Non-Fungible Tokens (NFT) for Identity and How It All Works
All of us have played or at least heard of CryptoKitties, built on the Ethereum blockchain or the NEO version release called HashPuppies; but do you know the technology behind these concepts? It isn’t just another NEP-5 token or ERC-20. These premises and others arising are now using something called Non-Fungible Token (NFT). What the heck is that you ask, I thought all cryptocurrency was the same? Let’s dive into this!
What are Non-Fungible Tokens (NFT)?
This concept is really easy to understand when we think about our everyday lives. Fungible means that something can be replaced by another identical item. If I give John Smith 1 TOLL token, then he gives Adam Smith that same 1 TOLL, it doesn’t matter who had it first because they all TOLL are identical in use and value at that current snapshot in time. Same premise goes for paying people in US Dollars. US dollars are not unique and are interchangeable with others for goods and services. Most cryptocurrencies prefer fungibility because it becomes an exchange of value, units of accounts etc. Fungibility is applied to Bitcoin, Ethereum and pretty much all other large crypto projects.
The real use-cases for NFT lie within their distinguishability; think of that rare holographic Charizard or Babe Ruth baseball card. An NFT token can digitize assets that are unique pieces and that token is equally as unique. An NFT token then becomes desirable and unique, as opposed to all ETH and BTC being equal.
ERC-721 publishing on Github aims to set the protocols for Ethereum for NFT. This is similar to the ERC-20 standard but adds the non-fungibility element. The key aspects are tokens that can be managed, owned and traded. Take a look below:
Haven’t we seen this before in video games?
The Warcraft fans will say they have seen this digital scarcity premise in their avatars. They uniquely built characters unlike any others and it is true they have existed for many years. But, adding a blockchain makes these decentralized and this isn’t just a buzzword here. This is extremely relevant to prove ownership of an asset without a centralized authority having to certify the claims. There are now projects popping up all over for music, artwork and homes on the blockchain with NFT protocols in mind. A slogan of NEO is the “Smart Econony” and I believe NFT gives more credence to this slogan. This will allow immutable records for an asset with a blockchain and the NFT enables rarity and unique nature to a token we can own and manage.
How does this tie in with Bridge and identity?
We saw the problem and the arising worries of regulators; since cryptocurrencies exploded in value in the last 12 months, money-laundering rules are being applied to this because the transfer of value it provides. Without a process of knowing the customer, where that cryptocurrency came from, it becomes a grey area for regulators. This core concept is how we designed the Bridge Protocol around. Our tool is assigning ID in a unique way to a public address/private key transaction. This meets the money laundering audit requirements, but what if each ID unlocked something unique?
We believe that NFT will gain prevalence in the very near future and uses after Gov. Carney signed into law three bills that specifically address the legal status of blockchain records; SB182, SB183 and SB194.
We foresee a secure, Bridge Passport that can unlock and share your NFT tokens that prove ownership of cars, homes, gold and more. This would provide security of your ID in the Bridge chain, while ensuring ownership of the asset/token you are sharing in a trusted manner. This would allow for transactions across the world in a seamless manner. Businesses can transact globally and eliminate any third-party verifiers and attorneys/middle-men. Property can be transferred in India with American businesses; instantly showing each party has the funds on hand while ensuring transfer of titling for property is owned by that unique NFT token the seller shares visibility with on the blockchain.
Now that legislation is beginning to recognize blockchain records as authentic, the physical asset it represents will be next.