Research — The Illusion of Ownership in Digital Art

The Central Finding

A collector sees an artwork and pays for a token marketed as securing blockchain-guaranteed ownership of it. What they receive is a token that genuinely has those properties — attached to an artwork that has none of them. The blockchain's properties — immutability, verified scarcity, transparent provenance — apply to the token record. They cannot apply to the image or video stored on someone else's server, controlled by someone else's contract, accessible only through someone else's infrastructure.

The Four Structural Failures

1. The smart contract is controlled — The artist or platform can change what the token points to at any time, without the holder's consent.
2. The asset is not stored with the owner — The artwork lives on private corporate servers or decentralised storage that depends on third parties continuing to pay for it.
3. Access to the blockchain is centralised — Nearly all consumers reach the blockchain through a handful of commercial gateway providers who can restrict access at any time.
4. The asset cannot exist without infrastructure — A digital artwork needs electricity, a device, software, and the internet just to be seen — constraints that do not apply to a physical painting.

Three Remedies Proposed

1. Honest marketing — Prohibit the unqualified use of "own," "permanent," and "sale" where the underlying facts do not support those terms.
2. Point-of-sale disclosure — A standardised label telling buyers, in plain language, where the artwork is stored, who controls it, and what happens if the platform closes.
3. Service classification — Treat dependency-bearing NFTs as service transactions for consumer protection, attracting the same disclosure and continuity duties as subscriptions.