' Derrick Vallejos | MTTLR

Will NFTs Solve Existing Legal Problems or Will They Create New Ones?

The recently released Netflix documentary Made You Look, highlights one of the biggest fraud scandals in the high-end art world. The Knoedler Gallery in New York City was found to have sold over 80 million dollars’ worth of forged artwork over a roughly 10-year period. This spectacle underscored the issue of provenance in the high-end art world. Provenance is paperwork or documentation that verifies the authenticity of the artwork. Unfortunately, it is common for expensive artwork to lack provenance. The documentation might not have ever been created because the artist was obscure at the time the work was created, or it might have simply gone missing as a result of time or theft. American case law is littered with disputes arising from art purchasers being defrauded and purchasing fake works, as well as disputes over ownership of artwork that was stolen at some point. As society and art moves toward an increasingly digital world, a potential solution to this issue can be found in non-fungible tokens (NFTs). Recently, NFTs have begun to make headlines as the technology rises in popularity, not only in the art market, but also in other areas such as sports trading cards. This recent rise in popularity has seen NFTs sell at exorbitant prices. The latest examples include, the artist Beeple selling his digital artwork at Christie’s for over $69 million dollars and the New York Times selling a digital column for over $700 thousand dollars. NFTs function in a similar manner to cryptocurrency tokens in that they are built on a blockchain, the most popular one being Ethereum. Unlike cryptocurrencies such as Bitcoin, the...