How to Mint an NFT: A Guide to Create Your Digital Artwork [UPDATED]

Copyright and Intellectual Property Issues: When minting NFTs, there’s a risk of infringing on copyright or intellectual property rights. Artists have reported their works being tokenized into NFTs without their consent, and there are instances where NFTs are created based on copyrighted works, such as comic book characters, without the permission of the original creators. Furthermore, the ownership of the copyright can be complex, especially if the original work was created under an employment arrangement or for a commission, as the employer or commissioning party may own the rights. There are also concerns regarding whether an NFT constitutes fair use of the underlying work, and possible violations of the Visual Artists Rights Act, which protects artists’ rights to attribution and against distortion of their work.

Misrepresentation and Buyer’s Misunderstanding: There’s a risk of misrepresentation by sellers regarding the rights acquired with an NFT purchase. Buyers might misunderstand the extent of their rights, leading to potential legal disputes. For instance, owning an NFT does not necessarily grant copyright of the underlying asset, and the terms of purchase may not fully disclose the rights associated with the NFT. Moreover, issues of authenticity and provenance are significant, as NFTs can be forged or misrepresented, just like physical artworks.

Market Volatility and Manipulation: NFTs, being a relatively new asset class, are subject to market volatility and potential manipulation. For example, an NFT representing clip art of a rock sold for approximately $1.3 million, despite having no functional purpose beyond ownership bragging rights. Additionally, the market can be susceptible to schemes like “wash trading,” where demand is fabricated to manipulate market perception.

Theft and Security Concerns: The risk of account hacking and loss of NFTs through theft is a growing concern. For example, after the sale of a Beeple work, there were reports of users losing NFTs worth over $150,000 due to account takeovers on Nifty Gateway. This highlights the need for robust security measures in NFT transactions.

Insurance and Coverage Issues: Insuring NFTs is complicated, especially in the context of blockchain hacking. Buyers need to review insurance policies carefully to ensure coverage for NFTs, considering the market’s immaturity and potential disputes over the asset’s value.

Legal and Regulatory Framework: NFTs, traded globally, are subject to varying legal and regulatory frameworks, which are still developing. This includes compliance with anti-money laundering laws and other regulations. Businesses dealing with NFTs may fall under regulatory scopes that require adherence to specific legal obligations. So be sure to do your research and only work with reputable minting platforms and exchanges.