Technology transfer agreements as well as investment agreements are often accompanied by source code escrow agreements used to secure the IP rights to the software.

Source code

The key of programs and software is the source code. It is the fundamental component of a computer program that is created by a programmer.  The source code should be written using a human-readable programming language – usually plain text. The main goal of it is to set exact rules and specifications for the computer that can be translated into the machine’s language.

What is source code escrow?

Sometimes it happens that even if special software tailored to one’s needs is created by a professional company, problems may arise. The investor needs to make every effort to protect company in the event that the contractor’s company ceases to exist, for example because of its bankruptcy or liquidation. In such cases, the solution to secure the transfer of ownership of the source code is to put in place source code escrow agreement. This is a service that helps protect all parties involved in a software licence by having a neutral, independent third party escrow agent hold the source code. 

Main principles of source code escrow

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KIEŁTYKA GŁADKOWSKI KG LEGAL constantly supervises and prepares its lawyers for the specialization in which they provide services for foreign clients. In order to systematize the conceptual grid of very specialized fields of IT, telecommunications, biology, medicine and modern finance, KIEŁTYKA GŁADKOWSKI conducts internal consultations to improve the experience of our lawyers specializing in legal assistance for foreign clients from the IT and TECH sector. As a result of such internal research, KIEŁTYKA GŁADKOWSKI creates and publishes texts on topics related to modern legal problems, but also to explain the basic concepts of specialized IT and pharmaceutical fields. In this way, KIEŁTYKA GŁADKOWSKI aims to demonstrate to potential clients within specialized industries that our lawyers are also familiar with specialist terms necessary for a proper understanding of our foreign client’s business and legal needs.

This is one of those texts. We invite you to read it.

How to get a cryptocurrency?

Cryptocurrency is not emitted by some central, national bank as it happens with classical form of money (fiat money). Cryptocurrency is made in a digital sphere and the only way to obtain the currency from the blockchain system is to mine it (similarly and metaphorically to the gold mining). Cryptocurrency mining works similarly to the gold mining. Virtual coins can be discovered digitally using computer programs. The Bitcoin, for instance, has set a limit of total of 21 million bitcoins. Thus the faster you dig bitcoins the more of them you will have (if we consider only mining). All bitcoins are lying within the blockchains system and the role of the computer program and the miners is to dig it from that system, precisely to discover it in that system. Thereby there can be one miner or a clubbed miners’ group who dig together, faster and more effectively and then they divide their profits among each other.

What is a mining pool?

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What is NTF?

NFT is a blockchain technology gradually entering our lives, more increasingly related to contemporary state-of-the-art artwork that can be purchased at international art auctions. Non-fungible token (NFT) is a key part of the blockchain economy. This is a type of cryptographic token that is stored on a blockchain architecture. It is a unique, digital certificate that provides certain ownership rights in an asset and it is not possible to copy it. Each of the tokens is individual, of different value and has no equivalent for itself. The most common standard for creating and issuing tokens is ERC-20, but there are other standards in operation (e.g., ERC-223, ERC-721, ERC-777, and ERC-1155). Each successive standard is created with increased security and speed in mind. NFTs can be used to represent items such as photos, videos, audio, and other types of digital files.

Blockchain is a decentralized database used to store and transmit information about transactions made on the Internet. One of the features of NFTs is that it can only be bought, sold and traded as individual assets and this is one of their differentiators in the market.

The Cryptocurrency market is growing at an accelerated rate and NFT trading is definitely following it. NFTs differ from cryptocurrencies such as Bitcoin, Ethereum or DDKoin in that they are both not interchangeable and not identical. In addition, owning a given token does not entitle us to the rights reflected by the token. NFTs can’t be divided into parts as the elementary unit here is the token itself, whereas fungible tokens can be because all the units have the same value. It does not matter which unit you get.

How to mint NFT?

Creating and saving NFT for the first time on a block chain involves minting. This is how the digital art becomes a part of Ethereum blockchain. Thanks to this process artists can purchase, trade and track in the market the art works.  Minters may be the creator of the work associated with the NFT, such as the artist. It can also be someone who has the appropriate rights to mint NFT digital assets. NFT contains unique identifier (called also ‘TokenID’), the blockchain wallet address of current owner and an identifier of where the digital work may be found. Transactions are fully transparent, so anyone can view an NFT and its underlying information, including the blockchain address of the current owner and the blockchain address of any previous owner. In addition, since transactions on a blockchain are publicly viewable, buyers can see the address from which the NFT was first minted.

NFT and cats?

Early forms of NFTs have been around since the mid-2010s. The NFT technology gained popularity in 2017 with the virtual cat-trading game called CryptoKitties. Namely, this is a game on Ethereum developed by Canadian studio Dapper Labs  which allows players to adopt and trade virtual cats. Each cat is one-of-a-kind and 100% owned by the owner and it cannot be replicated, taken away, or destroyed. Then NFT gained momentum. Many people have used the game as a way to earn big amounts of money quick. According to the TechCrunch website research from 2017, about $1.3M has been transacted, with multiple kittens selling for ~50 ETH (around $23,000) and the “genesis” kitten being sold for a record ~246 ETH (around $113,000).

The first 5000 days

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British auction house Christie’s is where spectacular auctions take place. Transactions that are carried out there are mentioned all over the world. Many Christie’s auctions attract interest due to the fact that they may be controversial, such as sale of an image created by artificial intelligence or the work entitled “Femme assise près d’une fenêtre (Marie-Thérèse)” by Pablo Picasso. Recently Christie’s announced that another innovative auction is planned.

Namely its October “Post-War to Present” auction will include the sale of 31 non-fungible tokens that are considered to be some of the oldest on the Ethereum blockchain. A non-fungible token (NFT) is a unit of data stored on a digital ledger, called a blockchain, that certifies a digital asset to be unique and therefore not interchangeable. This will be the first ever live auction with bidding conducted entirely in Ether. The NFTs that Christie’s is offering in the fall have distinct legacies of their own. They are also estimated to sell for between 250 and 350 ETH, which shakes out to approximately between $870,000 and $1.3 million. These NFTs are Curio Cards that were made in May 2017, so even earlier than CryptoPunks and CryptoKitties.  

Aside from the Curio Cards NFTs, Christie’s will be auctioning NFTs from the Art Blocks curated collection. Modern artists would have possibility to choose their favourite post-war artworks and pay for them in Ethereum. The tokens are representing real-world objects like art, music, in-game items, videos and other seemingly mundane everyday signifiers. Works by renowned artists such as Helen Frankenthaler, Elaine de Kooning, Joan Mitchell and Grace Hartigan will be part of the auction alongside works by Wayne Thiebaud.

The event definitely created a buzz among art enthusiasts.  NFTs are highly valued digital assets which uses blockchain to record the ownership status of the aforementioned items. After the transaction only the buyer of an NFT has the official of being its owner. However anyone can still view the item.

Recently, several large cryptocurrency-based auctions have brought in huge amounts of money in the art world. The upcoming “Post-War to Present” auction is sure to create a buzz among currency enthusiasts. One thing we can be sure of – a digital revolution is coming, and the world of cryptocurrencies will surprise us more than once.

Sources:

Christie’s Is Now Accepting Ether for Ethereum’s Earliest NFTs | Observer

Christie’s to Hold Auction of Some of the Oldest NFT Art — With Live Bids in ETH | Technology News (ndtv.com)

Christie’s na Twitterze: „Friday, 1 October at 9:30AM EDT, Christie’s New York presents Post-War to Present: The NFTs. This will be the first ever live auction with bidding conducted entirely in Ether. Featuring Curio Cards and Art Blocks Curated. https://t.co/Ydpr1zsr5Z https://t.co/zUaoY0pEXT” / Twitter

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We usually associate the cryptocurrency environment with advanced security measures to secure financial resources. There are even companies that offer cryptocurrency holders advanced methods of securing their wealth through military technology. Nevertheless, the problem of theft is not a foreign topic in the cryptocurrency community.

The graph above shows the size of cryptocurrency theft over a period of 3 years. Different colors indicate different cases of cryptocurrency theft, while the black line shows the number of recorded incidents.

Almost all cases of cryptocurrency theft fall into one of the three theft categories. The categories mentioned are: Exchange attacks, attacks on individuals, DeFi exploits.

Exchange attacks

At this point, thieves have stolen billions of dollars worth of cryptocurrency by attacking exchange wallets. Many companies, including such large and respected companies as Bitpoint, Binance, DragonEx, have been the subject of keen interest from hackers. The question arises as to how hackers managed to break through such advanced security. One of the most common methods used by hackers is social engineering. A hacker typically tries to trick employees of a particular cryptocurrency security company’s customers into downloading special malware that will give them access to one or more accounts. If the attacker is sufficiently determined, he will wait for months or even longer, observing patterns of money inflows and outflows so that he can sense the right moment to steal as much money as possible. What does this look like in practice?  In one particularly audacious case, hackers set up a fake company, complete with website, social media presence and executive resumes.  On the fake website, the hackers posted that they had created an automated trading bot and sent out several messages to employees of the companies/exchanges asking them to download and try a free trial version. At least one of the recipients was tempted by the offer. As it later turned out, the “free trial” included malware that helped hackers obtain the keys to private cryptocurrency wallets of several users. Immediately after gaining access to these accounts, the hackers began siphoning funds from these wallets. Hacking activity is a major threat for exchanges.

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