NFTs and the Art World – What’s Real, and What’s Not

This Article explores the reality and mythology of NFTs in art law and in the artworld by unpacking six myths, misconceptions, and poorly understood truths about NFTs that prevent persons and particularly art law lawyers from understanding the role NFTs are playing and could play in the art world and beyond:

Myth 1: NFTs are artworks.

Myth 2: NFTs create a false artificial scarcity in artworks.

Myth 3: The valuation of NFTs is unlike any rational process of valuation for any other artwork or asset.

Myth 4: Smart Contracts are like regular contracts.

Myth 5: NFTs have created the ability of artists to receive resale royalty rights.

Myth 6: NFTs will allow all artists the chance to make serious money from their art.

This Article is written for the participants in the art world, the artists, dealers, gallery owners, and museum curators, and the lawyers seeking to advise them. It also may serve to help educate regulators who might try to step in and curb the worst excesses and fraudulent practices of this ecosystem. If these myths and misconceptions are better understood for what is real and what is not real about NFTs, then clients’ expectations may be adjusted to a more rational level, legal analysis and advice will be more helpful, and regulators may be able to find a way to help the NFT ecosystem function better without stomping out its creative potentialities.