with Pagoda, and they announced that they will be creating a non-fungible token (NFT) out of it. NFT is the latest hype in the art world, bringing together smart contracts and blockchain technology, so it wouldn’t have generated much interest were it not for the fact that their announcement included a statement that NFT would not only transfer ownership of digital files but the new owners would be granted the right to destroy them: the original work if they want.

This angered art enthusiasts and raised some legal questions about whether this was possible under copyright laws. There’s something clearly distasteful about destroying an artist’s physical work, but there’s also the fact that it’s done to generate interest and scarcity in a tactic to increase auction prices. The outrage reached the art licensing body that manages Basquiat’s artwork on behalf of his estate, and they stated that Day storm only owned a physical copy of the work but did not own the accompanying copyright.

The artwork was immediately removed from sale, but Basquiat’s sketches are just the latest example of a growing number of works raising legal questions regarding the interaction between copyright and non-exchangeable tokens. Recently an art collective purchased a copy of Banksy’s work, which later remodeled it, and turned it into NFT. A viral video of a baby biting his brother’s finger, known as “Charlie Bit Me” was sold as NFT for $500k USD, with the video taken offline after the sale.

What exactly is NFT? Can someone use it to transfer copyright ownership to a work, or does it work as a license? What happens if someone makes NFT work without permission? Is that a violation?

Moving on from this, Kepeng.io tries to answer it from a legal perspective in Indonesia. This explanation was conveyed in socialization brought by AA “Ary” Anila Kusuma Wardhani to the Dug Cenk FEB Udayana community and the ITB Stikom Bali Dance UKM, at the Dharma Negara Alaya (DNA) Building Denpasar, Friday (20/8).

NFT stands for a non-fungible token which is a representation of an asset/someone’s ownership. This NFT cannot be exchanged for other NFTs such as fungible tokens, because it has a unique and rare value, and each NFT has a different code. A non-Fungible Token (NFT) is a type of cryptocurrency derived from the Ethereum smart contract. Quoted from the journal entitled Non-Fungible Token (NFT): Overview, Evaluation, Opportunities, and Challenges in 2021, in recent years, NFT has garnered tremendous attention from both the industrial and scientific community countries. It is reported that the average 24-hour trading volume of the NFT market is USD 4,592, 146, 914, while the 24-hour trading volume of the entire cryptocurrency market is Rp. 341, 017, 001, 809. This indicates that the NFT market opportunity is very large, especially if the NFT is about works of art.

In his socialization, Ary said, that NFT in art has become popular recently. If we look at the news in February 2021 reporting that Christie’s auction house is selling the NFT digital artwork “Every day’s: The First 5000 Days” by Mike Winkelmann, the digital artist known as Beeple, for $69,346,250, signifies that the opportunity for NFT works the art is great. NFT has been trendy over the past few years, with the launch of Crypto Kitties in 2017, but has really boomed in the past year as a way to verify digital art ownership. “By printing a work of digital art on the blockchain, there is a reliable record that identifies the creator, date of creation, the title of the work, copyright of ownership, ownership of property, make NFT become a legal digital format for works,” she added.

NFT can be used to represent items such as photos, videos, audio, and other types of digital files. Then, talking about whether one can use NFT to transfer ownership rights to a work, then the answer is yes. Access to copies of the original files, however, is not limited to NFT buyers. While copies of these digital goods are available for anyone to acquire, NFTs are tracked on the blockchain to provide proof of ownership separate from copyright to their owners. “Ownership of an NFT is often associated with a license to use the underlying digital asset, but generally does not confer the copyright to the purchaser,” said Ary. In addition, some agreements only provide licenses for non-commercial personal use, while other licenses exist that permit the commercial use of the underlying digital asset.

NFTs may be associated with certain digital or physical assets (such as files or physical objects) and licenses to use the assets for specific purposes. NFTs (and associated licenses to use, copy or display underlying assets) can be traded and sold on digital markets. So, what happens if someone makes NFT work without permission? Ary explained that someone who illegally makes NFT work will be detrimental to the creator of the work. Especially if the creators of the work do not have proof of copyright. “Therefore, I hope that artists can seek copyright first after creating works, or they can be used as NFTs immediately before someone commits plagiarism,” said Ary. “Well, if there is a copyright or NFT right, then someone who plagiarizes the artist’s work can be sued,” she added.

NFT can indeed minimize the possibility of a work being plagiarized. However, there is no system from NFT that can filter a work before it becomes a token. There have been cases where artists have plagiarized other people’s digital artworks and turned them into tokens. This causes anxiety experienced by the artists so that some of them become less enthusiastic in making new works again. Of course, with clear regulations and regulations, slowly this problem will find a solution and there is good hope for the artists in increasing their enthusiasm in creating.


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