Author: Intern - Ashay Kaushik
Blockchain has since its invention been an intriguing technological innovation. The recent application of this digital information storage system is the Non- Fungible Tokens (“NFTs”) which can prove to be a game changer for the Digital Arts Industry. Fungible simply means something which is mutually interchangeable. NFTs are non interchangeable (unique) cryptographic tokens which can represent digital assets (music, images, tweets, videos, etc.) and are useful in determining the authenticity and ownership of such digital assets.
In the era of digitalization, piracy of digital content and its misappropriation largely undermine the economic potential of such assets. Moreover, claims of ownership and authenticity pose further challenge to monetization of digital assets. These challenges are being taken care of by the NFTs.
Since NFTs are unique tokens, each such token can represent only one digital asset, thereby forming a unique identity to that digital creation. Though the digital content may be reproduced, the token identifies that digital asset is not reproducible. Moreover, the technology enables the creator of digital content to track all the subsequent transactions and make provisions for royalties in the form of a Blockchain enabled contract to be executed at the time of first sale.
The draft bill proposing to ban cryptocurrencies in India- ‘Banning of Cryptocurrency and Regulation of Official Digital Currency Bill, 2019’, under section 2(a) defines tokens generated through cryptographic means as cryptocurrency; whereas section 3 seeks to criminalise dealing in cryptocurrencies within the territory of India. Therefore, the draft bill, if passed in its present form, would lead to complete banning of all types of NFTs in Indian Digital Market. The Government should reconsider the draft bill to exclude NFTs at least partially from its ambit.
The primary motivation of the Government for being harsh on cryptocurrency seems to be the technological challenges in regulating virtual currency. However, NFTs can serve a useful purpose. Being merely an application of the Blockchain technology to generate a unique token on cryptographic databases, a limited use of NFTs for digital arts has the potential to bring about a revolution in the digital arts market. Thus, the government should reconsider its policy for cryptocurrency.
While globally, artists are getting “unimaginable monetary returns” for their digital art [1], there seems no justifiable reason why Indian Digital Artists should be denied making the most of this technological innovation. No matter the Government’s stance over its proposed ban on cryptocurrencies, the applications of blockchain and cryptocurrencies continue to evolve.
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