#Decentralized Identity

NFTs and the need for Self-Sovereign Identity

Caspar Roelofs
min read

In this article, we first highlight the great potential that NFTs have in terms of provable scarcity and ownership, as well as an important shortcoming that is limiting the fulfillment of this potential: the lack of a verifiable identity layer. We describe how this lack of verifiable identity not only limits the use of NFTs for provable scarcity and ownership – it opens the gates for fraud and scams. Finally, we describe how self-sovereign identity (SSI) can be the solution to verify the origin and legitimacy of an NFT and its linked object, and we invite you to join Gimly and bitcoin artist Petek@RaydarRayne on our journey to fulfill the potential of NFTs for digital and physical artists alike.

Non-Fungible Tokens: The basics

Non-fungible tokens (NFTs) are provably unique digital assets. They cannot be duplicated or divided creating digital scarcity. NFT's contain information that link a digital or physical object, and are recorded in smart contracts on decentralized blockchain networks which makes the record mathematically tamperproof. Ownership of an NFT is provably unique which is why investors and collectors are excited for this new digital format allowing them to have trustworthy collectables in the digital space. Under the hood, NFTs are actually software programs that exist on decentralised blockchains like Bitcoin and Ethereum which give them their unique trust properties. Learn more about NFTs here.

This works very well with on-chain virtual objects that live on the blockchain which can be provably and uniquely linked to the NFT. Some good examples of this are digital cats on Cryptokitties, trading cards on Pepecard, virtual land on Decentraland and video game items on Ultra.

However, when we want to issue NFTs representing a physical or digital object that is not on the blockchain – such as a piece of art – we run into problems. Because the NFT and its object are not immutably linked, important questions arise about what it is that the NFT conveys ownership over. And is the creator of the NFT even authorized to convey such ownership? What is the legitimacy of the NFT and the creator of the NFT in the first place?

The Identity problem

Petek @RadarRayne, a Bitcoin artist well-known for her artwork representing the stock-to-flow model in collaboration with PlanB, recently found herself asking exactly these questions. A few weeks ago, she discovered that rarible.com listed an NFT falsely representing one of her latest prints in the limited series "The Fourth Turning". This NFT was created by a scammer and was not actually backed by any of her artwork. It had nothing to do with Petek's art and was a serious infringement of her copyrights! So she asked herself: how could this happen?

Most blockchains, such as Bitcoin and Ethereum are pseudo-anonymous. Accounts on the blockchain do not reveal any information about the identity that controls them. Anyone could take a screenshot from Peteks website, and NFT her artwork. There is no reliable way for the potential buyer to verify the origin and the legitimacy of the NFT creator. A buyer would need to visit Petek's website and even reach out in person to verify whether the NFT is legitimate.

Thankfully, in this case some of Petek's clients indeed reached out to her and Petek was able to have the NFT listing removed. But surely, there will be many more similar cases where such fraud is not detected in time.

This example deals with a physical piece of art, but the lack of a verifiable identity at the origin of an NFT is equally problematic for digital art. The lack of NFT verifiability also leads to intellectual property & copyright infringements. Of course, it is possible to trace back the chain of custody to the creator's public address and see if similar artwork from the same artist is created using that address. But an instant and fool-proof manner to verify the legitimacy of an NFTs creator is lacking none the less. Without such verification built into the NFT, an NFT proves ownership only over that NFT itself, and nothing more.

Self-Sovereign Identity: Verifying the origin and legitimacy of an NFT and the linked object

This is exactly the problem that self-sovereign identity (SSI) solves! SSI is a new set of standards that guide a new identity architecture for the Internet. With a focus on privacy, security interoperability, SSI applications use public key cryptography in consertion with public blockchains to create persistent identities with private and selective disclosure of information for people (and more generally, identity information for all kinds of entities - organizations, objects, IoT devices and more).

Because SSI is built for blockchain-based identities, it is the perfect solution to bring identity to NFTs! SSI applications enables the creator or artist to proveably sign off that a digital or physical asset was created by them. Buyers can then verifiably check they are indeed purchasing an NFT that was created by the artist.

Without this, NFTs of the future should not be considered legitimate, unless people don't mind them being "backed by thin air". SSI is what lends NFTs the "value beyond the token itself" immutably, and cryptographically connected to said asset in perpetuity.

Learn more about SSI and IoT with Non-Fungible Tokens

We are currently consulting with Petek on how we can future proof her artwork from being scammed by offering SSI-backed NFTs with value that is also connected to the actual artwork through "artist approved" verification methods and proveable ownership with our self-sovereign identity NFC chips.

Do you want to work with us? Be sure to reach out via hello@gimly.io, or visit our contact page below.

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