Cryptocurrency
NFT: Paying for air or an asset?
NFT is the most discussed digital trend right now. While some users have joined the chase for the most unusual crypto-art, others do not understand the real value of tokens.
NFTs are incorrectly classified as digital currencies because they are digital certificates of ownership; that is, they are intellectual property objects, as they are the result of human intellectual activity.
Let’s deal with the concept of NFT
Often “token” refers to any cryptocurrency or crypto-asset, which, in fact, only creates more confusion. The closest to the truth defines a token as a certain unit of account, which itself is not a cryptocurrency. In fact, it is a special registry entry that certifies that a certain person owns the right to a certain asset.
The term non-interchangeable can also be replaced with the word “unique” – its specificity is that each token is specific and cannot be exchanged or replaced with another token of the same kind.
It turns out that NFT is a unique record in the registry, confirming a person’s right to a particular asset. As a rule, NFT is used to secure the right to unique objects from the virtual world, which are most often intellectual property objects.
NFT copyright. Is it real?
An NFT is only a certain record that confirms the right to a unique object – the token itself cannot be copyrighted.
This is because the non-interchangeable token itself, although it has its expression in objective form, was not created by creative labor, and this is the key criterion for recognizing a particular object as a copyright object. Also, the attribution of the NFT itself to intellectual property objects simply does not fit into the logic of its essence: the NFT – something that certifies the right to the object of intellectual property.
BAYC monkeys – a club for a select few
NFTs are now actively used to sell digital objects. For example, one of the most popular has become a collection of NFT BoredApeYacht Club (BAYC), which presents a collection of pictures of “cartoon” monkeys, which are procedurally generated by an algorithm. Why did the creators of these pictures decide to use NFT to distribute their works?
NFT contains information about the rights to the image to which it is “attached”. In the case of BAYC, this is exactly the situation: ownership of NFTs gives their owners access to a closed online club, exclusive in-person events, and also certifies their exclusive right to the said image and the character depicted in it.
In this case, non-exchangeable tokens are very much like uncertified securities, which also certify binding and other rights and also have no tangible medium.
Where are the borders?
For many people, it is not obvious that an NFT associated with a work or an object from the real world may not give the owner of a token any exclusive rights to that object. Unless the terms of purchase specifically state that an NFT certifying an exclusive right to an intellectual property object is transferred to the purchaser, it must be assumed that the NFT merely certifies ownership of a digital copy of a particular object.
By acquiring NFT, its new owner can not dispose of the rights for the work itself, to prohibit third parties from using or independently process the work without the consent of the right holder. He can only determine the fate of the copy he has inherited, without becoming the copyright holder for the work itself. The rights holder himself/herself is not restricted to create a few more digital copies of his/her work, issue new NFTs to certify ownership of them, and sell them to other purchasers.
It will work the same way in the other direction – if a person is not the owner of the exclusive right to a work, he is not entitled to issue an NFT certifying the right to such a work either.
Conclusions
It may seem that an NFT is just a risky investment which cannot perform any useful function. That’s not entirely true: in addition to selling images of monkeys and other digital art, NFTs can be used for more useful purposes
Recently the Japanese startup ABCRECORDS created a marketplace where anyone can buy NFTs entitling them to use a piece of music in their social networks and, subject to a special questionnaire and an agreement with the rights holder, the owner of the token can also obtain the right to use the music for commercial purposes.
If the NFT is resold, these rights will pass to another person, and the author of the work whose rights are certified by the NFT will receive a certain percentage of the resale amount.
Hong Kong has allocated another $50 million to accelerate the development of the crypto industry after local authorities allocated HK$50 million (about $6.37 million) in late February to develop the Web3 direction. This is stated in a press release on the website of the government.
Legalization of cryptocurrencies in Hong Kong
According to the head of the Financial Services and Treasury Bureau of Hong Kong (FSTB) Christopher Hui, the pool of funds will be allocated, in particular, to organize major international Web3-events. Hui also said that the government will organize educational programs for young people, for which preparations have already begun.
In addition, the 2023 budget provides for the creation of a working group to focus on developing virtual assets and study the situation in the crypto market, development opportunities and the need for changes in regulation.
“Hong Kong is well positioned to become a leading hub for Web3 in Asia and beyond, and we attach great importance to virtual assets (VA) and Web3. The government is committed at a high level to developing this sector and providing a comprehensive support system for enterprises,” Hui said.
He added that the Hong Kong Monetary Authority (HKMA) is now working on regulating stablecoins to introduce them into the economy next year. The country also plans to improve securities regulations so that retail investors can access ETFs based on cryptocurrency futures.
Despite several personal initiatives, Hong Kong authorities are also working closely with mainland China, testing international payments in the digital currency and working with the Central Bank. In all, as of the end of February, more than 80 Chinese companies had expressed interest in operating in Hong Kong.
Bloomberg wrote about China’s support back in late February. The agency pointed out that after Hong Kong set out to develop the crypto industry last October, Chinese officials have become more frequent visitors to Hong Kong. According to sources, this interest is because Beijing wants to use the city as a testing ground for digital assets amid tight control of crypto activity on the mainland.
We previously reported that the collapse of the Silicon Valley Bank is spurring demand for crypto apps.
Stablecoin issuer USDT is rapidly printing “digital dollars” in the TRON (TRC-20) ecosystem. This time, Tether printed another billion dollars in USDT, according to transaction details. The total number of USDT in circulation in the TRON ecosystem is over 42.1 billion USDT. By comparison, the Ethereum ecosystem issued significantly less – 34.2 billion USDT.
As TRONScan data shows, this is the second billion-dollar tranche issued by Tether for TRON. The last time the USDT-issuing company issued a similar amount of Stablecoin was on March 14. Since the beginning of 2023, this is the fourth transaction to issue such a large amount of USDT. As of 2023, the largest issuance occurred in February. At that time, Tether issued two billion dollars in USDT at once.
Amid the news, bitcoin barely reacted to the USDT pump. According to TradingView, the bitcoin (BTC) exchange rate in the BTC/USDT trading pair is $27,949, up just 1.4% overnight. Bitcoin has a market capitalization of $540.4 billion.
In early March, The Wall Street Journal revealed that Tether had opened bank accounts using fake documents and shell companies. It turned out that one of Tether’s Turkish accounts had been opened in the name of Denix Royal Dis Ticaret Limited Sirketi, which had previously been caught laundering money for a terrorist group.
Tether chief technology officer Paolo Ardoino ridiculed the publication on Twitter and said the WSJ’s information was untrue. Tether said it adheres to legal requirements to combat money laundering and terrorist financing, and uses KYC mechanisms of the highest level. Renowned cryptocurrency critic Molly White, for her part, said that The Wall Street Journal journalists couldn’t “just make this stuff up.”
We previously reported that major cryptocurrency exchanges have moved offshore.
According to a report by platform CoinGecko, 21 of the 30 largest crypto exchanges (70%) are based in offshore financial centers – territories that want to attract companies from abroad through loyal laws and schemes with low or no taxation.
Analysts of the service note that offshore zones, as a rule, offer non-residents more financial services and on more loyal terms than “in the home country”.
Where are crypto exchanges registered? They choose islands
Seychelles, the Cayman Islands and the British Virgin Islands were among the most popular offshore locations for cryptocurrencies. These territories are also considered tax havens for many corporations.
Also, one in five Crypto exchanges in offshore locations (20%) are registered in the Seychelles. This jurisdiction has become home to many centralized exchanges. Among them, there are well-known major platforms such as OKX, KuCoin, and MEXC Global. Many companies are “moving” to the Seychelles because the Seychelles Financial Services Authority (FSA Seychelles) refuses to license and oversee activities or companies related to cryptocurrencies.
In total, according to CoinGecko, the top 30 cryptocurrency exchanges are listed in 15 different countries: 11 of the 30 platforms (37%) are in North America – mostly in the Cayman Islands, British Virgin Islands and the United States. The number of companies located in Europe, Asia and Africa is evenly split: 20% each (or 6 countries).
The number of companies offshore may grow
Because of stricter U.S. regulators’ policies toward cryptocurrency companies, many firms are having to move to more cryptocurrency-friendly countries.
For example, the Hong Kong government, to turn the state into a new crypto hub, has allowed retail investors to trade digital tokens such as bitcoin (BTC) and Ethereum (ETH). The Hong Kong authorities themselves admit that they want to create a “favorable environment” for developing the local crypto industry.
Also, Ras Al Khaimah, one of seven regions in the United Arab Emirates (UAE), is preparing to open a free zone for cryptocurrency companies. Entrepreneurs in these areas own 100% of their businesses and have their own tax schemes and regulatory frameworks.
We previously reported on the Top 5 low-cost AI tokens with huge growth potential.
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