The billions of dollars that have exchanged hands as a result of NFTs, have solidified its presence to be more than a passing frenzy, bubble or hype. Over $20B was traded in volume in the past year, and more than half has already been traded in the first quarter of 2022, although growth of its user exchange volumes have dwindled as a result of the now obvious bear market, strengthened by LUNA’s obliteration.
The rise to fame and adoption of these uninterchangeable tokens was quite unexpected, but once it hit the spotlight, the potential to disrupt the internet and transform it from what it currently is was quickly recognized by enthusiasts and even “normies”. Little wonder why it has been applied to a vast number of fields including tokenizing digital art, photographs, text, tweet, codes, music, gif, videos, collectibles, tickets, and even domain names etcetera. The list, as each day passes, seems to be limited only to creators’ imagination.
NFTs, an acronym for Non-Fungible Tokens, are unique blockchain-based tokens which serve as a deed or proof of ownership of any type of digital and even physical content. As its name hints, individual tokens cannot be exchanged for one another as they are inherently unique or different from other tokens; To put this into perspective, token #134 of an X collection of tokens, is inherently not the same of token #135 of the same collection. This is the superpower of NFTs to serve as a certificate of ownership for the digital items or assets it’s linked to through its metadata property.
One of the prominent reasons why NFTs have been outstanding that even staunch web2 users find these unique tokens unique, is the creator freedom it provides. With complete independence, web users can now create and maintain full self-custody of any content they put out. In addition to this, perhaps most importantly for some user, independently monetize their content and build an economy of value around their digital property.
While the endpoint of the content, asset or digital item is almost fully decentralized as NFTs, if content is hosted on decentralized storages that is, the process of getting to that point is not entirely so. In the process, as the user journeys from point A to B, from the first click which opens the browser interface to uploading the content to the tokenizing platform, a good number of the channels and tools till date remain centralized. In fact, a humongous portion of the internet till date still remain centralized. Experts argue there are no standalone fully decentralized platforms to this day and we can’t say their claim is far from the truth.
Amongst the several centralized web infrastructures, we’ll be shining the spotlight on the naming system of the internet — the blockchain revolution is now knocking at its door with a pole-length sickle — what it means for NFTs and vice versa.
The internet naming system, popularly referred to as the Domain Name System, DNS for short, is a system which brought great usability to web technology. Prior to its establishment in 1983, users of the web had to keep in mind the internet protocol (IP) addresses of devices or websites they had to visit to request any resource from. These addresses are used by the protocol to locate the resources in web of interlinked resources on the web. Little wonder why they are similar URLs, Uniform Resource Locators — In fact, IP addresses are a translated subset of URLs.
No one wants to keep a period-separated combination of numbers such as 217.172.10.14 in mind, a user would rather memorize a website domain name like Google(dot)com. This is what the DNS standardization achieved for the internet by developing a registry or a phonebook of some sort which maps human-readable and “memorisable” names to these machine-level IP addresses. This is how a web request is handled with a DNS; when a user requests resources from, say Bictory.io by typing in that domain name into the address bar and hitting enter, the request goes straight to a domain name resolver which translates the request into an IP address to find where the resource requested is located in the web to fetch the data.
It’s a pretty sophisticated and efficient system but heavily centralized. It’s also been proven that DNS servers are a weak point in the internet and that the threats continue to grow with reports highlighting about 82% of companies victimized by DNS attacks. Besides the caches in recursive DNS resolvers, the main registry of domain names and addresses is held in centralized authoritative servers which when compromised leads to significant loss of data. Most attack on DNS’s either prevents access by swamping the server with malicious bogus requests or even worse redirect an unsuspecting user to the attacker-controlled website clone of the user request and stealthily harvest user private and payment data.
Blockchain domains, now rampantly claimed, is proven to offer new levels of security. Developed to give a human-readable face to long alphanumeric strings called addresses just like the DNS, its applications have stretched to break new grounds of internet infrastructure. Contrary to the classic DNS, the registry of blockchain domains are held and resolved by smart contracts on the blockchain. Not only does this results in an immutable phonebook, it eliminates other vulnerabilities that once resulted from a centralized registry.
These decentralized domains and usually minted as NFTs and held in the owner’s wallet just like any other NFT, cryptocurrency or token. They are also similarly transferrable. This, in itself, means the security of NFTs as entire ecosystem of distributed website can be set up free from bottlenecks or central points of failure. The registry in distributed domain name systems is a smart contract which handles the list of top-level domains, sub-domains, owners (in terms of wallet address), resolver, and the Time To Live (TTL) of the domain.
Here’s what it means for NFTs and even other blockchain-backed digital assets collectively. A website for any purpose is fundamentally almost a combination of the content or resources stored in some virtual storage and a uniform resource locator (URL) or domain name to find the hosted content. For storages, decentralized storages like IPFS, Storj, etcetera which guarantee the persistence hosted data by sharding the data is already predominant and they are one of the key reasons why NFTs are still held in goodwill. NFT off-chain data are held in these kind of storages and the Content Identifier (CID) is included in the metaproperties of the NFT held on-chain.
However, the platforms through which NFTs are viewed, exchanged i.e marketplaces, staked or collateralized to take loans all still run in the classic domain name system. This is a huge security risk as it renders connected wallets vulnerable if compromised by the soaring DNS attacks. In a case when the DNS is attacked and the user redirected to a clone, the user would have signed open the wallet to the bad actor. This would hamper the development of the decentralized web and the advent of envisaged Internet of Value (IoV). With these distributed domain systems, browsers will read the blockchain directly i.e the distributed address registry.
At the time of this writing, browser adoption of blockchain domains is at its infancy. Popular browsers which have come to terms with the distributed naming system include the Brave and Opera browsers. Other browsers require some extensions to handle user queries to distributed domains — not quite convenient for an average user.
One major problem associated with blockchain domains, given that they are distributed and not managed by any central authority like the Internet Corporation Assigned for Names and Numbers (ICANN) is lack of standardization (well, this applies to the entire web3 space) and cybersquatting. While projects like Unstoppable Domains offer these domains as lifelong owned NFTs, some other domain providers like the Ethereum Name Service (ENS) has applied a renewal structure to discourage the squatting of domain names and some top Alexa-ranked domain names have been reserved for a period for the brands of the traditional web to claim them.
In conclusion, blockchain domains is a step to realizing the promise of a fully decentralized web which is safer compared to what it currently is, given the rising reports of DNS attacks. Taking out the central points in the current naming system which is proven to be susceptible to attacks and replacing it with the distributed architecture establishes an environment where we have one less security threat to worry about. The safety of our digital assets are worth it right?
Team Bictory Finance
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