NFT – the greater the potential, the greater the risk

Published date03 April 2022
Publication titleJerusalem Post, The: Web Edition Articles (Israel)
"Before we dive into the complex world of NFT, we must first understand what it is. NFT is an acronym for a non-fungible token and is an irreplaceable digital token. It is based on blockchain technology, similar to the distributed currencies with which we are familiar, such as Bitcoin and the like," explains Luzzatto. "However, unlike those currencies, the NFT cannot be exchanged for another currency identical to it, because each NFT is unique

"The NFT market is growing at a dizzying pace, and huge sums of money are traded in it," she adds, "and it is a money-laundering paradise, which attracts the attention of less desirable parties. This is because the value of the assets is determined by the parties in the transaction instead of an objective index in the market. In the art world, for example, the artist may decide that a photograph of a banana is worth $20 million, and he can set the price as he sees fit.

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"With NFT, one party can buy the property with money obtained by criminal means, and launder it through the sale, without having a regulator who oversees the transaction, or an intermediary."

Luzzatto says the first known NFT was created in 2014 by digital artist Kevin McCoy and tech entrepreneur Anil Dash. The piece, titled "Quantum," consists of a video featuring an octagon that changes colors. In October 2015, the first NFT project was launched under the name "Etheria." A special cryptocurrency was also launched three months later, but the term "NFT" was recognized as a standard currency only in 2017. Luzzatto says 2020 was a turning point, and NFT market values reached astronomical levels in 2021.

After graduating with honors from the Interdisciplinary Center Herzliya in 2010, earning bachelor of business administration and bachelor of laws degrees, Michal joined Luthi+ Co. as an intern in intellectual property and litigation.

After passing the bar exams, Michal joined the Luzzatto Group and currently heads the Luzzatto Law Firm, established 153 years ago as a law firm specializing in intellectual property. As a photographer and artist herself, Luzzatto is well aware of the importance of promoting the protection of intellectual property rights. Her main areas of practice also include communications law and Internet law.

"The primary use of an NFT is to mark digital assets to prove the originality and ownership...

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