“In the world of crypto and NFTs, everyone has a shot a being a hedge fund billionaire—or at least appears to.”
Digital assets on a blockchain or public ledger have disrupted how financial markets look at value and investors regard transactions. Some pro-patent and pro-copyright supporters have embraced the change, while many others are ambivalent about crypto and NFTs, quick to dismiss them as a fad, and not without reason. Their growth has been meteoric.
Are the new digital assets positive for IP rights and creators, a key to the future of expression and innovation, or are they a merely a cloak donned by the privileged destined to wear thin?
In Sunday’s IPWatchdog an article pulls back some of the layers.
“Some pro-IP skeptics of NFTs believe they undermine IP like copyrights and trademarks by implying ownership interest where there is none,” write Bruce Berman in the Intangible Investor. “To them, NFTs are a trap perpetuated by power investors to ensnare the young and hungry. There may be some truth to that. Others, however, including creators and an increasing number of global brands and financial institutions, have begun to embrace NFTs as they come to better understand their limitations.”
Authenticity and Loyalty
Not everything on a blockchain is an NFT or a currency like Bitcoin or Ethereum. An NFT’s strength is its provenance and authenticity, which can be established without the need for a centralized authority, like an auction house or bank, or Amazon.com. Like other assets, NFT value reflects a combination of scarcity, loyalty and demand, fueled by celebrity and social media.
Brands like Nike, Taco Bell, Coca-Cola, the NBA and some content owners like photographers have been getting more comfortable with distributed ledger concept. Gucci, Burberry, Louis Vuitton, are among the luxury brands already involved, sometimes awarding buyers with NFTs, small rights to own a limited edition or access something others can not. Content holders like the film industry and Asian businesses are becoming more active. Patents are less clearly a treatment for digital investing, but owners appear to be tipping their toes in the water.
“As far as many people are concerned it is the idiosyncratic equity and opaque bond markets that are the scam, not distributed ledger, where available information and transaction history is irrefutable and there are few or no intermediaries poised to exact a commission. Like Pop Art, Bored Apes and CryptoPunk thumb their collective nose in the face of ‘serious’ assets, like stocks and bonds, but they are often no less valuable.”
The Market Determines Value
For digital asset investors the market will determine value, no matter how absurd, not financial institutions; not cash rich tech companies; not heavily invested pension funds. Why is a stock’s book value $10 and its market value $50? It is perception filtered through analysts in pursuit of investment banking business, balance sheets which only reveal a fraction of actual performance, rumors and the media.
The equity markets have a limited appeal for most players, but they have established an orderliness over time that has enabled small investors to benefit enough to keep them in the game (Isn’t that what Las Vegas is famous for?). Digital assets have yet to master this.
Over time, they likely will. And, you heard it here early if not first, they will increase IP values by serving as not only a marketing opportunity for IP owners, but a challenge to NFT buyers to understand underlying rights which they do not own — What they provide and do not, and what a license or part ownership may be worth.
Image source: storytellingforeveryone.net