What are PFP NFTs, and Do you Really “Own” your NFT?

CryptoPunks, the adorable pixelated faces that created a big hype in their heydays, came back recently in April to overtake the currently trending BAYC NFTs. The Bored Ape Yacht Club collection is currently selling at a floor price of around 80 ETH.

The BAYC is a collection of programmatically generated ape figures, and are a big hit with social media users adopting them as their profile pictures – these are called PFP NFTs. Twitter has joined the trend by authenticating the ownership and providing a blue border to show that the user is the owner of their dashboard picture.

BAYC apes are a collection created by Yuga Labs, which has recently moved to own the CryptoPunk and Meebits intellectual property rights.

The bored apes club

BAYC apes aren’t merely NFTs, but passports to a club with a host of privileges and benefits thrown in. The official site calls it a “swamp club for apes”. The collection is generated dynamically by altering colors, headgear, clothes and expressions. The original collection issue priced all works at the same price to make it fair play.

What’s even more transparent is the ownership of the works. The buyer gets to own even the underlying Board Ape illustration, “completely”. They can use it commercially and make copies and do what an owner can.

Who owns the NFTs?

Browsing through OpenSea, a marketplace for NFTs, it’s difficult to locate that one essential piece of advice or help – what is the buyer actually buying, and what kind of IP agreements are typically involved.

CoinDesk TV recently aired an interview with Alex Thorn, head of research at Galaxy Digital, who surprised everyone by stating that most of the NFT deals aren’t transferring ownership rights for the underlying work of art or object. His research showed only one in 25 leading NFT platforms conferring IP rights to buyers of art NFTs.

A little search reveals that NFT rights are indeed not a matter of assumption and buyers should know what they are buying before jumping in.

The website Makeuseof.com explains the ownership issue with more clarity. The buyer is buying a limited digital edition of an artwork. They don’t own the actual art, can’t use it for commercial gains, and do not automatically get a copyright either. The owner retains these rights, but the buyer gets to own the certificate of owning their NFT, of which there may be only one copy in the world.

So the artist selling the digital work retains the copyright and IP rights, unless it is explicitly transferred to the buyer, as in the case of BAYC or World of Women NFTs.

There are other issues involved. Royalties may be involved when the buyer aims to resell the token. The file hosting service, where the actual digital work is stored, requires attention, as storage may expire and the link to the work may go dysfunctional after some time. IPFS, the decentralized web storage is therefore preferred for assuring longevity of the digital work on the internet.

Finally, remember modern art. Here is what can obsession and going crazy over social trends can make people actually buy: