Ownership Claims over Auction of “The First NFT” Previously Dismissed by a New York Court Now on Appeal
By: Jonathan Mollod (Blockchain & The Law/Proskauer)
In 2014, artist Kevin McCoy made waves in the tech world by recording his octagon-shaped digital artwork called “Quantum” on the Namecoin blockchain, essentially creating what we now know as the first NFT. Fast forward seven years, and this pioneering digital piece was sold at an auction for nearly $1.5 million.
Namecoin, one of the early blockchain technologies and a fork of Bitcoin, introduced a unique system of names made up of numbers and letters that users could claim and trade. It was designed to establish a decentralized domain name system (DNS) to convert human-readable domain names (like “.com”) into computer-friendly numerical addresses. Namecoin allowed users to register and manage domain names ending with “.bit” without relying on a central authority like ICANN. Each domain name in Namecoin was associated with a token that granted the owner control over the domain, enabling them to set parameters like linking to specific IP addresses or other data.
One interesting aspect highlighted in the legal context is that Namecoin records could be used similar to domain names or even serve as NFTs, storing data within their blockchain records. An essential point in the ongoing legal dispute is that ownership of registered Namecoin names expires over time, and if not renewed by the original owner, anyone can claim and re-register them. McCoy’s original Namecoin registration for “Quantum” lapsed in January 2015, and it remained unclaimed for six years.
In May 2021, McCoy took a new step by preserving “Quantum” as an NFT on the Ethereum blockchain, a more contemporary and widely recognized blockchain platform. He moved the original data from the expired Namecoin token to a modern ERC-721 token on Ethereum while maintaining all the crucial information from the original on-chain record…