An NFT is a data unit (represented by a particular digital record, the blockchain) that can be bought and sold on the market. One common definition of the NFT includes being associated with an asset and a licence to use that asset for a stated purpose. One can also buy and sell licences to use, copy, or display an underlying asset, both as a normal service on digital markets and as an NFT.
Cryptographic tokens (i.e. NFTs) behave like cryptocurrencies, but unlike cryptocurrencies such as Bitcoin, they are not mutually interchangeable. As a result, they are not fungible. The same bitcoins may have multiple values, since each NFT may represent a different underlying asset. Blockchains use hash records to link a list of items, such as a file’s cryptographic hash, to a prior list of items to form a chain of connected records. A digital signature is used to track the ownership of each digital content. Information about where the work is housed is, however, retrievable via the data linkages.
Although the ownership of an NFT does not convey copyright automatically, a copyright can be applied to whatever digital object the token represents. Ownership of an NFT does not grant rights to make more of the same. The issue with NFTs, and what causes most of the conflict, is that they are simply evidence of ownership, which is independent of copyright. From the art market’s perspective, the buyer actually gets whatever they’ve been given in the art world. Until then, they don’t hold the copyright to the underlying work. The copyright held by the original artwork’s artist will often not be passed down to NFT buyers.