WTF is an NFT?
Recently, Influencers like Paris Hilton and Jake Paul have been publicly advocating for NFT’s. So what exactly is an NFT and why should I care?
NFT stands for – “Non-Fungible Token” – which basically means it’s a one-of-a-kind token and cannot be replaced with another NFT. For example, you could trade a dollar for a different dollar, and it would hold the same value, but if you trade one NFT for another, it will never be valued the same – think of them like unique trading cards.
NFTs are part of the Ethereum blockchain. Ethereum is a cryptocurrency that supports NFTs by storing extra information about them that makes them work differently than the Ethereum cryptocurrency.
NFTs were first introduced to purchase digital art online, or more importantly, an NFT serves as proof that you own the original. Because it is easy to download or save artwork posted online, the NFT serves as proof that whoever owns it, owns the original.
But now, artists are not the only people benefiting from NFTs. Influencers are leveraging NFTs for new business opportunities… such as placing a price on their reputation.
Celebrity Trading Cards
Like digital artwork, celebrities can use their likeness to create their own NFT collections. Paris Hilton has most recently jumped on the NFT train by collaborating with designer Blake Kathryn to launch her own collection of NFTs, selling for over $1.1 million, according to Yahoo! Finance.
BitClout – The NFT Social Media Platform
What if you could invest in someone’s reputation or influence? With Bitclout, you can. How does it work?
BitClout is a social crypto exchange where users can buy and sell “creator coins” or NFTs based on an influencer’s reputation. The value of each influencer or celebrity’s creator coin is determined by their popularity. Basically, BitClout allows users to bet on a creator’s reputation and likeness and make gains through the growing popularity of each influencer. So, if the influencer does something cool and creates buzz, their creator coin would go up in value, but if they get “cancelled”, so to speak, their coin’s value would decrease.
The value of the creator coin can increase or decrease depending on their reputation.
For example, if James Charles had a creator coin, it would increase in value after a Morphe collaboration or a successful YouTube video, but decrease in value whenever the hashtag “#canceljamescharles” is trending on Twitter – but that is just one example.
The difference in buying stock in a well-known company like Tesla vs. purchasing Elon Musk’s BitClout creator coin, is that BitClout coins aren’t actually attached to shares of a creator’s personal fortune or future earnings, it is attached to Musk’s social media clout.
BitClout Early Legal Issues
In March 2021, BitClout was launched, introducing itself as “not a company,” but a “new type of social network”. Its interface looked similar to a Twitter feed, complete with the profiles for many famous celebrities and influencers like Kim Kardashian, Elon Musk, and Justin Bieber. However, as it turned out, many of those celebrities never actually chose to be on the platform. BitClout opened accounts in their name without their permission, according to Intelligencer.
“A California law firm called Anderson Kill has sent Al-Naji, [BitClout’s rumored founder], a cease-and-desist letter demanding that the name and likeness of their client Brandon Curtis, a Bay Area tech executive, be removed from the site. Meanwhile, James Prestwich, a San Francisco–based crypto entrepreneur, says his profile suddenly disappeared after he complained loudly enough on Twitter,” reports Intelligencer.
Still, other celebrities like Jake Paul and Benny Blanco chose to claim their BitClout accounts to participate in this clout investment opportunity. So far, BitClout has a valuation exceeding $1 billion, thanks to the amount of bitcoin it has received so far (currently, you can only buy BitClout tokens with bitcoin).
NFTs, BitClout and Defamation – Could a damaged reputation lower the value of your NFT?
The value of BitClout coins are determined by the influencer’s reputation. So, if a specific influencer or “creator” were to get bad press for something malicious, the value of their creator coin would go down. If their bad press were defamatory, who would be the damaged party? Obviously, the influencer would be one, but what about their BitClout investors? Could they sue for defamation as well?
“Probably, not. One of the primary requirements needed to establish a defamation claim is that the defamatory statement must be ‘of and concerning’ the plaintiff,” says defamation attorney Daniel Warner, “In other words, the defamatory statement must be about and harm the person looking to sue, and that would not be the case in this situation. It would be like a shareholder of a large publicly traded company trying to sue for defamation of the company, even though the claim can only be asserted by the company.”
“As an aside, the coins may be considered to be securities by the SEC and may require registration, continues Warner, “Although I am not a securities lawyer, this seems fairly obvious given the passive nature of the investment and ability to sell it for a substantial profit in the future. However, it could be more like buying a piece of art, rather than a security, because the increase in value is based on reputation, as opposed to the operation of a business for profit.”
NFTs and Intellectual Property
Not only do NFTs hold a monetary value, but they also hold the rights to online intellectual property. If you own the original NFT for a piece of artwork or even a tweet, you own the rights to the IP. So, if anyone were to reproduce or use a copy of your digital art, they would be infringing upon your intellectual property, and you could sue.
NFT Legal Issue? Get in Contact…
If you are dealing with an NFT legal issue or are interested in launching your own NFT, contact one of our experienced Internet attorneys today.