NFTs lack the legal and regulatory protection of other forms of property. In the event of a dispute, there is no oversight. This fundamental principle of crypto projects (decentralization, no middle man, zero trust) limits what can be represented as a non-fungible token.
- An Engineer’s Hype-Free Observations on Web3 literary notes
- Smart contracts are not legal contracts and since NFTs are implemented as smart contracts this might have some bearing on the rights of ownership (but I’m not a lawyer!)
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Smart contracts are not recognized as legal contracts and don’t offer the same protections. They are more like stored procedures in that they are scripts that execute on a blockchain.