Non-Fungible Token Transactions according to Indonesian Law

The existence of the COVID-19 Pandemic has encouraged many people to invest in stocks, cryptocurrencies, and even Non-Fungible Tokens. Non-Fungible Tokens (NFT) and cryptocurrencies are new technologies related to digitization and finance. NFT is a crypto token, just like Bitcoin or any other cryptocurrency. However, the value of each NFT token is different compared to other NFT tokens. On the other hand, cryptocurrencies like Bitcoin have the same value to all existing Bitcoin tokens (equal value) as currency like dollars or other official currencies.

Therefore, tokens are unique and can only be stored in one digital wallet. Meanwhile, the images referred to in the NFT are digital media objects in the form of images, text, or videos that can be viewed, copied, or downloaded by anyone.

The existence of NFT is inseparable from Blockchain technology. Blockchain can be likened to a digital ledger that records all kinds of digital transactions and can be accessed in general. Transactions that have been recorded in the Blockchain cannot be changed. These features make Blockchain a reliable transaction database. Blockchain technology, digital assets, is a limited and unique thing, that is NFT. One of the issues in the commercialization of digital works is that they are fungible. In other words, an original digital work has no difference from the digital copy, as $1 can be exchanged for another $1 without reducing its value.

NFT is related to Indonesian law, such as property law. According to the Civil Code, an object is every item and every right to be the object of a property right (Article 499 of Indonesian Civil Code). As a relic of the colonial era, property law is not intended to cover digital objects. However, the legal conception of the object has recognized the existence of intangible movable objects such as receivables, other collection rights, and Copyrights as regulated in Article 16 Paragraph (1) of Law Number 28 of 2014 on Copyrights.

Furthermore, Indonesia also recognizes the existence of digital goods in the form of electronic information. In addition to property law, the existence of NFT is also related to Intellectual Property Law. According to Article 25 of Law Number 11 of 2008 on Information and Electronic Transaction, which states that electronic information and electronic documents compiled into intellectual works, internet sites, and intellectual works contained in them are protected as intellectual property rights based on the provisions of laws and regulations so that NFTs can be saved as intellectual property rights because NFTs are artwork encrypted into the blockchain network. Because NFT is a work of art, music, videos, game items, etc. that is encrypted into the blockchain network, NFT is often associated with copyright.

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