NFT: This mysterious acronym has been named Collins Dictionary’s 2021 Word of the Year. Even translated, the initials remain difficult to understand for the vast majority. NFT as “non-fungible token”, non-fungible token in French. Obscure ? Definitely. Before coming back to this, a detour through metaverses and cryptocurrencies is essential with, again, a few simple definitions.
“Metavers are virtual worlds with their own economy, accessible to a large number of users simultaneously and in an immersive way, in particular thanks to representations by avatars”, summarizes Me Lea Jacquemin. We immediately think of video games, of course, like Fortnite, which has millions of players in France.
“Metavers do not escape harassment: behind the avatars, there are natural persons”
But metaverses are not limited to video games. “There are two kinds of metaverse, specifies the lawyer, those, like Fortnite or other games, whose universe or rules are diametrically opposed to the real world – you can kill in video games, without risking prison – and those that offer a real-world duplicate. This is the case of the Facebook project, which would allow a projection of avatars that can meet, in conditions sticking as close as possible to reality – having a drink with friends for example. In these second types of metaverse, sometimes astonishing applications are already in place: training as a surgeon in virtual reality, for example.
“Metaverse is increasingly extending beyond the world of entertainment: the more the material becomes professional, the more the limits of its development are pushed back. These metaverses are taken very seriously by the giants of the real economy: Carrefour or Casino have acquired plots of land in metaverses. And, just like in real life, the law applies, warns Me Jacquemin: “Purchasing land is a transaction, with property rights issues. The metaverses do not escape harassment because, behind the avatars, there are natural persons, subjects of law…”
In these metaverses, exchanges are carried out in particular in cryptocurrency. Again, a definition is needed. “It’s a fungible virtual digital asset. Fungible means that it can be exchanged for its equivalent: a bitcoin can be exchanged for a bitcoin, just as a euro can be exchanged for another euro”, continues Me Jacquemin.
In France, none of the more than 5,000 cryptocurrencies circulating in the world is recognized as money. Which does not prevent them from having value, of course. They are not created by a State, but by communities of Internet users whose members are rewarded by touching a certain number of “tokens”. The law of supply and demand does the rest, which explains the lack of visibility for investors unfamiliar with finance: bitcoin has lost 300% of its value in one year, for example, even if its price has tripled in five years.
NFTs, tokens exchangeable in cryptocurrency or euros
Cryptocurrencies are difficult to sell in real life, unless you buy a Tesla car… On the other hand, they are the preferred means of payment in metaverses. And we come back to the famous NFT, the non-fungible tokens, that is to say that we cannot exchange them for their equivalent. “These are tokens exchangeable in cryptocurrency or euros, through platforms that operate the conversion. An NFT is a form of certificate of ownership associated with a virtual or physical object”, defines Me Constantius Cuvillier.
Very concretely, rapper Booba offered 25,000 NFTs for sale, for an amount equivalent to 20 euros in cryptocurrency, corresponding to sequences from his latest clip. In two hours, 7,000 fans have acquired these NFTs and are therefore “owners” of one of the sequences. And they had the right, in exchange for their investment, to see the clip and to attend – virtually – the concert of their idol at the Stade de France, which was filmed and broadcast live… For the rapper, the operation has was very profitable.
NFTs raise complex legal issues
“Other sectors are concerned: there are Panini stickers in the form of NFTs – limited to 9,600. These are no longer labels to stick in albums, they are virtual, specifies Me Cuvillier, even if you can print them at home…” The art market is particularly affected by NFTs. “There is a lot of speculation, explains the lawyer from Dijon, but we can also see this as a democratization, the NFTs making it possible to enter the market with a modest sum. Of course, you can’t hang the painting, since you’re just buying a virtual representation of the work.
These NFTs raise complex legal issues, particularly in possible violations of intellectual property law. To overcome this, she explains, “the Chamber of Judicial Officers of Paris has launched the Legide platform, which offers, alongside the bailiff’s report, the protection of all types of intellectual creations by a time-stamped deposit using technology blockchain”.
To see more clearly, and before you start, it is better to consult, in the real world, a lawyer who works in this very specific area of law.
Metaverses are increasingly extending beyond the realm of entertainment.
Me Léa Jacquemin, lawyer at the Dijo n Bar
An NFT is a form of certificate of ownership associated with a virtual or physical object.
Me Constance Cuvillier, lawyer at the Dijon Bar