The following paragraphs are going to outline the study area of NFTs as the topic of NFTs is an emerging topic in the scientific literature. A similarity between these studies below is that the study of the NFT market has been empirical as these studies are confirming something that the practitioners have seen in practice while for example, they have been minting NFTs.
An example of the holes in the scientific literature is when the first systematic study of NFTs was published in 2021 by Wang et al. , and Moringiello and Odinet  being forthcoming for year 2022, where Wang et al.  added to the scientific literature in form of their design analysis of the NFTs and they took this analysis further by doing a security evaluation as well as describing the advantages and disadvantages of NFTs. This something that according to them has not been done before apart from forum posts and blogs posts which does not have the same scientific validity and scientific reliability as blog posts about the same topic.
This empirical research was seen in a recent study from Arora A., Kanisk, Kumar S.  were their study aimed at a solution for both researchers and practitioners, and they confirmed what the NFT community has been saying through their research on the ERC-721 token on the Ethereum blockchain.In extension could this be used in the field of authentication where rare art pieces are unable to be forged and therefore retains or increases in value because of this built-in on the Ethereum blockchain. This is something that is seen where an NFT sold at an art auction such as the Beeple which sold at Christie´s auction for $69 Million  and because the NFT cannot be forged this art piece will either increase or retain its value.
Furthermore has the case of NFTs growing in value as well as the market for NFTs grown in market size with the rise of popularity of the NFTs, but something we need to remember is that the NFT market, as well as the technology, is in its early stages . This mania as Wang et al.  defined it has a hype cycle with high prices, but the authors did not exclude the fact that NFTs are backed by an important technology and because of its attractive technology does the authors advocate for further advancement with some examples given in music and sports events as well as in finance.
As Wang et al.  illustrate does the further advancement in NFTs in music and sports give artists the freedom to commercialize their work, which is something Fowler and Pirker  write about in their study where they overview the NFT space in their examples of gaming, art and the music industry which has not been commercialized to the same degree as before the introduction of NFTs. Fowler and Pirker  conclude by saying that the NFT space is still missing regulations and that the NFT space still is similar to what they define the space as the Wild West. Already expressed in this paragraph and mentioned in the following research by Dowling , have we seen multiple areas for NFTs such as gaming, art and the music industry does the question of regulation become hard as these NFTs are classified in all of these areas.
Regulatory landscape in the topic of NFTs
A study that explains the regulatory landscape of NFTs is Moringiello and Odinet  who explains NFTs and the connection to property rights and in extension do they back this phenomenon as revolutionary and that its implication would change the regulatory landscape as we see it today. Their article is one of the first academic articles on the relationship between property rights and NFTs and because the current and traditional property concepts do not apply to NFTs could the consumer be in danger due to the uncertainty in trading with NFTs as well as the uncertainty in the technology behind smart contracts.
Moringiello and Odinet  bring up a counter-argument to many NFT enthusiasts by telling the reader that NFTs are “searching for a problem where they are the solution to” where the NFT does not have a reference asset and is by legal theory not classified as property which could have the future implication that regulators do not use the correct laws when regulating NFTs and therefore has there not been set a precedent for regulators to use in other legal cases.
The NFT does not symbolize by itself a ticket to a football game and because it has no tangible asset connected to it can it not be classified as property and if no asset is transferred can it not be classified under property rights according to Moringiello and Odinet . On the other hand, does Fairfield  instead characterize NFTs as personal property because of its digital interest where the NFTs are the first example of new personal property that has been created over the internet and has fixed the problem with the internet, the problem with mass production, through making the NFT exclusive personal art pieces.
Fairfield  depicts the NFT space as the sports cards for the internet era, and because of the decentralized crypto ledger technology, where these unique high scarcity sports cards are built on are they able to be seen as some kind of digital property. A third author is Henderson and Raskin  who published an article where they discuss whether or not this form of investment can be classified as security which in extension has different tax purposes based on how the NFTs are viewed as in our regulatory system as these NFTs do not fit into our current regulatory system.
The two problems that NFTs cause to our current regulatory system are according to Henderson and Raskin  asymmetrical information problem and the police power problem. The first problem is characterized by insider trading and anti-fraud rules and the second problem is characterized by state regulations to stop actors from trading assets with for example higher taxes or to prohibit certain actions. In extension with stricter regulations on both minting NFTs and trading NFTs, does the government need to take into account that these stricter regulations may help bad actors through ignoring the laws and creating a black market while good actors need to adhere to these stricter laws. It is therefore important for researchers to do research in both the regulatory space as well as the investment space of NFTs because this new technology needs to be examined from different view points.
NFTs as Investment
The first comprehensive empirical analysis of this new and popular investment type was published in September of 2021 by Kong and Lin  meaning that the research is continuing in the topic of NFTs and their research ended in that they constructed a price index which they proxied from the by using the CryptoPunks as the overall pricing of NFT markets, where they compared the risk-return of these new investment types. This is key, due to the fact that there is no investment model for NFT pricing and their main finding from this study also suggest that there is extremely high volatility and they showed this volatility by measuring the standard deviation was to 58% and a higher Sharpe ratio.
The price of NFTs and the NFT market was likewise studied in Dowling  where the author studied the crossover effect of cryptocurrency pricing and NFT pricing where the hypothesis was that they expected a spillover effect from cryptocurrency pricing to NFT pricing and that this would be beneficial to understand since there is a connectivity between cryptocurrencies if this also spill-over onto the NFT market. This spillover was measured much lower on from cryptocurrency market to NFT markets and in between the NFT market than on the cryptocurrency market, but it also suggests some movement between the markets because of its similar underlying technology. Dowling  main finding was that NFTs seems to be a new asset class, as it does not move as a whole market but as multiple markets due to the variety of NFTs, but to be certain does the author note that additional studies are needed in this area due to this study was only able to compare a few NFT markets over a limited time.
Ante , suggests that the NFT market is immature and that “Most NFT submarkets are driven by other NFT submarkets.” And the first part is something Wang et al. , and Fowler and Pirker  agrees on in different ways, where they describe this immaturity as the new technology it is or as the Wild West. The second part is something that Dowling  studied with similar results, where the NFT market drives itself as a new asset class and has implications on itself more than other cryptocurrencies has on the NFT market. Therefore is Ante important to take into account in creating a new hypothesis in the topic of NFTs where these submarkets can to some degree exclude the research between cryptocurrencies and the NFT market as the NFT market moreover is its own asset class and therefore is interdependent on itself more than the cryptocurrency market.
Summary and Conclusion
To summarize has this overview of the research in NFTs illustrated different legal challenges as well as market challenges where the market according to some researches see the market as in its early stages and that the market has premature actions seen in multiple cases from these researchers where they explained the NFT market is driven by hype and instead of being influence by other markets is the NFT market influenced by itself and by other submarkets.
To conclude does the scientific literature on the topic of NFTs still need to be expanded upon to reach a broader as well as a deeper understanding of the NFT market but seen in this short overview of the current research has the NFT research started on a smaller scale.
33. Arora A., Kanisk, Kumar S. (2022) https://link.springer.com/chapter/10.1007/978-981-16-3961-6_34
35. Fowler and Pirker (2021) https://dl.acm.org/doi/pdf/10.1145/3450337.3483501
36. Wang et al. (2021) https://arxiv.org/pdf/2105.07447.pdf
37. Dowling (2021) https://www.sciencedirect.com/science/article/pii/S1544612321001781
38. Moringiello and Odinet (2022) https://poseidon01.ssrn.com/delivery.php?ID=916073065102101064104010004114094007031005031068030005011122069010110069127089117109050018100005055097010094117102088117079001055038014069012122116097018005119012122091065085009075025111074069022022114110072122000010127065065087024115083025064090003081&EXT=pdf&INDEX=TRUE
39. Fairfield (2021) https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3821102
40. Henderson and Raskin (2019) https://journals.library.columbia.edu/index.php/CBLR/article/view/3423/1369
41. Kong and Lin (2021) https://poseidon01.ssrn.com/delivery.php?ID=703102118110006022111007124104107064063039030001048013074088000010086093081096064094048055006126041126113103102123100064127016057017032014011083109030109102119099004073055050096087025064005101116086005009115092106124000082122127110027125125000100110002&EXT=pdf&INDEX=TRUE
42. Ante (2021)https://poseidon01.ssrn.com/delivery.php?ID=450091020087105085092071072103096112059038009000020002096085023066103080094005112027119013052038049022008093079119112002127018024091008040092095004117112017098077072086019086121011094117098093086087088085002105024024023086104116005123091071000099090126&EXT=pdf&INDEX=TRUE
Connect with Marcus Johansson on Linkedin