NFTs and the Prevention of Illegal Art Trafficking

Since 2019, the United Nations Educational, Scientific and Cultural Organization (UNESCO) is marking 14 November as the International Day Against Illicit Trafficking in Cultural Property. Throughout history, the theft, smuggling, and illegal trade of goods tied to different cultures or art has been a persistent issue. This issue is exceptionally plaguing the art scene, with numerous cases when paintings or sculptures created by some of the most famous artists in history were stolen and popped up on illegal auctions or in the personal collections of wealthy art collectors.

With the arrival of blockchain technology, numerous industries, from finance and payments to gaming, healthcare, and supply chains, have benefited from cryptocurrency-based innovations. 

The art scene is no exception, and there are various ways that blockchain solutions can help solve issues such as illegal art traffic, copyrights, and intellectual property rights through the use of non-fungible tokens (NFTs).

Let's check out how exactly NFTs work and how they can help protect the art scene from malicious individuals looking to make illegal profits. We'll also dive into the different types of NFTs to showcase how this type of blockchain assets is highly versatile and suitable for all kinds of art forms. 

 

NFTs: Tokenizing Art With the Help of Blockchain Technology

Unlike classic cryptocurrencies that consist of numerous units of identical tokens, such as Bitcoin, with every unit being exactly the same, NFTs aren't fungible and are all unique. Each NFT has a unique blockchain identity and represents a tokenized asset. 

You can tokenize various assets as an NFT, including art, contracts, web domains, videos, music, and more. When an asset is tokenized as an NFT, it has a digital blockchain representation that can be used to prove an individual's ownership over that asset, as well as its authenticity.

Just like cryptocurrencies, NFTs are stored in crypto wallets, which means no one can physically steal them, but holders need to safely store their wallet credentials to protect their assets from hackers and scammers.

Although NFTs can be used to tokenize a wide variety of things, their most popular use case is for tokenizing art, and the majority of NFT collections are artwork in different forms. 

 

NFTs and Intellectual Property Rights

Since blockchain transactions are immutable and can't be altered once a transfer is processed through the blockchain, NFTs are a perfect medium for protecting artists' copyrights and proving ownership over artwork.

Anyone can check a blockchain transaction on a blockchain explorer platform to confirm that a certain NFT is stored in someone's wallet address, and likewise, they can use it to prove their ownership of an NFT. 

All NFTs are created with the help of smart contracts, which are pieces of programming code designed to execute certain operations on the blockchain. Smart contracts allow artists to include copyright and royalty rules within the operating mechanism of their NFTs. For example, artists can sell an NFT of theirs and then receive a royalty payout each time the NFT is re-sold on the market. 

However, no matter how many times an NFT is re-sold, it will always contain its unique blockchain identity and information about the wallet address that created, or in NFT terms, "minted" the NFT. This way, NFTs successfully solve the art copyright issues and make illegal art trafficking practically pointless. 

Even if someone manages to steal your NFTs by hacking your wallet, you can track exactly where the NFTs were transferred through a blockchain explorer. This means that creators or NFT art owners could flag an NFT as stolen and make it extremely hard for the thief to re-sell it to anyone. OpenSea, the largest NFT marketplace and the go-to destination for NFT creators and traders, allows users to flag stolen NFTs by submitting blockchain transaction data and other details regarding how the NFT was unlawfully obtained or traded.

Preventing illegal art trafficking is much more complicated with traditional artwork because, basically, once someone steals a painting, law enforcement agencies need to invest considerable time and resources to attempt to track the thief and retrieve the artwork. 

 

Key Types of Artistic NFTs

Now, let's look at what art NFTs exist and how this innovative blockchain asset class can cover most types of art.

 

Generative Art NFTs

Generative art NFTs come in collections with hundreds or even thousands of unique tokens in the form of digital images. These NFTs are generated by a computer algorithm based on the initial visual input by an artist. The artist designs an initial model of the collection's visuals and creates all the elements that the algorithm can use to generate the whole collection with numerous variations of colors, accessories, and image elements. 

Usually, generative NFT collections depict images of humanoid creatures with animal features, animated characters, or objects and scenery. 

Bored Ape Yacht Club and CryptoPunks are some of the most popular generative art NFT collections.

 

1 of 1 NFTs

1 of 1 NFTs are best suited for artists producing unique artwork instead of generating massive collections of similar art. A 1 of 1 NFT is ideal for tokenizing paintings in digital form, and these NFTs usually aren't part of any collection. Instead, they stand alone. However, some artists create small collections of 1 of 1 NFTs that contain digital representations of a small number of paintings, photos, unique digital artwork, or drawings, usually up to a maximum of a few dozen tokens.

Beeple's Everydays: The First 5000 Days and Right-click and Save As guy are famous examples of 1 of 1 NFTs. 

 

Music and Video NFTs

NFTs can go way beyond static visual images. In fact, artists can tokenize videos and music just like images, drawings, and paintings. Musicians and video creators can tokenize their work and directly reap the benefits from royalties for each song download and video view. Essentially, creators don't have to depend on intermediaries and service providers that charge hefty fees for their services.

Platforms like OpenSea and Air NFTs are key locations for music and video NFTs on the market.

 

Physical NFTs

Physical NFTs are gaining prominence thanks to the fact that they allow artists to tokenize their physical art by connecting a sculpture, painting, or other artwork to the blockchain through a QR code or digital tag on the artwork itself. 

For example, paintings can have QR codes on their frames or tags with embedded microchips, which, once scanned or connected to a mobile phone, showcase the blockchain data of the painting's creator and current owner. If a painting is stolen, thieves will have no possibility to prove their ownership over the painting because they lack adequate blockchain credentials.
ArtAreas is an example of a company specializing in producing NFT tags for physical art, thus enabling artists to tokenize their physical artwork.