Christie’s Auctions in London are always good for excitement. This was also the case when artist Beeple (real name: Mike Winkelmann) recovered more than $69 million with his artwork The First 5000 Days in March of this year. It received its historical dimension above all from the fact that it is one of the first of its kind to be truly unique. NFT technology makes this possible. The term refers to a special application of the blockchain, with which digital entities can be designed in a way that is unique and resistant to forgery.
To understand how NFT works, it is worth considering the topic of coding as a whole. Coding has been one of the most important trends in the use of blockchain technology for years. The main focus is on the possibility of digitally trading and managing illiquid assets. These entities, internationally referred to as non-cashable assets (nbA), such as real estate, artwork, valuables and collectibles, are not only interesting investment opportunities in times of low interest rates. Digital coding of stocks in these commodities allows ownership of these assets – even in parts – the exchange. It will be made interchangeable and thus will be available to new groups of investors, among other things. The basis of coding in the Ethereum ecosystem is the ERC 20 standard.
As the name implies, non-fungible (non-exchangeable/exchangeable) tokens according to the ERC 721 standard are very different from the basic idea of the token. Because this is about defining something that is irreplaceable and irreplaceable in the digital world as such. Artist Beeple provided a particularly popular example of this by citing his work at the beginning.
Singularity was hitherto a property of things in the real world that could not be mapped into the digital world. Because no matter if it’s an image, an audio document, or a text – a digital image means that any object can be copied at will. Among other things, this repeatedly leads to copyright disputes in the world of art, music and media. In addition, online commerce also thrives in the business of pirated copies of physical goods – often backed by fake digital “certificates” whose authenticity is difficult for any retailer to verify and certainly cannot be verified by the end customer with reasonable effort.
NFTs differ from other blockchain tokens – which include cryptocurrencies – primarily in that they cannot be exchanged or exchanged for identical tokens. It consists of one or more proprietary smart nodes that guarantee their uniqueness and impossibility through their implementation and interaction. In addition, they are – at least in their earlier form specified in the ERC 721 standard – indivisible. The combination of these two characteristics makes it easier for NFT to ensure transparency of NFT ownership and deter fraud or fraud attempts compared to other blockchain tokens. In addition to the ERC 721 standard, there are already a number of other standards that add functionality to designate proprietary business models.
The principle and benefits of NFT can be demonstrated using luxury watches as an example. (see figure above). The uniqueness of NFT can help prevent product piracy or at least make it significantly more difficult. For this purpose, a token is automatically generated when each hour is completed, which contains all the information needed to uniquely identify the hour. This includes serial numbers, components, and production data that help uniquely identify them.
The process of creating an NFT is called minting, derived from the English verb “mint” to mint coins. The motivation for this comes from the production system. During minting, an event token is issued along with the NFT, which is technically closely related to the NFT – like both sides of a coin. For this purpose, the NFT contains a link to the associated event code. The event code contains a list of all transactions that have been completed with the NFT.
They can be tracked at any time, from coin minting during watch production to recording delivery and delivery to retailer and buyer, as well as watch services and resales. Unlike the serial number, the NFT, by associating it with its event code, contains all the information not only about the originality of the product, but also about the owner’s authorization to sell it. In addition to protecting buyers, this also protects sellers, who can prove the value of their property at any time without any doubt. Manufacturers also benefit because the exclusivity of their products is guaranteed as an essential component of the brand.
Zoë Roth provided a well-accepted example of the use of NFT, which as a child became a popular idea for disaster memes and thus caused a worldwide sensation: “Disaster Girl,” Zoë Roth sold a photo her father had taken of her at the NFT for 180 ether. , equivalent to more than 350,000 euros. The New York Times reported this at the end of April. Highlight: The copyright remains with the Ruth family and they receive ten percent of every further sale proceeds.
Robot Sophia made headlines in March when an NFT panel of his self-portrait was hammered for nearly €600,000. Experts see great potential in online commerce in luxury goods, among other things. According to Bain & Company’s findings, nearly 50 billion euros were delivered here in 2020. In order to protect both manufacturers and brands as well as customers from fraud, the industry has long relied on blockchain platforms such as EverLedger or auraluxuryblockchain.com.
With the NFT, companies now have more efficient technology at their disposal than traditional blockchain applications. However, the potential of NFT is not limited to niche markets. Other application scenarios are:
Digital reliability certificates for high-quality spare parts in mechanical and plant engineering, especially in connection with their provision by specialized service partners using 3D printing.
In the pharmaceutical industry, prescriptions for authorized production of drugs can be issued in a non-falsifiable manner via NFT.
Identity cards, such as a digital vaccination card, can also be secured against tampering and theft using NFT.
In the software industry, for example, NFT can ensure that AI units trained for specific use cases can only be used in the intended context. For example, when it comes to security solutions, control of critical infrastructures, or medical implants such as pacemakers, hearing aids or blood sugar sensors.
Sourceforge provides an overview of the NFT platforms currently available, particularly in the context of the art and collectibles market.
NFT – like cryptocurrency – is an application of blockchain technology. As with Bitcoin, Ether, and other cryptocurrencies, the technology’s great potential must be brought to practical use. In a concrete sense, for companies, this means: identifying potential use cases in their own business environment, finding partners, forming alliances and creating consortia. Because blockchain development so far has shown a lot: the biggest benefit arises where there is collaboration across companies and industries.
After all, other technological advances such as the Internet of Things, the Industrial Internet, machine-to-machine communication, machine learning, big data, and artificial intelligence do not stop at the company’s borders. On the contrary: your benefit increases when you share it. NFT as a key technology for simple and secure management of device identities, secure packets of data or artificial intelligence algorithms based on the radar of every company that, as a leader in innovation, wants to ensure the individuality of its brands, products and operations in the long term. (body weight)