NFT is a bubble, many claimed. It will swallow up investments and come cascading down just like the 2017 ICO crash — I’ll spare the dot com bubble the shame in this article. The first wave of hype and greed came, with NFTs selling for millions of dollars, even the most caricature looking ones. Right after, things went quite a bit. You could hear the “I told you so” whispers of skeptics and critics cropping up from every corner in a myriad of variations. Less than a year later, the tides rose up again to commence a second wave which the current wave we are currently riding on has overlapped itself.
Skeptics and critics have gone quiet, mostly covering their faces with their hands in shame (Somebody tell Beeple this would be a great NFT art Idea! ). Some believers have become skeptics but are gradually repenting of their doubts because of the seemingly unending length of this new wave and the big names endorsing it. Celebrities and superstars have jumped on the bandwagon by either selling show tickets or other products as NFTs or acquiring some apes. Big businesses have grabbed either a piece of land on the metaverse or some collectibles or both. For thousands to millions of dollars, and who knows, maybe El Salvador will pass it as a legal tender next.
In all of these, there are still many unanswered questions. Of course, there should be; the industry is growing at a pace so fast that your study of it today is outdated by the next day. Still, a pressing question left unanswered is “What is the business readiness of NFTs, and how soon will it come?”. Truly, this is an umbrella question for a host of other questions, including regulations, digital asset inheritance, identity, speed and cost of transactions, etcetera.
To make an attempt at answering all of these questions, we’ll consider NFTs on Bictory’s parent blockchain, Concordium, which is built on the back of Scientific research aimed towards business applications.
What is Concordium?
Concordium is a blockchain that is built with real businesses in mind. It touts itself as a public and permissionless blockchain in nature but centered on privacy and compliance. Before dismissing this as contradictory or a complete marketing tagline with no substance, let’s consider together the approach that this seemingly paradoxical blockchain takes. In my opinion, if you asked for it, I’d say it takes a pretty interesting approach.
Driven and steered by its aim to make the now popular blockchain technology more business-ready, It approaches the existing state of the tech with a methodology that retains some of its best parts like permissionlessness, openness as well as privacy, and introduces some unique features too like an ID layer built directly into its core protocol and a double layer consensus mechanism. These simple-looking features yet profound goes a long way to position Concordium as the home of Dapps in the long term.
The primary reason for the above claim of a long-term positioning for the blockchain is simple — regulations are coming! Mass-adoption too! We can already tell by all of the support and attention of this new piece of technology and its theme of decentralization. While the brightest of minds and most studious struggle to keep abreast with it, the government must feel like dullards of the class. They are probably dazzled into dizziness by the speed at which this vehicle moves so much so, that to determine how to keep their feet in the water and regulate it without shooting themselves in that same foot or stifle innovation seems almost like an impossible task. We empathize with them, and Concordium must just be the most empathetic as they’ve provided a solution with them in mind.
Concordium’s Layer1 ID Protocol
Concordium’s in-built ID layer takes a lot of weight off of their shoulders. It would indeed be in their best interest to push Concordium mainstream. The reason for the above statement is the same reason; primarily, the government is spending millions in tracking and combating privacy coins — Identification and taxation. It would also claim those actions are taken for consumer protection. Well, let’s say we believe them and accept their actions as only noble because, in truth, privacy coins have been a menace as they’ve constantly served as a vehicle for exchanging all kinds of contraband on the dark web. An objective consideration of this builds a case for Concordium’s core ID layer.
Before the violent reactions troll in from crypto purists and OG’s ( thankfully, Medium doesn’t have a dislike button, thanks to Evan, you’re a great guy!), I should quickly state that your ID on Concordium isn’t left displayed to the public like some ad on a billboard, rather it keeps you anonymous like any blockchain would and even private if you can afford the fees for those kinds of transactions. However, suppose you’ve been a bad boy, and the government needs to find you, by its compliant positioning, Concordium provides a channel for consensual de-anonymization of your identity, only to the requester (anonymity is retained to the general public), by its partner off-chain identity providers in different jurisdictions collaborating with its on-chain identity revokers. You can read more of this interesting piece of technology in its whitepaper, as that is not the focus of this article.
Concordium’s Two-Layer Consensus Mechanism
Concordium is a Proof of Stake (PoS) blockchain that employs Nakamoto’s competitive approach of miners or validators, in this case, to update the blockchain. While this approach holds up its resistance for up to 50% of bad actors in the network, it takes some time to achieve block finality i.e prevent transactions reversal. Concordium ingeniously layers a Committee-based Byzantine Fault Tolerance (CBFT) consensus, which is known to be able to achieve almost instant block finality but fails on the attack of above 33.33% or 1/3 of bad actors in its network nodes. This brilliant combination allows Concordium to harness the best of both approaches; meteoric block settlements when threats in the network lie below the yield point of the CBFT consensus algorithm but when above falls back to the strength of the Nakamoto Style Consensus when the bad guys come in greater numbers but below Nakamoto’s Achilles heel.
What does all of this mean for NFTs on Concordium?
As we may all already know by now, NFTs are unique cryptographic tokens on the blockchain that serve as some sort of ownership tag and certificate of authenticity & originality over any digital content, including images, gifs, tweets, e-collectibles, audio, code, etcetera. Some physical items are getting tokenized too.
The billions of dollars shift in capital caused by these phenomena tokens convinces us of their relevance — No one is crazy enough to throw such a huge amount of money on some worthless pieces of tokens, right? …right? (no response). Well, regardless of all of the craziness and hype in this space, NFTs have their utilities, and the scope of use cases are widening by the day, and NFTs on Concordium will be no different, but maybe a little more interesting and future-proof.
Worthy of the first note, NFTs on Concordium run on Concordium’s CIS-1 protocol. CIS-1, which stands for Concordium Interoperability Standard 1, governs how token contracts and tokens operate on the Concordium blockchain. It sets a framework for how both fungible and Non-fungible tokens should be designed and implemented on the Concordium blockchain. Besides the ease of CIS-1 given the simplified protocol module and multi-language support, NFTs built on the CIS-1 framework have the propensity to travel between shards on the Concordium blockchain as well as even outside of the blockchain without the use of any bridging plugins. This will be a huge payoff as businesses start to employ Concordium’s private shards for different commercial purposes while still keeping up some B2B interactions.
Menacing Cost Amended
Cost is a major menace when it comes to minting NFTs because they execute more complicated computations on the blockchain and it is generally known that Proof of Work (PoW) blockchains are generally more expensive than their PoS counterparts. This reveals the benefit of Concordium being a PoS blockchain as NFTs can be minted cheaper. Considering the Two-Layer Consensus mechanism we’ve discussed, they can be minted faster and save businesses the time cost of production. Another important feature NFT businesses on the Concordium blockchain will be lucky to have is the fixed fees baked into its protocols. Detached from the market price of Concordium’s Global Transaction Unit (GTU), this reliable fee structure would aid capital planning and budgeting for businesses whose future estimations and calculations are critical to their success.
You, Not Your Address, own your NFT
NFTs are a many-to-one or a one-to-one pointer or representation (depending on its rarity) to our digital content, not the content itself. The blockchain on which the token is minted is aware of this as well as the rightful owner of the content. This is based on the information stored in the token’s metadata — a data reference to the actual represented data such as its name and URL or CID in the case of IPFS stored content. Therefore, traditional blockchains are only aware of a string of characters that are supposed to represent the rightful owner of an NFT with no connection whatsoever with real-world identities. The implication of this truth is profound. For one, the bad guys are strengthened and some good ones converted by psychological deindividuation to act rashly towards the network or other network members.
Secondly, relative to traditional account security on Web2.0, the security of Web3.0 accounts, aka wallets, are feeble. This is because there are no means to attach extra security measures because the blockchain has no framework to hinge it on. Hence the crypto cliche, Not your Keys, Not you Crypto, proves true every time.
With Concordium, However, Addresses are mapped to real-world identities. Not only does this deter bad actors from being in their worst behaviour, when the keys to your address which holds your very expensive NFTs are lost, or fall into the wrong hands, it’s not game over. You still have some hope of retrieving what’s rightfully and provably yours because of Concordium’s tethering our blockchain-ID, aka our address, to our real-world ID.
The blockchain-to-real-world ID mapping opens up a plethora of possibilities, easy NFT taxation implementation being the least. Talk about digital asset inheritance in the case of the death of the owner. A combination of the CIS-1 updateOperator token function and the real-world ID, which can be extended to accommodate next of kin, could automatically trigger a transfer after a period of account dormancy. The possibilities are endless literally, especially when we include its implementation in the budding metaverse.
The use-cases of NFTs are exponentially growing by the day, with the metaverse being the largest application of it yet. Although no one knows how far its growth will be, it’s certain now that it must grow on the right foundation, so it doesn’t cave in. Ethereum, Solana, and all other host blockchains are doing a great job at nurturing their growth. Still, some missing pieces in their core create a loophole for a lot of cancerous growth in the technology, and fixing this might require some tearing down and rebuilding. The Concordium blockchain, on the other hand, has considered these weaknesses and, by solid research, developed a solution that delivers NFTs and digital assets as a whole on steroids.
Team Bictory Finance.