Non-fungible tokens or NFTs have been the biggest craze of the recent digital currency bull market. However, NFTs are still in their infancy, with useless pictures like Bored Apes being sold for millions of dollars. In a recent video interview, Dr. Craig Wright explained the unrealized potential of NFTs and where they might be headed in the future.
What is a Non-Fungible Token (NFT)?
Kicking off the interview, Dr. Wright described what NFTs are. The nChain chief scientist said NFT has four key characteristics:
- Unique – Metadata describes what makes the asset different from others.
- Ownable – Blockchain technology helps to prove your ownership.
- Transferable – NFTs can be freely traded on specific markets.
- Indivisible – NFTs cannot be split into smaller denominations.
“NFTs are unique cryptographic tokens that cannot be replicated,” Dr. Wright said.
The current misuse of NFTs
Highlighting the example of a JPG file that sold for $500 million, Dr. Wright pointed out that this is not ownership or IP rights in any real sense. He said that there is some evidence that the buyer and seller of this NFT may be the same person. Asking the question of “who paid what and to whom?” Dr. Wright used this question to highlight something he has been hammering home for years: identity matters.
He highlighted that without identity, e.g., the buyers and sellers being known (which is not the same as their identities being publicly known), no property rights could be enforced.
At the moment, NFT holders do not have:
- Digital Rights Management
- Copy Protection
- Guarantee of Availability
However, they can have all of these things if their identities are known.
The true potential of NFTs
Describing the true potential of NFTs, Dr. Wright explained four potential use cases.
NFTs can be used to verify the authenticity of high-end goods. For example, watches, handbags, and cosmetic products can be verified as legit by the purchaser. This will make it difficult for producers of counterfeit goods to get away with hurting industries the way they do today.
They can also be used to prove ownership. For example, if your high-value item is lost or stolen, you can prove it’s yours. At the very least, this can devalue theft and allow the original owner to trace her product as it is bought and sold later. As well as items like Louis Vuitton handbags and Rolex watches, this could apply to property, vehicles, jewelry, and other items.
Essentially, NFTs can bring ownership, traceability, and authenticity to the world.
Control and access
NFTs can also be used to control access to things like rooms and buildings. For example, they can be used to give room access to different employees of a company. Combined with a timestamped ledger like Bitcoin, it could make it possible for companies to track and trace who entered different rooms and when.
As well as access to physical property, it could control access to computer servers or devices. What would this mean for hacking? Using your imagination, you can figure it out. NFTs bring value to this area in the form of security, traceability, and safety.
Tickets for vouchers
NFTs can also transform how tickets and vouchers work. Using the example of static tickets, Dr. Wright explained how NFTs make it possible to:
- Stop the transfer of tickets to someone else.
- Prevent scalpers and ticket touts from reselling tickets.
- Allowing the real ticket owner to prove ownership.
However, NFTs can allow transfers and the reselling of tickets with set rules such as with the agreement of the ticket issuer. NFTs bring the following value: traceability, authenticity, and lower operational costs in this industry. This can apply to event tickets, parking tickets, and even vouchers.
One of the areas Dr. Wright is familiar with is shipping. This is because it is related to his previous studies in law and other subjects. He’s familiar with the problems of this industry and believes NFTs can help.
NFTs can handle:
- Shipping instructions
- Packing list
- Certificate of origin
- Bill of lading
They can also track states such as:
It’s not difficult to imagine the efficiencies this would bring to this industry which Dr. Wright describes as “stuck in the 50s.”
“NFTs are not about silly little images. They should be about building something that changes the world,” Dr. Wright said.
Questions and answers about NFTs
After Dr. Wright’s main presentation, there was a question and answer session on NFTs.
Do we need new legislation to facilitate the use of NFTs and help them realize their potential?
Dr. Wright does not believe that any new legislation is needed. He points out that everything about Bitcoin complies with current laws. However, he believes that scale is needed, which includes scaling to tens and even hundreds of billions of transactions per second.
How can an average person get involved and build businesses related to NFTs?
Dismissing the current speculation on NFTs as gambling, Dr. Wright recommended building applications that beat the competition and make things better for users. For example, he said the correct approach is to build something better than Docusign and Verisign, making digital signatures timestamped and immutable.
Can NFTs be used for passports, identity documents, voting, etc.?
Yes. Dr. Wright and his team are working on this using zero-knowledge proofs. He further explains how tokens can categorize information so that specific individuals can only see the information necessary to complete their tasks while protecting users’ privacy.
What’s one of your current favorite successful use cases of NFTs?
nChain is working with several small governments such as those of Tuvalu and Antigua to create digital economies for them. He likes the use of NFTs to create complete electronic economies in some of these countries. He also likes how UNISOT uses NFTs to trace and track seafood.
Is there any real value in current NFTs as related to identity?
Dr. Wright again dismissed the value of JPGs for their own sake but allowed that there is value in in-game NFTs such as skins and weapons.
Watch: CoinGeek New York panel, The New World of NFTs
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