According to a new study by academics at Birmingham City University, owners of non-fungible tokens could face legal costs and heartache if their NFT “hard forks”.
UNIVERSITY OF THE CITY OF BIRMINGHAM
A new study by academic Akira Summers and legal expert Mitchell Longan has explored the issues hard forking creates for unique assets and who should own an NFT when it occurs. The issue has not yet been brought to court, but landmark cases are expected soon.
“When an NFT hard forks, it essentially splits and creates two separate copies – which is problematic for NFTs because they are unique digital assets. NFTs can also represent ownership of real-world items, such as real estate or digital properties in the development of metaverses. Some are worth millions,” says Akira, Digital Media Technology course leader and senior lecturer in the University of Birmingham’s School of Computing and Digital Technology.
“But when they fork, there will inevitably be legal issues – especially if there are two ownership ‘receipts’ for the same tangible item, such as a house.
Blockchain technologies are relatively new and rapidly evolving, and there is very little awareness of the issues that can arise with NFTs when a hard fork occurs. It has not yet been tested by the legal system, so our research considers the technological and legal implications – and solutions – before this inevitable event occurs.
Akira Summers, blockchain expert and digital media speaker
The researchers’ work also questions whether, in this case, each NFT should represent a 50% share of a house – mimicking the process by which public companies sometimes “split” their shares. For example, is one token valid and the other not? If yes which ?
The results also revealed that there may be valid reasons why the token linked to the unupdated blockchain should be considered the “valid” NFT – if there were legitimate reasons not to update. . Whoever was in possession of the NFT at the time the fork occurred could be the owner of both copies.
Akira Summers has worked in software and technology development since 2000. Starting out in related fields of web development, interactive media, and software development, she has held many development roles and spent several years working as a game programmer. She now teaches digital media technologies at Birmingham City University – teaching programming, interactive media and development, where she is involved in blockchain research and projects.
Mitchell Longan has been researching the legal impacts of various new technologies since 2016. He previously worked as a researcher at the Cloud Legal Project at Queen Mary University. He is now a lecturer in law at BCU where he teaches intellectual property law and works on research projects related to intellectual property and technology law as a member of the Center for Interdisciplinary Legal Studies.
Other related research is explained in Akira Summers’ recently published book “Understanding Blockchain and Cryptocurrencies”.