Non-Fungible Tokens

In Numbers Protocol, monetization is achieved by issuing Non-Fungible Tokens (NFTs). This provides a robust system for asset ownership, and within this system, there are two types of NFTs: Custody NFT and License NFT.

Custody NFT and License NFT represent two distinct types of ownership. A Custody NFT can be compared to a "Soulbond" NFT for an asset. This means it is wholly unique, one-of-a-kind, and represents the core rights and ownership of a particular asset. Owning a Custody NFT is akin to holding the master key to the asset, granting you the foundational entitlements and decisions over that asset. Just as a soul bond connects one entity to another in an unparalleled way, a Custody NFT binds the ownership of a digital asset exclusively to the holder of the token.

On the other hand, a License NFT can be thought of as a transferable certificate that grants the owner certain defined rights to the asset but not the full ownership. This is similar to obtaining a license for software, where the user has rights to use, distribute, or modify the software under specified conditions, but doesn't own the software outright. For instance, a musician could mint a License NFT that is associated with specific clauses of the license and then sell it to others. The buyer then obtains the rights defined in the License NFT, which might include the rights to stream the music, use it in a personal project, or distribute it on specific platforms.

The existence of a Custody NFT determines the right to mint these NFTs. If no Custody NFT exists for an asset, the creator of the asset retains the rights to mint both Custody NFTs and License NFTs. This effectively means that the creator remains the primary custodian of the asset with the ability to define and distribute usage rights. However, if a Custody NFT does exist, only the owner of that Custody NFT has the right to mint License NFTs. In such a case, the Custody NFT owner assumes the role of the asset's custodian and gains control over the distribution of usage rights.