For instance, NFTs can help track donated blood within the healthcare industry, enable fractionalized ownership of tangible assets, such as real estate, and help brands generate revenue from secondary markets. This uniqueness is helping artists combat plagiarism, prove authenticity and increase the collectability of their works, but NFT use cases are also increasingly extending beyond art and into the wider economy. NFTs make it possible to create and own a digital original. In the physical world it has always been possible to own a one-of-a-kind piece of art.
NFTs’ ability to create unique assets in the digital world is unprecedented. They cannot be copied, substituted or subdivided and are used to certify authenticity and ownership of associated tangible or intangible assets. NFTs are unique digital identifiers recorded on a blockchain. Just four years later, NFTs have evolved dramatically, featuring both tangible and intangible assets, and embedded with smart contracts that grant a wide range of rights.īut what exactly are NFTs, how are they evolving, and how can organizations use them to drive revenue, extend their product lines, connect with new customers, and build corporate brand? What are NFTs? What made CryptoKitties so special was that it was the first successful attempt to monetize blockchain, with each unique collectable “card” in the form of a NFT. Within weeks, one of these virtual cats sold for the equivalent of more than US$117,000 and the game was later spun off to form its own company, raising US$12m of investment. In late 2018, a new internet game called CryptoKitties, which enabled players to collect and “breed” virtual cats, was launched. In a suite of articles, we will be considering the direct and indirect tax and legal implications of NFTs, looking at the way that business use of NFTs is starting to evolve.
Multiple opportunities for tax and law functions to innovate and unlock long-term value are embedded at the heart of new developments like non-fungible tokens (NFTs). There are exciting and dramatic changes everywhere in the world, and tax and law are no exception.
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