NFTs: a brief guide

Non-fungible tokens or NFTs have been making headlines in recent months. In brief, NFTs are a type of digital asset designed to represent ownership of rare virtual items. They are a unit of data stored on a digital ledger, called a blockchain, that certifies a digital asset to be unique and therefore not interchangeable.

The very term fungible means were replaceable by another identical item. Non-fungible, therefore, means that the item in question is unique, incapable of replacement and the only one in the world.

Much like physical paintings are incapable of exact replication, NFTs provide creatives with the opportunity to create stand-alone and unique pieces in the digital world. This is of particular importance in the digital sphere where mass downloading has driven down the value of creatives’ pieces.

On top of this, NFTs are creating a shift in current business models according to Lior Messika, founder of Eden Block, a venture capital firm specialising in blockchain and crypto. This is because NFTs also allow artists to sell directly to consumers and feature built-in functions that pay creators when their work is sold on. The latter function means that art pieces can operate as collectables, both tangible and speculative, which can be bought, sold and traded for money.

According to NonFungible.com, sales of these tokens soared to more than $2 billion in the first quarter and back in March, an NFT by the artist Beeple sold at Christie’s for over $60 million, making it the most expensive NFT ever sold at auction.

How will Binance’s NFT marketplace work?

The platform will be divided into two main parts: Premium Events and Trading Market. The former will select works and high-end exhibitions, for which Binance will charge a 10% fee with creators receiving 90% of the proceeds. The latter, which allows for regular users to create their assets, will charge a 1% processing fee, with creators continuously receiving 1% royalties.

The marketplace will be powered by the company’s blockchain infrastructure, Binance Smart Chain (BSC) but users will also be able to deposit tokenized artworks from other chains like Ethereum.

One question that has arisen out of this launch is who the target market is. One panellist from CoinDesk’s “The Hash” drew upon parallels between Binance and Ethereum and posited that users are cognitive of cryptocurrency exchanges and would therefore be unlikely to move away from Ethereum in favour of a new market like Binance’s.

However, one advantage that Binance may have over its competitors is the lower fee structure as stated above. By way of example, SuperRare, an NFT marketplace with a similar premium gallery offering, takes a 15% commission on primary sales. The other side of the coin, however, is that the lower fees may mean that Binance becomes a platform for lower grade artwork compared to its competitors.

Another reason that Binance’s NFT marketplace launch may be successful is that Binance already has an established customer base. According to Forbes, in March 2021, Binance Smart Chain (BSC), is currently the most used blockchain in terms of unique active wallets, averaging 105,000 in March. Additionally, BSC averages almost 8x the number of daily transactions on Ethereum (8.2 million vs. Ethereum’s 1.4 million on April 26). What this means is that Binance can offer a suite of services to customers they already have and customers looking to expand into NFTs.

Some believe that the NFT craze has come to pass already and that the timing of Binance’s launch is out of step with NFT market value. However, others argue that it is only a matter of time before industries outside of collectables, art and music catch on to the NFT craze.

While this means that the NFT bubble will not burst but rebound in another form, this could spell trouble for Binance who has stated that it will be a destination for the creative industries already associated with NFTs. Only June will tell.

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So, what happened?

In brief, the case is centred around an allegation by Oracle, an American multinational computer technology corporation, that Java’s application programming interfaces (APIs) and about 11,000 lines of source code had been copied by Google and used in Android technology. Oracle sought $9billion worth of damages.

What led to the allegations of copycat technology?

By way of background, Oracle began developing the technology in December 1990, with its subsidiary branch at Sun Microsystems and it was made available to the public in 1995. However, Sun retained control over its technology by doing the following: while anyone could program in the language itself, Sun maintained the Java Platform, Standard Edition and Mobile Edition libraries, provided to users as pre-compiled Java bytecode.

Android, founded in 2003, was bought by Google Inc. in 2005. During the development of the Android technology, Google wanted to incorporate the Java libraries and so, Google’s executive chairman Eric Schmidt approached Sun’s president Jonathan I. Schwartz in a bid for licensing the libraries for use in Android. Sun offered a licensing deal of between $30 and 50 million.

The deal failed for two primary reasons. Firstly, Sun had asked for some shared control of Android which Google was not willing to offer. Secondly, Sun was also concerned that Google planned to essentially fork Java into a Google version of the language and to prevent it from being interoperable with other versions. In software engineering, “fork” is when developers take a copy of source code from one software package and start independent development on it.

What happened next is that Google developed a cleanroom version of Java technologies. They did not have access to Sun’s source code and developed an entirely new version from scratch.

The Case:

The first phase of the biggest programming copyright Supreme Court case in history began in 2010 when Oracle sued Google for copyright and patenting infringement in the District Court for the Northern District of California. In this instance, Judge William Alsop split the case into three phases: copyright, patent, and damages.

The copyright phase began in April 2012 and consisted of several distinct claims of infringement. Oracle alleged infringement of 37 separate Java APIs. The issue which arose was not whether Google had infringed on the copyright, the jury found in favour of Oracle/Sun. The question was whether such technologies were within fair use, i.e., an American legal doctrine that permits the use of copyrighted material without first having to acquire permission from the copyright holder. The courts were deadlocked on this aspect and the jury was split.

The patent phase began in May 2012 with the same jury. The jury found non-infringement on all claims. The damages phase therefore could not go ahead because of the rulings in both the copyright and patent phase.

Over the next few years, the companies made a series of appeals through the various courts. The courts found themselves divided on whether the use of the technologies fell within fair use before ultimately ruling in Oracle’s favour. However, Google appealed to the Supreme Court in 2019 to challenge the previous rulings.

The Final Judgement: the Supreme Court

The Court issued its decision on April 5, 2021. In a 6–2 majority, the Court ruled that Google’s use of the Java APIs was within the bounds of fair use, reversing the lower courts’ ruling. While they ultimately ruled the APIs copyrightable, Google had the right to their use at the time. Google successfully argued that they are to be used in the way that an alphabet or grammar is to be used; they are fundamental tools in the development of computer programmes.

However, there is another element worth considering. It is possible that the ruling was not made entirely for the reasons stated. Oracle has stated that the ruling happened in Google’s favour because of the monopoly it holds over the tech industry – ruling in favour of Oracle could have had major global implications. Justice Stephen Breyer, in his written opinion, said that “to allow enforcement of Oracle’s copyright here would risk harm to the public”.

What does this mean for the future of software engineering?

As above, this case is likely to set a precedent on APIs. While it does not rule out that APIs are copyrightable, it may suggest that APIs are to fall under the doctrine of fair use, meaning that developers cannot stop other developers from using their APIs. This could have interesting implications on the technology sector and whether there is any real protection or remedy for theft and copying.

The other side of the coin, however, is that it could encourage and promote creativity and innovation. This is because developers can pick and choose fellow developers APIs and run with them, meaning that technological innovation is boundless.

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This was an incredible achievement invoking parallels with the first flight of an aeroplane by the Wright Brothers in 1903, 117 years earlier and 173 million miles away. Like the Wright Brothers’ first flight, which only lasted twelve seconds, the historic significance of Ingenuity’s first flight is not its length or duration, but the demonstration of what can be done.

The flight was years in the planning. Early conceptual designs were published by NASA in 2014, engineering models were tested in a simulated Martian atmosphere in 2016 and the flight was approved in 2018 as part of NASA’s Mars 2020 mission. Ingenuity was strapped on the underside of the Perseverance rover drone for the flight to Mars and a 100m drive from the landing site, ready for its first flight on Tuesday, April 19.

There were many technical issues to overcome. Although Mars has only one-third of Earth’s gravity to overcome, it has a much thinner atmosphere with only 1% of Earth’s atmospheric surface atmosphere. This is not much atmosphere for helicopter blades to work with. Ingenuity has two rotary blades, each 1.2 m in diameter that rotates in opposite directions at over 2,500 revolutions per minute, five times what’s needed on Earth.

Not only that, but the flight had to be autonomous. Radio signals to and from Mars take between 5 and 20 minutes each way depending on the relative position of the planets. On April 19th, it was 15 minutes and 27 seconds, meaning the 40-second flight would have been over before any news of liftoff could have reached earth. Given the time-lapse, there is no possibility of flying ingenuity using a real-time joystick on Earth.

The stage was set for Ingenuity’s first flight at 3:34 a.m. Eastern Standard time, the middle of the day on Mars. Radio commands from NASA’s Mission Control in California were relayed to Ingenuity by the Perseverance Rover strategically parked 200 feet away from the flat terrain that had been selected for the flight. Perseverance was able to capture images 30 times per second to feed into the navigation computer and record the flight. These images, together with images taken from Ingenuity’s camera showing its own shadow over Mars, provide a striking documentary record of the flight.

It was not until three hours later that ground controllers learned that the flight had been successful. They had to wait until NASA’s other Mars Spacecraft, the Mars Reconnaissance Orbiter had passed overhead and was able to relay data and images back to Earth. Only then could celebrations begin and analogies with the Wright Brothers be made.

NASA Associate Administrator for Science, Thomas Zurbuchen, said that “Now, 117 years after the Wright brothers succeeded in making the first flight on our planet, NASA’s Ingenuity helicopter has succeeded in performing this amazing feat on another world”, adding that this area of flat terrain on Mars, “the first of many airfields on other worlds will now be known as Wright Brothers Field”.

There is even a small piece of muslin, the size of a postage stamp taken from the wing of Flyer 1, the Wright brothers’ historic prototype, onboard Ingenuity, where it will rest in perpetuity.

Looking ahead, Ingenuity is scheduled for up to four more flights with plans to travel as far as 50 m and then return. There is no testing equipment on board Ingenuity. The flights are tests in themselves, showing that it is possible to fly on Mars and to envisage the possibility of aerial exploration of Mars to open up new vistas.

As acting NASA administrator, Steve Jurczyk, stated, “We don’t know exactly where Ingenuity will lead us, but today’s results indicate the sky – at least on Mars – may not be the limit”.

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YouTube and Copyright Law

Under UK copyright law, when a person creates an original work that is fixed in a physical medium, he or she automatically owns the copyright to the work. The owner has the exclusive right to use the work and to make copies as they wish.

YouTube developed its copyright enforcement tool called Content ID that works by scanning uploaded content against a database of copyrighted materials. If an uploaded video is matched against one in the database, YouTube will warn the user.

Content ID was developed in response to a lawsuit from Viacom in which Viacom sued the video-sharing site for allowing users to upload and view hundreds of thousands of videos owned by Viacom without permission.

A further tool used by YouTube is copyright strikes. This serves to police copyrighted material. Once a user receives a strike, they will be required to watch a video on the dangers of copyright infringement and subsequently answer questions testing their knowledge on the subject.

After three strikes, YouTube will terminate a user’s channel, erase all of their videos and prohibit them from creating another channel. This is highly controversial because it appears to assume the guilt of YouTube users and does little to question the copyright holders.

The implementation of these new tools leads to a large number of copyright claims being made. Content ID was criticised for removing videos or even entire channels for alleged copyright infringement claims which were deemed unfair. This was particularly true in cases where videos were made to review films or video games.

On top of this, the copyright infringement policies were seen as favouring large corporations. This is because if a video has been flagged as containing copyrighted material, it can either be taken down or monetized by the original creator of said material. This means that many unsuspecting users could be exploited by the holders of the copyrighted material who in turn would be making money off of them. This was a very imperfect system with many controversies. A change was needed.

Checks and Content ID – what’s the difference?

The primary difference between the two systems is the timeline. While the former would flag copyrighted material after it was uploaded, Checks matches videos before the uploading stage. In some cases, this makes a lot of sense.

Many users will be unaware that they are about to upload a video that contains copyrighted material and if they are notified before it goes live, then they will be able to rectify the issue on the spot. If a copyright issue is found but users do not think that they have done anything wrong, then they have the opportunity to dispute the claim ahead of time. However, Checks still relies on Content ID and some issues remain.

While it is a step in the right direction, it is unlikely that this will rectify all of the issues that currently exist on the site. One reason for this is that copyright strikes can still occur after the content has been uploaded. While the Checks system is efficient, it is not the end of the line.

A copyright holder can still make a claim post-upload and users are still vulnerable to the same issues highlighted above. Users continue to be vulnerable to exploitation from corporations. The creative arts industry continues to be dominated by a few large companies, from music to movies and TV, and the system that YouTube has in place only serves to protect their unshakeable monopoly.

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Nuance specialises in conversational and artificial intelligence (AI) applications with a focus on healthcare. It is perhaps best known as being the voice recognition company behind Siri, Apple’s voice assistant. Nuance has successfully extended its voice recognition systems to reduce the administrative load on doctors by taking notes from doctor-patient conversations and integrating them into diagnostic tests, leaving the doctor free to focus on the patient and determine the best treatments.

Aspects of Nuance’s healthcare software have been developed in partnership with Microsoft, as have applications that combine Nuance’s voice recognition technology with Microsoft’s Teams conferencing application to drive remote telehealth appointments. Microsoft and Nuance know each other well.

The acquisition of Nuance accelerates Microsoft’s push into the healthcare sector. Last year, Microsoft announced Microsoft Cloud for Healthcare, aiming to sell more cloud software to hospitals and doctors. It has hired executives with medical backgrounds and introduced AI tools for areas including clinical trials.

All of these initiatives will help Microsoft drive revenues from Nuance’s existing 10,000 healthcare customers, including some of the biggest names in the sector such as Johns Hopkins, Cleveland Clinic and Athena Health.

These aspects of the transaction were emphasised by Microsoft CEO Satya Nadella who posted on Twitter that “AI is technology’s most important priority, and healthcare is its most urgent application. Together with @Nuancelnc, we will put advanced AI solutions into the hands of professionals to drive better decision-making and create more meaningful connections”.

Stock market analysts did not need much convincing. According to Wedbush Securities analyst Dan Ives, “The Nuance deal is a strategic no-brainer…it fits like a glove into its health care endeavours at a time in which hospitals and doctors are embracing next-generation AI capabilities“. Further advances in AI software should enhance the ability of Nuance’s voice recognition technology to improve suggestions to doctors for patient care based on searches for certain words in health records.

The healthcare sector may have driven the acquisition, but Microsoft could use Nuance’s technology in other areas such as its Teams software package or within Office 365 to offer voice recognition features to compete with Amazon’s Alexa or Apple’s Siri. The possibilities of generating significant synergies applying Nuance’s technology across Microsoft’s products and customers are quite endless.

Analysts were even comfortable with the price Microsoft agreed to pay. Anurag Rana, a software analyst with Bloomberg, is on record as saying that he believes “the valuation is sensible, given Nuance’s leadership in conversational AI and what Microsoft could do with its software assets.” Of greater interest to Anurag Rana and other analysts is what Microsoft will do next. Microsoft is acquisitive, having come close to buying social media platforms TikTok and Discord.

It is even said to have walked away from a potential deal to acquire Pinterest. Microsoft has the financial resources to push into social media, but its current strategic imperative seems to be to deploy its resources into the growing healthcare sector.

Even so, Microsoft could look at acquiring companies that focus on other specific industries like manufacturing or retail, in the same way, that Nuance focuses on healthcare, and bring the Nuance voice recognition technology and AI capabilities to those companies. That would be a really big win.

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