2021 was a banner year for non-fungible token sales, which are projected to climb even higher in 2022.
Selected by Collins English Dictionary as the 2021 Word of the Year, non-fungible tokens (NFTs) are unique blockchain-based digital assets that are associated with images, artwork, videos, games, or other creative content. Although NFTs have been gaining steam in the arts and sports industries, they are expected to expand into a broad set of industries this year. The gradual adoption of a crypto economy and broader acceptance of virtual ownership means tech entrepreneurs and investors alike are increasingly turning toward digital assets in preparation for a future in the metaverse.
For the most part, NFTs are still in their infancy, with a small, but growing, marketplace of buyers and sellers. However, NFTs have the potential to become mainstream as more brand-name companies enter the arena and proliferate their use for collecting, betting, trading, exhibiting, and gaming, among other uses. With $41 billion in NFT sales in 2021 according to the latest data by Chainalysis, compared with total sales valued at less than $100 million in 2020, this market is poised to be a new revenue source for many companies looking to monetize existing intellectual property.
As with any emerging, fast-paced technology, the global legal, enforcement, and regulatory framework is playing catch-up to developments and new market entrants. In this forward-looking piece, Morgan Lewis lawyers look at various industries that are being disrupted by NFTs and address various considerations relating to different areas of law.