It is not really a big secret that I am not a huge fan of the current way NFTs are being used. I do however think there are use cases for NFTs. And I have talked about those in a previous post. I am here to talk about NFTs in general, and if you are not already aware of this. It might very well change how you view NFTs moving forward.

What am I talking about?

At the beginning of March, March 7 to be exact. Yuga Labs filed for a trademark for one of their NFT projects with the United States Patent and Trademark Office (USPTO). By itself nothing spectacular or world-changing at all. The whole thing was very standard and what you could expect. Well from the application at least.

USPTO´s response

In USPTO´s response, they more or less cut straight to the cheese. If we look at the first line in the top paragraph. It states that “a non-fungible token or NFT is not a good in trade”. But what exactly does that mean? It means that an NFT does not fit the requirement that needs to be met in order for you to be able to trademark it. If you wonder about what exactly the requirements taken into account are, they are the following 3 things:

The next three lines go into detail explaining what or how an NFT does. It “authenticate and prove ownership rights to digital or physical items” and they are “downloadable units of data … that can be simultaneously used and shared”. It is just some data that say you own a digital or physical something.

It is the next part that is the really interesting part. It says that an NFT is not a physical or digital item. It just contains information about the item. They then go on to equate an NFT with a “certificate of authenticity/ownership for a physical item”. I would argue that it more or less is the same thing as a receipt you get when you buy something at a store.

The OG NFT?

This more or less means that the jpg you have that is worth the same as a house actually is not the jpg. You do not own it or can use it in any way shape or form. All you own is the receipt. And unless it is specified what the item is, it is more or less useless. It is a receipt simply saying you have bought something, but not what that something is.

And as far as I know, the only company that has addressed this, most likely by a happy accident, is Yuga Labs. As they clearly state that with their NFTs comes the rights to the likeness of the jpg. So you are free to use it as you see fit, put it on t-shirts, and use it as a company logo. Whatever you want. You can sell it and profit from it. But as far as I am aware no other companies have done anything to address this situation. And what is even more startling is that the state of NFTs has been like this for quite some time. This is no new thing that was revealed by Yuga Labs’ trademark application.

What does this mean for NFTs?

There are a few possible things that can or need to happen as I see it. The first thing that can happen is that if it gets widely known, it could very well erode any potential value people’s NFT collection has. Possibly it would happen during something similar to a bank run. Where people are trying to sell what they have and get what money they can before anyone else gets any wiser.

What I would however like to happen is the companies need to take responsibility for the situation and put out whatever legal documents that are needed in order for people to own what they think they actually bought. Because as it is now things can turn ugly really fast. Which leads me to the next thing.

This is all a global conspiracy where a bunch of people/companies are out to scam as many as humanly possible for as much as they can get. And as soon as this gets widely known they will just turn off the lights, take the money and go home. And there would be nothing anyone could do about it. Because it was never specified what it was you’re NFT is a proof of ownership for. Sure, it might be a little far-fetched. But what story does not get better with a conspiracy?

People will just go on pretending everything is fine. Ignore anyone who tells them anything different. Why, because ignorance is bliss, or out of sight and out of mind. People in general do not like to be told bad news. Especially if it can be construed as an attack on their person. And if you’re wondering what I mean by that. As an example there most definitely will be some people out there who will see someone telling them this as a “you calling me stupid, don’t you think I know my stuff” thing.

Selling NFTs

This also has the potential to impact the ability to sell. How so you might wonder. If an NFT is comparable to a certificate of authenticity/ownership. That means it has to deal with the “who”. And by who I mean who is the owner of the thing the NFT should be able to tell people about. As I see it, this information has to be put into the NFT when it is minted. Simply because you can not change an NFT after that.

This only leaves room for three options. The first is it simply does not list who the owner is. Making the certificate of authenticity/ownership more or less useless. And selling or reselling one of these NFTs I would argue should be the equivalent of committing fraud. Might be unknowingly done, but still.

The second option is the everlasting catch-all version. And that is simply to put in “the holder of the NFT is also the owner of the thing”. This has the upside that it will forever work. But the downside is that if it is stolen, well then you’re in for a world of crap trying to get it back. But this at least allows for NFTs to be resold.

The third and last option is the only way to tie anything to something in the crypto space. That is to tie the ownership upon minting to a wallet address. This however also, I would argue, would put selling and reselling these types of NFTs into useless or fraud categorie. As this would be similar to how Brad Pit in the movie Snatch always sweetens the deal with a dog. Only for it to always escape and return back to him. No matter how many times or to whom the NFT gets sold, the original owner can always claim to still be the owner. Simply because it say so in the NFT.

To say the least, this makes selling and reselling NFTs a whole new completely gigantic jar of worms.

Is this something you were already aware of, or is this “news” to you? In either case please share your thought and if it will change how you view or interact with NFT going forward. If you would like to support me and the content I make, please consider following me, reading my other posts, or why not do both instead.