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Non-fungible tokens: a bubble or the end of an era of intellectual property rights

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  • Elli Kraizberg

    (Bar Ilan University)

Abstract

The viability of exponentially growing non-fungible token (NFT) market is evaluated by identifying potential value-generating mechanisms that can be rationalized. After identifying the value-generating mechanisms underlying the positive values of NFTs, this study establishes a pricing model for NFTs that follows a continuous-time financial framework. As NFTs are claimed to securitize “ownership rights short of use”, and as such they may potentially serve as a substitute for the need to rely replace the reliance on the legal protection provided by intellectual property rights (IPRs). Considering this issue, this study evaluates the likelihood that NFTs will replace existing mechanisms that protect producers’ rightful claim to use their assets or the need to apply the legal code that governs IPRs. The financial condition for this potential shift is derived for a category of assets whose use or consumption does not reduce supply as the notion of scarcity does not apply.

Suggested Citation

  • Elli Kraizberg, 2023. "Non-fungible tokens: a bubble or the end of an era of intellectual property rights," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 9(1), pages 1-20, December.
    • Handle: RePEc:spr:fininn:v:9:y:2023:i:1:d:10.1186_s40854-022-00428-4
    DOI: 10.1186/s40854-022-00428-4
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    References listed on IDEAS

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    Cited by:

    1. Zoran Poposki, 2024. "Corpus-based critical discourse analysis of NFT art within mainstream art-market discourse and implications for the political economy of digital art," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-10, December.
    2. Proelss, Juliane & Sévigny, Stéphane & Schweizer, Denis, 2023. "GameFi: The perfect symbiosis of blockchain, tokens, DeFi, and NFTs?," International Review of Financial Analysis, Elsevier, vol. 90(C).
    3. Jan Schwiderowski & Asger Balle Pedersen & Jonas Kasper Jensen & Roman Beck, 2023. "Value creation and capture in decentralized finance markets: Non-fungible tokens as a class of digital assets," Electronic Markets, Springer;IIM University of St. Gallen, vol. 33(1), pages 1-16, December.

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    More about this item

    Keywords

    Non-fungible tokens; Intellectual property rights; Status;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • K11 - Law and Economics - - Basic Areas of Law - - - Property Law

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