NFT Art NFT Marketplaces and Trading 5 — Questions and Answers
Question 1: What is 'IP (intellectual property) rights' typically transferred with an art NFT purchase?
- Full copyright ownership of the artwork
- Only a license to display the NFT, unless the creator explicitly grants more (Correct answer)
- The right to create derivative works and sell them
- Complete ownership of the source files and master artwork
Correct answer: Only a license to display the NFT, unless the creator explicitly grants more
Most NFT purchases transfer only a limited display license; copyright remains with the creator unless the terms explicitly state otherwise.
Question 2: What was the primary innovation of the LooksRare marketplace when it launched in January 2022?
- It was the first marketplace to support video NFTs
- It rewarded both buyers and sellers with its native LOOKS token for trading (Correct answer)
- It introduced zero-fee trading for all NFT transactions
- It was the first curated marketplace for generative art
Correct answer: It rewarded both buyers and sellers with its native LOOKS token for trading
LooksRare disrupted the market by distributing LOOKS tokens to users who traded on the platform, directly incentivizing volume.
Question 3: What does 'offer' functionality allow buyers to do on NFT marketplaces like OpenSea?
- Propose a purchase price below the listed asking price (Correct answer)
- Request a custom artwork from the creator
- Report a listing as potentially fraudulent
- Transfer an NFT to another wallet as a gift
Correct answer: Propose a purchase price below the listed asking price
The offer feature lets buyers submit bids below the listing price, which sellers can accept, reject, or counter.
Question 4: What is 'edition size' and how does it affect the value of an art NFT?
- The file resolution of the artwork; higher resolution increases value
- The number of identical copies minted; smaller editions are generally more valuable (Correct answer)
- The number of traits in a generative NFT collection
- The blockchain confirmation count for the minting transaction
Correct answer: The number of identical copies minted; smaller editions are generally more valuable
Edition size refers to how many copies of an artwork are minted; 1/1 (one-of-one) editions are typically most valuable due to scarcity.
Question 5: Which NFT marketplace is specifically designed for generative art and collaborates with artists to deploy custom on-chain generative scripts?
- OpenSea
- Art Blocks (Correct answer)
- SuperRare
- Rarible
Correct answer: Art Blocks
Art Blocks hosts generative art where algorithms stored on-chain create unique outputs at mint time, producing one-of-a-kind results from a single script.
Question 6: What risk does a buyer face when purchasing an NFT where the artwork is stored on a centralized server (not IPFS or on-chain)?
- The NFT cannot be resold on secondary markets
- The artwork may disappear if the server shuts down, leaving an NFT pointing to nothing (Correct answer)
- The buyer cannot display the artwork in virtual galleries
- The creator can retroactively change the royalty percentage
Correct answer: The artwork may disappear if the server shuts down, leaving an NFT pointing to nothing
Centrally hosted NFT media can become inaccessible if the hosting service shuts down, a risk known as 'link rot.'
Question 7: What is the purpose of a 'make offer' with wrapped ETH (WETH) on NFT marketplaces?
- WETH offers cannot be rejected by sellers, forcing automatic sales
- WETH allows placing standing bids without manually submitting ETH each time a new listing appears (Correct answer)
- WETH offers are subject to lower marketplace fees than ETH offers
- WETH is required for cross-chain NFT purchases
Correct answer: WETH allows placing standing bids without manually submitting ETH each time a new listing appears
WETH (Wrapped ETH) is an ERC-20 token that enables buyers to pre-approve funds for offers, allowing standing bids that can be accepted by sellers at any time.
NFT Art NFT Marketplaces and Trading 5
What is 'IP (intellectual property) rights' typically transferred with an art NFT purchase?