Reproducibility is an inalienable attribute of digital content. The cost of reproduction and distribution of digital content tends to be zero. This makes it virtually impossible to identify an ‘original’ copy of any digital asset and therefore devalues the original content. NFTs seek to solve the problems of proof of ownership and value storage by acting as a certificate of authentication. And so, has the potential of revolutionising the value of digital assets.
Smart contracts are lines of code containing the terms of the arrangement agreed between the parties which are embedded into the NFTs. These are programmed to execute automatically when certain pre-defined conditions are met. An example of such a condition would be the purchase of an NFT. Indian law does not expressly recognise smart contracts. Regardless, the inherent flexibility built into the law that governs enforcement of contracts in India ought to allay any apprehension that smart contracts are unenforceable per se.
Non fungibility, an essential characteristic of NFTs, displaces the legal debate surrounding crypto assets, significantly. As an overarching summary, an artist ought to be able to launch NFTs in India in a manner that is completely consistent with Indian law.
As the economy embraces Web 3.0, we expect the use of NFTs to increase. While legal challenges exist, a well thought strategy of acquisition and distribution of rights and ensuring basic KYC protocols and diligence and compliance requirements ought to enable Indian corporates to launch NFTs.
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