WHITE PAPER – Legal Architecture of TokenizArt
TOKENIZART: A DISRUPTIVE NFT MODEL FOCUSED ON SOLVING THE PHYSICAL ASSET ISSUE.
Perhaps the concept of NFT is broad, strictly linked to a speculative world, and even poorly disseminated. Furthermore, when attempting to link or explain it in terms of pre-existing assets in the physical world.
TokenizArt is a platform that, beyond including all types of tokenized art (physical and digital), has disrupted the Blockchain market with its set of tools and functional architecture, unlocking the complexity of tokenizing underlying assets (assets from the physical world) that even existed without the need for an NFT to represent them. In other words, we have excelled and specialized in physical NFTs or NFT Physical Assets. Therefore, we want to present and let you know from this perspective what NFTs are, the new concept dominating the technological world.
Preliminarily, we can say that NFTs can be virtual assets (e.g., crypto art) or representations of an already existing physical asset (RWA) REAL WORLD ASSET, which are linked or associated to improve their identification to a standardized system, to a non-fungible token (NFT).
A unique ID is assigned to these assets to maintain their singularity and indivisibility characteristic of NFTs.
NFTs in general are known as “non-fungible tokens,” which are blockchain smart contracts that inherit the uniqueness, singularity, and rarity (in the sense of scarcity) of their digital or real-world asset. It precisely facilitates the proof of such scarcity to be verifiable erga omnes (by everyone). This tokenization is a technological tool that ensures authenticity and ownership proof recorded on a blockchain to register each and every transaction related to the underlying asset it represents.
This concept of physical NFT will greatly assist numerous artists, creators, and many other professionals in generating opportunities to monetize their work and, at the same time, act as excellent support in the collection of unique or rare items.
Physical Asset: Another Way to View NFTs
Blockchain in general and NFTs, in particular, are beginning to flourish in our society, revolutionizing the concept of trust in a third party without the involvement of an intermediary. People claim property rights and authentic identity or any fraudulent transaction that has occurred regarding their assets.
Users and holders should always remember that these tokens can record the digitized version of the physical asset in any market, and generating the NFT will eventually give full ownership to the buyer (if stipulated). Since the NFT cannot be altered, the claim of ownership can even be used as collateral to obtain a loan in a specific loan.
What is a Physical NFT Artwork?
A physical NFT artwork (Non-Fungible Token) is a token representing a real-world physical artwork. It facilitates traceability, incorporation of history, and successive transmissions.
What do we need to ensure a physical identity for an NFT?
While NFTs are commonly used for purely digital art, their linkage to pre-existing physical objects requires a different and more complex technical, legal, and technological architecture.
The life of a physical artwork, its sale, transmission, storage, and transportation are entirely different. Different needs require different or at least complementary solutions. Among them is the proper linking and identification of digital identity to the physical one, ensuring that this linkage is secure, unalterable, and traceable.
TokenizArt’s physical NFTs are efficiently linked to physical artworks or other unique physical objects. Therefore, their ownership cannot be transferred like any other 100% digital NFT.
Firstly, they require adaptation to existing legal systems to ensure transmission, the “TRADITIO,” consisting of the TITLE and the MODO.
This requires CUSTOMIZATION OF SOLUTIONS TO BE SUITABLE for physical objects. TokenizArt solves this with a chip equipped with NFC technology programmed to measure and need to authenticate the article, linked through an app that you need to download to interact. Ensuring PHYSICAL-DIGITAL connection.
We encode a unique and secure link to the NFT on this chip through an interaction on the Blockchain of the Smart Contract called “Certify Chip – NFC Linking.” The system is linked to the physical artwork and interacts with the descriptions and photos incorporated into IPFS (the decentralized file that ensures the data is hosted in an immutable way).
How should a physical NFT be transmitted or sold?
Customized solution. Physical and digital unity. Linking the digital NFT to the physical artwork.
A common mistake people make is assuming that an NFT can exist and be traded along with the physical asset in the same way as digital art.
A system of assigning a DIGITAL ASSET to an underlying physical asset requires a customized solution for the specific needs of a physical artwork.
It is not possible, or at least, it is impractical in practice to automatically swap (atomic exchange) an NFT for a physical artwork with a token (cryptocurrency), as we could do with crypto art, where the underlying asset (the artwork) is also digital.
The digital art, its simplicity.
Digital art, which is born, lives, and is stored entirely in cyberspace, in databases, IPFS, etc., makes its transmission or purchase easy, practical, and self-sufficient through simultaneous and atomic delivery (at the same time and in the same act) between buyers and sellers, in exchange for cryptographic value.
Complexity of physical art.
In contrast, physical art will undoubtedly have prior, intermediate, and complementary steps to ensure the physical transmission and delivery of the artwork.
It will undoubtedly require oracles to ensure and coordinate the linkages between the physical and digital, the off-chain data running with the on-chain. They must also accredit the veracity of the artwork, its state of conservation, agree to its delivery, transit, custody agents, accompany contracts, supporting documentation, etc. That is, they must generate all the dynamic probative load that ensures the legitimacy of the asset, its acts, certifications, and related authentications.
It will require an ad-hoc infrastructure, entirely customized and linkable to all operations, ensuring not only on-chain traceability (verifiable on the blockchain) but also ensuring payments, transfers, and guarantees. To this end, TokenizArt has an Escrow Service system, which facilitates various actions, such as blocking the ownership of the artwork until the physical delivery of the asset is completed.
It also facilitates the autonomy of the parties’ will regarding stipulating milestones, clauses, payment methods, the currency, or chosen payment instrument (it is undeniable that physical art continues to use fiat currencies, with cryptocurrency payments not being common). Tokenizart takes all of this into account and has conducted a meticulous study of needs and practices in the art world.
Why do physical NFT artworks add value over traditional physical artworks?
Why would someone want to create a tokenized version of a real-world asset?
Tokenization, due to its traceability and the uniqueness it ensures, simplifies the process of selling or transferring artwork and the associated rights. It allows for transparent management, ensuring even the construction of fair and objective prices.
An NFT can be sold at any point and bought at any time. While a traditional artwork may change hands every few years or decades due to the need to inspect and transport the physical item, an NFT representing ownership of the physical artwork can change hands instantly multiple times in a day or hour with different owners worldwide.
When the sale of a traditional artwork is limited to auction house clients, anyone with a cryptocurrency wallet can buy or sell an NFT piece. This opens pieces to be traded by a much broader global group of buyers and sellers.
Logistics (or lack of logistics)
Transferring high-value physical assets is complicated; the process typically involves some or all of the following milestones: shipping, insurance, escrow for funds, a dispute resolution process. The transfer of an NFT, even for physical art, improves the sales dynamics even if not instantaneous.
Fraudulent copies of sold artworks are a significant issue with physical pieces. Once ownership of the artist’s private key is established (for example, the artist has publicly shared their public key through a reliable source), then the blockchain provenance of the NFT for the artwork becomes very difficult to undermine.
What advantages does this bring?
This allows for the dissociation of possession from ownership of an asset, providing numerous advantages to everyone involved in the art world. Among the many benefits, it’s worth mentioning that there is no need for third-party delivery and custody to guarantee pledges or collateral; this can easily be done through an Escrow Service (see explanation in TokenizArt FAQs/Escrow Service). Alternatively, an investor interested in acquiring a work for purely speculative purposes or as a store of value may choose to have custody or possession handled by museums or galleries.
The connection of art to the economic and financial world, like Lego pieces, had not been possible analogically until the emergence of these new disruptive technologies.
Thus, with these technologies, it is possible to create new service models with greater security and scalability for faster and lower-cost agreements. This brings greater fluidity, speed, and, above all, GREATER LIQUIDITY.
The digitization of real-world assets (REAL WORLD ASSET)
Our robust infrastructure makes it easy to:
Unlock the full value of physical assets as digital tokens, making illiquid assets more accessible and attractive to buyers.
If you are an intermediary, expert, curator, or validator, our tools allow you to improve your services by facilitating the management of digital assets using blockchain, enhancing your processes, and ensuring a verifiable track record.
You will be able to verify the transactions made.
Last Updated: November 3, 2023
YOUR PRIVACY: SUMMARY
Note about Children: We do not intentionally collect Personal Data from visitors under 13 years of age. If a child under 13 submits Personal Data to Tokenizart, and we learn that the Personal Data is the information of a child under 13, we will attempt to delete the information as soon as possible. If you believe we might have Personal Data from a child under 13, please contact us at the address provided in Section 1 above.
Types of Data We Collect: “Personal Data” refers to data that allows someone to identify or contact you, including, for example, your name, address, phone number, email address, as well as any other non-public information about you that is associated or linked to any of the foregoing data. “Anonymous Data” refers to data, including aggregated and anonymized data, that is not associated or linked to your Personal Data; Anonymous Data does not, by itself, permit the identification of individual persons. We collect Personal Data and Anonymous Data, as described below.
5.1. Information You Provide:
5.1.1. We may collect Personal Data from you, such as your name and surname, email and mailing addresses, and Enigma password when you create an account to log in to our network (“Account”).
5.1.2. If you use our Services on your mobile device, we may collect your phone number and unique device identifier.
5.1.3. Our Service allows you to store preferences such as how your content is displayed, your location, secure search settings, notification settings, and favorite widgets. We may associate these preferences with your identification, browser, or mobile device, and you can edit these preferences at any time.
5.1.4. When connecting to our Services through a service provider that uniquely identifies your mobile device, we may receive this identification and use it to provide extended services and/or functionality.
5.1.5. Certain Services, such as two-factor authentication, may require us to collect your phone number. We may associate that phone number with the identification information of your mobile device.
5.1.6. If you provide us with feedback or contact us via email, we will collect your name and email address, as well as any other content included in the email, to send you a response.
5.1.7. We also collect other types of Personal Data that you provide voluntarily, such as your operating system and version, product registration number, address, and other information requested when you contact us by email regarding support for the Services.
5.1.8. We may also collect Personal Data at other points in our service that state that Personal Data is being collected.
5.2 Information Collected through Technology:
As you browse and interact with our Service, we may use automatic data collection technologies to collect certain information about your computer, actions, and browsing patterns, including:
5.2.1 Information collected by our servers: To make our Service more useful to you, our servers (which may be hosted by an external service provider) collect information about you, including the type of browser, operating system, Internet Protocol (“IP”) address (a number automatically assigned to your computer when you use the Internet, which may vary from session to session), domain name, address, wallet type, and/or a date/time stamp for your visit.
5.2.2 Log files: As with most websites, we collect certain information automatically and store it in log files. This information includes IP addresses, browser type, Internet Service Provider (“ISP”), referral/exit pages, operating system, date/time stamp, and clickstream data. We use this information to analyze trends, administer the Service, track users’ movements around the Service, gather demographic information about our user base as a whole, and tailor our Services to the needs of our users. For example, some of the information may be collected so that when you visit the Service again, it will recognize you and the information can be used to serve ads and other information appropriate to your interests.
5.2.4 How we respond to Do Not Track signals: We currently do not respond to “do not track” signals or other mechanisms that may allow Users to opt-out of tracking on our site.
5.3 Information Collected from Third-Party Companies: We may receive Personal Data and/or Anonymous Data about you from companies that provide our Services through a co-branded or private-labeled website or companies that offer their products and/or services on our Service. In particular, wallets provide us with your address and other information you choose to share with the wallets. These third-party companies may provide us with Personal Data. We may add this to the information we have already collected from you through our Service to improve it. We do not automatically collect Personal Data, but we may tie this information to Personal Data about you that we collect from other sources or you provide to us.
6. Use of Your Personal Data:
6.1 General Use: In general, the Personal Data you submit to us is used to respond to requests that you make or to aid us in providing you with a better service. We use your Personal Data in the following ways:
- 6.1.1 Facilitate the creation and secure your Account on our network;
- 6.1.2 Identify you as a user in our system;
- 6.1.3 Provide better management of our Service;
- 6.1.4 Provide the Services you request, including facilitating your cryptocurrency transactions through wallets;
- 6.1.5 Improve the quality of the experience when you interact with our Service;
- 6.1.6 Send you a welcome email to verify ownership of the provided email address when your Account is created;
- 6.1.8 Display your username alongside digital assets you wish to sell on the website;
- 6.1.9 Send you administrative emails, such as security or support and maintenance notices;
- 6.1.10 Send you email notifications related to actions on the Service, including notifications of offers on your digital assets;
- 6.1.11 Respond to your inquiries regarding job opportunities or other requests;
- 6.1.12 Make phone calls to you, occasionally, as part of a secondary fraud protection or to solicit your feedback;
- 6.1.13 In any other way, we may describe when you provide the Personal Data; and
- 6.1.14 Send newsletters, surveys, offers, and other promotional materials related to our Services and for other Tokenizart marketing purposes.
6.2 Creation of Anonymous Data: We may create anonymous records from Personal Data by excluding information (such as your name) that makes the data personally identifiable. We reserve the right to use anonymous data for any purpose and to disclose anonymous data to third parties without restriction.
7.1 Third-Party Service Providers: We may share your Personal Data with third-party service providers to: provide you with the Services we offer through our Service; to conduct quality assurance testing; to facilitate account creation; to provide technical support; and/or to provide other services to Enigma.
7.5 Other Disclosures: We may also disclose your Personal Data, to fulfill the purpose for which you provide it; for any other purpose disclosed by us when you provide it; or with your consent. We do not sell your personal data.
9. Your Choices Regarding Information: You have several choices regarding the use of information on our Services:
9.2 Cookies: If you decide at any time that you no longer wish to accept Cookies from our Service for any of the purposes described above, you can instruct your browser, by changing its settings, to stop accepting Cookies or to prompt you before accepting a Cookie from websites you visit. Consult your browser’s technical information. However, if you do not accept Cookies, you may not be able to use all portions of the Service or all functionality of the Service. If you have any questions about how to disable or modify Cookies, please let us know at the address provided in paragraph (1).
10. Access and Data Control: You can view, access, edit, or delete your personal data for many aspects of the Service through your account settings page. You can also make choices about the use of your data by Tokenizart. You can always choose whether you want to receive our marketing communications. You can also opt-out of receiving our marketing communications by using the opt-out link in the communication or by visiting your account settings page. We may retain an archived copy of your records as required by law or for legitimate business purposes.
10.1 Data Access: You can access your personal data on your account settings page.
10.2 Data Portability: You can request a copy of your personal data by contacting us here and including “Please send me my personal data” in the subject line. Enigma will verify your ability to access that email and then send you a digital export of the data we have associated with your email address. We will make all reasonable efforts to respond to your request within 7 days but in all cases within 28 days of receiving the request.
10.3 Data Deletion: You can delete your personal data on your account settings page. Alternatively, you can request Enigma to delete your personal data by contacting us here and including “Delete my personal data” in the subject line. Tokenizart will verify your ability to access that email and then delete the Personal Data associated with your email address. We will make all reasonable efforts to respond to your request within 7 days but in all cases within 28 days of receiving the request.
10.4 Data Correction: You can modify your personal data on your account settings page.
11. Data Retention: We may retain your personal information as long as you continue to use the Service, have an account with us, or for as long as necessary to fulfill the purposes outlined in this Policy. You can request the closure of your account by contacting us as described above, and we will delete your Personal Data upon request. However, we may retain Personal Data for an additional period as permitted or required by applicable laws, for legal, tax, or regulatory reasons, or for legitimate and lawful business purposes.
12. Data Protection: We implement various security measures to ensure the security of your Personal Data when you enter, submit, or access your Personal Data. All confidential information supplied is transmitted through secure technology.
For any dispute not subject to arbitration, you and TOKENIZART agree to submit to the jurisdiction and personal and exclusive venue of the federal and state courts located in New York County, New York. Additionally, you agree to accept service of process by mail and hereby waive any and all jurisdictional and venue defenses otherwise available. The Agreement and the relationship between you and TOKENIZART shall be governed by the laws of the state of New York without regard to its conflict of law provisions.
- General Information
- Complete Agreement
These Terms (and any additional terms, rules, and participation conditions that TOKENIZART may post on the Application) constitute the complete agreement between you and TOKENIZART regarding the Application and supersede any prior oral or written agreement between you and TOKENIZART. In the event of a conflict between these Terms and any additional terms, rules, and participation conditions, the latter shall prevail to the extent of the conflict.
No Third-Party Beneficiaries
There are no third-party beneficiaries to these Terms.
You may not assign any of your rights or obligations under these Terms, whether by operation of law or otherwise, without our prior written consent. We may assign our rights and obligations under these Terms at our sole discretion to an affiliate or in connection with an acquisition, sale, or merger.
The language of these Terms shall be interpreted in its fair meaning and not strictly for or against any party.
Waiver and Severability of Terms
The failure of TOKENIZART to exercise or enforce any right or provision of the Terms shall not constitute a waiver of such right or provision. If an arbitrator or a court of competent jurisdiction determines that any provision of the Terms is invalid, the parties agree that the arbitrator or court should endeavor to give effect to the parties’ intentions as reflected in the provision, and the other provisions of the Terms remain in full force and effect.
Statute of Limitations
You agree that, regardless of any statute or law to the contrary, any claim or cause of action arising out of or related to the use of the Application or the Terms must be filed within one (1) year after such claim or cause of action arose, or be forever barred.
The section headings in the Terms are for convenience only and have no legal or contractual effect.
Users with questions, complaints, or claims regarding the Application can contact us at [email protected].
These Terms establish your rights and obligations and those of Now 2 Now Limited and its duly designated subcontractors and licensors (“we,” “our,” or “us”), in relation to www.tokenizart.com and related sites, including www.tokeniz.art (the ‘Sites’) and any service, product, or material of any kind accessible or available through the Sites or directly from us (collectively, the “Service”).
When we refer to “Tokenizart” in these Terms, we mean us/we/our, the Sites, and/or the Service, as context dictates.
Fundamentals of Tokenizart:
Tokenizart offers a range of products for the art market, consisting of a digital platform with account management and content creation features, edition/storage management, and sharing functions (the ‘Platform’) and associated physical products (the ‘Products’) including artwork tokenization, MINTing, unique items, transfer, P2P systems, Certify, seals, security labels (‘Tags’), and Certificates of authenticity (‘Certificates’).
The Platform includes providing a database of artist profiles (the ‘Registry’). It also includes methods for sharing artwork data through portals (‘Channels’) to third parties for marketing or other purposes, always subject to the terms and conditions of those third parties.
Our clients (‘Users’) include artists, collectors, galleries, and other individuals and organizations.
Users may be required to verify their identity following processes specified by TOKENIZART. TOKENIZART may, at its sole discretion, determine that a user has not satisfactorily completed these processes and, in such cases, may refuse to allow such user to continue using TOKENIZART. References to “User(s)” in the rest of these Terms do not include those we have rejected on this basis.
- Access the Service online and create an account, providing accurate and truthful personal and/or corporate information that TOKENIZART may reasonably require to establish such an account.
- In good faith, create records of information (‘Illustration Records’) related to artworks or other objects (‘Works’) that exist or will exist in the real world, uploading information to the Platform following the procedures specified by us. Users warrant that such Illustration Records faithfully represent the Works and commit to exercising all due care and attention when uploading such information and ensuring its accuracy. By uploading such information, users acknowledge that it may be publicly accessible (for example, by ‘publishing’ or ‘transferring’).
- Order, pay for, and use Products in good faith and strictly in accordance with the instructions issued by the Company and updated from time to time. In the case of Tags, apply the same diligence and care to Works.
- Use the Services to issue Certificates of Authenticity regarding Verified Works and exercise reasonable diligence in the care and custody of such Certificates. These Certificates may be delivered to bona fide buyers (‘Collectors’) of the Verified Work and may be used in the process of transferring the Verified Work to the Collector’s account.
- Use the Platform, along with members of the public with internet access, to search for records of artworks and/or registered artists.
Users pay online at the time of placing their order or through a separate agreement upon receiving the invoice for Products and other items or services charged delivered as part of the Service. Additionally, and as a variation of the provisions set forth above and elsewhere in these Terms, the Company may provide separate written agreements regarding payment methods and deferred payment, and when such agreements are in effect and explicitly differ from these Terms, they will prevail over any provisions of these Terms.
If at any time we are informed or reasonably suspect a substantial breach by a User of these Terms and conditions, including, among others, fraudulent or unauthorized use, we may, at our sole discretion, prevent the User from continuing to use TOKENIZART and prevent further access of that User to all or part of the Service. No refund of sums paid or payable to us is owed.
Without limiting the generality of this, any user behavior that reasonably leads us to suspect an attempted fraudulent, unauthorized, or bad-faith use of TOKENIZART by a User (or a person requesting to be a User) will result in the suspension of the corresponding account. Information entered by the User regarding Works that existed at the time the account was suspended may continue to be searched over the internet. References to ‘User(s)’ in the rest of these Terms do not include Users whose accounts we have suspended in accordance with this clause.
Tags and Artwork Labeling. These are carried out on behalf and on the order of users, as well as the linking to NFC chips, which is done in a fully decentralized manner. Without influence or action by TOKENIZART, users are solely and exclusively responsible for fraudulent or erroneous linking of works or linking with metadata on IPFS.
Purchases of TOKENIZART Tags and Certificates are governed by our Product Purchase Terms. Users must ensure that (a) they only apply tags to works for which the user has a clear documented right to do so; (b) no unauthorized person has access to the Tags and associated seals or other accessories (the ‘Tag Products’); and (c) the labeled associated Products or Chips are securely stored to prevent inappropriate or unauthorized use. If inappropriate or unauthorized use of the Products is known or suspected (such as improper labeling of a work), the User must contact TOKENIZART at [email protected].
The User in whose account a record of works is stored and associated with NFC chip and void labels is referred to as ‘linked by chip,’ it is a blockchain-powered CERTIFY via their own wallet or an authorized third party. Being the Registered Owner does not necessarily connote ownership or the right to sell the Work; we rely on users to provide accurate and complete information, and we do not independently verify that information. The types of information that may be included in an Illustration Record, the User authorized to change or add to the information contained in an Illustration Record, and the levels of security and accessibility that a User can apply to the information contained in an Illustration Record. Tokenizart may change over time. When Tokenizart is informed or reasonably suspects that the Artwork Record contains incorrect or inaccurate content (such as an incorrect or substantially inaccurate entry in the Artwork Record), we may temporarily or permanently suspend access to the relevant part of the Artwork Record and any other part of it that we reasonably consider affected. Each User acknowledges and agrees that the information entered in the Illustration Record may be made available by the Platform for access through the Internet, except when the availability of such information is explicitly open to User or Registered Owner management through the Service.
TOKENIZART Accounts and Authority to Act
If we ask you to provide information about yourself when registering with TOKENIZART (or later), you must ensure that this information is accurate and up-to-date. You can keep this information up-to-date through your Account. When logging in.
Please note that we have the right to treat anything done through a User’s Account, or through an email address, phone number, or other communication method associated with that Account, as if done by the User; it is up to the User to maintain the security of their Account. If you tell us that you are acting on behalf of, or are a representative of, someone (such as an Artist) or an entity (such as a limited company or a society), you agree to be duly authorized to act in that capacity in accordance with applicable law, that your authority to do so is fully and enforceably documented in writing.
However, please note that Tokenizart has no responsibility to confirm (a) the identity of anyone, (b) that anyone has the ability to represent another person (such as an Artist), or (c) that someone is who they say they are. Our Verification processes are not a guarantee of provenance or that a User is truly who they claim to be.
You must ensure that the email address we have for you remains up-to-date and that you have full access to it; we will send important messages there. So, if you change your email address, you must notify Tokenizart. If you provide an invalid email address or an email address that belongs to someone else, Tokenizart may deactivate your account at any time without prior notice. You must not register as a User if you are under 18 years old.