Introducing Confidential NFTs (cNFTs)

Our previously introduced scalability solution Nifty Erdstall facilitates (but is no condition for) the usage of Confidential NFTs (cNFTs). We introduce this novel trustless solution for NFT applications. It guarantees that only the current owner of an NFT can access specific data, for example high-resolution images or software license files attached to an NFT. This approach enables further use cases, some of which are outlined in this article as well.

By Hendrik Amler, Sebastian Stammler, Aashi Saxena and Marcel Kaiser

The digitization of assets with non-fungible tokens (NFTs) opened up a wide variety of new use cases, for example in the art and gaming domain and changed how we buy, collect and trade digital collectibles. However, all NFT data is public and there is no way to hide the data from people not eligible to access it. This further limits NFTs for use cases such as licensing, for example for the used software license market or DRM. We introduce confidential NFTs, or cNFTs, to solve this issue and further extend the possibilities that NFTs offer so that new and previously impossible use cases for NFTs emerge.

Technology

The technology behind cNFTs uses a so-called cNFT Oracle that leverages a trusted execution environment (TEE) and is interconnected with an underlying blockchain. The oracle can parse blocks to track ownership of NFTs and, for example, decrypt data associated with the NFT. Developers can interact with the cNFT Oracle using an SDK. To securely verify new blocks, the entire parsing process runs inside a secure enclave which is running inside of a TEE. Using the remote attestation feature of TEEs, users can verify that the enclave runs the correct code at any time.

Figure 1: High-level mechanism description. It is also possible for the owner and other users to send and receive ownership-certified messages using the decryption oracle.

The difference to a regular NFT can be found in its functionality: while NFTs merely represent ownership, cNFTs can furtherly contain sensitive information or allow access to services which can only be accessed by the respective owner via the cNFT Oracle.

Use Cases

Leveraging TEEs to bring a confidentiality aspect to NFTs enables a variety of different use cases across different segments to provide their services more efficiently and securely. With the help of cNFTs, blockchains can enable real-world services such as Digital Rights Management, Access control, etc. Below are some use cases:

1. Licenses: Software licenses can be issued in the form of cNFTs so that the license can only be accessed by the owner of the cNFT. This prevents the account from copying the license mischievously or by creating a fake license and using it inappropriately. Further, licenses are freely transferable and tradeable which makes license issuing and revoking much more flexible. The license NFT provides simple and secure access to software without much hassle. With the use of cNFTs, the gaming industry can also provide licenses to users who have purchased or acquired certain valuable resources or exclusive treasures that they do not want to expose in the game to increase suspense and thrill.
2. Encrypted images: Images (or any data, really) can be encrypted and transformed from NFTs to cNFTs to prevent copyright infringement or theft of digital art. This will enhance the protection and privacy of valuable art items and also increase its exclusiveness and value. One application of this is to have a low-resolution image widely available but grant the cNFT owner access to a high-resolution version of it.
3. Access control of a company’s confidential data: To limit access to the company’s confidential data, cNFTs can be generated and distributed to a small number of employees. Depending on the sensitivity of the data, a multisig approach could be taken. This ensures security, and any mishaps or data leaks can be avoided more effectively since each participant would have to participate in the most sensitive of leaks.
4. Exclusive tickets of Live shows/webinars: Offering tickets for live streaming or even on-site events in the form of cNFT will not allow fraudulent accounts to gain access to the event. This would help reduce piracy because the accounts of those watching the live program will be verified by the organizers.
5. Premium memberships for content and streaming platforms: Netflix, Prime Video, or any other platform in this area can stand to benefit from establishing premium membership badges in the form of cNFTs. This will not only allow for restricted access to the content but will also ensure security. Emerging secondary markets for such memberships might arise, increasing the effective usage of streaming platforms for individuals who want to access individual content for a limited period of time. These secondary markets could be monitored by the respective streaming service provider. The provider can charge fees for such transactions to not miss out on revenue while enabling more efficient usage of streaming services to customers.

Combining cNFTs with Nifty Erdstall

Figure 2: Incorporating Nifty Erdstall as a component in your marketplace enables a variety of features such as scalability, smart contract structures and cNFTs.

NFTs are usually expensive and time-consuming in their creation. That is not the case when using a Nifty Marketplace. Priorly, we introduced this new approach for developing NFT marketplaces which allows both novice and advanced users to fully use all NFT features while still ensuring ease of use, low fees, scalability, flexibility, and security. Regular NFTs have weak information protection properties, thus the use of confidential NFTs is the better option in some cases. cNFTs can but do not have to be used within the Nifty Erdstall (NERD) marketplace solution. This second layer scaling solution employs a Plasma inspired system within a TEE, which strongly increases scalability and offers cheaper and faster handling of NFTs. Integrating NERD into your marketplace (see Figure 2) makes it cNFT-ready and empowers customers to settle their trades and payments swiftly and cheaply. A benefit is the possibility to interact with the underlying blockchain at any time, in case of dispute or if users want to take funds elsewhere.

Conclusion

We introduce the concept of confidential NFTs which are capable of excluding non-owners to access certain information. They, therefore, empower cNFT owners to control the access to such information, goods or rights more efficiently, utilizing a cNFT Oracle. We leverage Nifty Erdstall, a TEE-based Plasma inspired system, to combine cNFTs and their features with higher transaction speed and significantly lower cost. Many other dimensions of cNFTs and their combinations with other concepts will be explored soon.

If you are interested in learning more about cNFTs and how they can be used to improve your NFT marketplace or business, visit our website (https://erdstall.dev/) and our GitHub repo or contact us directly by writing us an email at hi@erdstall.dev.