The popularity of the NFT market last year has allowed countless companies and individuals to enter this brand new digital field. Taking the domestic NFT market as an example, leading Internet companies such as Ali and Tencent have taken the lead, followed by a large number of small and medium-sized enterprises. Coupled with the participation and support of official media such as Xinhua News Agency and Youth Daily, this has made the entire NFT market grow rapidly since 2021. After Alipay launched the digital collection trading platform in June 2019, an extremely huge market has been formed in just half a year. Alipay alone will have sales exceeding 40 million yuan by the end of 2021.
Behind the fiery NFT market, there are also many hidden risks. Its decentralized nature allows many financial frauds, Ponzi schemes, and fund disks to exist.
NFT has undoubtedly brought many positive promotions to the digital economy. In the digital economy, transactions are an extremely critical content, and digital assets are the core of transactions. Traditional digital assets have a lot of problems in terms of security and privacy. NFT uses encryption mechanisms, digital signatures, etc. to determine the ownership of digital assets, which significantly reduces the cost of confirmation and rights protection of digital assets.
In addition, NFT also solves the difficulty of proof of rights and interests in traditional digital assets, and completes automated transactions quickly and efficiently through smart contracts, which also improves transaction costs in the digital economy.
But again, there are many problems in NFT, the most serious of which is its financial attributes, which makes illegal transactions such as money laundering, gambling, and fraud exist in the entire market.
Specifically, the main reason is that the legal attributes of NFT are not clearly defined at present, and there is no clear definition. From a legal perspective, NFT is a blank field, which makes it difficult to be regulated by law.
In addition, the copyright in NFT is actually at risk of controversy. Many people think that NFT can confirm the rights of digital content, so there is no copyright issue, but this is not the case. The confirmation of NFT is only for the digital content on the chain, but there is nothing to do under the chain.
The risk of financialization is also a major legal issue facing NFT. Financialization actually runs counter to the goals of NFT. NFT pursues decentralization and unique value, but financialization only uses NFT as a financial tool to benefit people. Despite this, the financial attributes of NFT have made many people unconsciously regard it as a new financial tool, while ignoring its inherent value. This is also a bubble with a lot of hype and inflated value in the NFT market root cause.
The legal regulation of NFT is also mainly based on these issues, clarifying the legal attributes of NFT, strict auditing, operation and other responsibilities of the NFT platform, and strictly preventing financial changes, so that NFT can develop healthily.