Non-fungible Tokens: A Bubble or the End of an Era of Intellectual Property Rights

Abstract

The viability of the exponentially growing non-fungible token (NFT) markets is evaluated by identifying potential value-generating mechanisms that may be rationalized. NFTs are claimed to securitize “ownership rights short of use”. This paper evaluates the likelihood that NFTs will replace existing mechanisms that protect producers’ rightful claim to use their assets, or replace the need to apply the legal code that governs intellectual property rights (IPR). A condition for this shift is derived for a category of assets whose use or consumption does not reduce their scarce supply.

Keywords: Non-fungible tokens, Intellectual Property Rights, Status

JEL Classification: G12, K11