NFTs for digital identity — first get over your baggage
What is the big deal with NFTs? Every day I read an article about a collection of digital images being sold for thousands of dollars. Or maybe it’s a company raising millions of dollars, or the fear-evoking headlines about the latest NFT hack and scam. Is there any substance behind the over-the-top hype? And what do NFTs have to do with digital identity anyway?
In the beginning was the fungible token
If the term NFT is confusing, I find it helpful to remember that a non-fungible token is a counterpoint to the fungible token. Both are designed to run on the rails of the Ethereum blockchain, and the NFT spec was designed in 2018 – that’s almost ancient history in the crypto space. Fungible tokens are interchangeable with each other like a currency, whereas non-fungible tokens are unique and distinguished from each other like a deed or verified receipt. This means that NFTs have an additional level of unique identity associated with them compared to interchangeable tokens.
Distinguishing between ‘my’ item and multiples of the same item with the same barcode means somehow giving them an identity. This isn’t a new concept. Have you registered a product with the manufacturer for the extended warranty? Or taken an inventory of your items for your insurance company? Or made an insurance claim for damaged items? Have you wanted to know with certainty that the luxury item (like a Louis Vuitton wallet) you are about to buy is authentic? How can you transfer that record of authenticity when you sell it on the second-hand market?
Tokenizing everything really means creating and/or attaching a digital identifier (the NFT) to a digital object or to the digital representation of a physical object. The usefulness of this becomes obvious if you (or your kids) game. Games have in-game currency, and there are special objects or clothes or items your character or avatar can buy to improve the gaming experience. This application of NFTs to games is a reason a lot of people are excited about the area.
But NFTs can be applied to other scenarios. Think of NFTs as providing identity for (digital) goods. They can be digital, in the case of game items and digital art, but you can apply an NFT to a collection of images of key sports moments, as in the case of NBA Top Shots. And it can apply to digi-physical goods too. I see an application of NFTs on luxury goods where you want to track the authenticity (and ownership) of an item. And I’m not the only one who sees a potential application of NFTs to the supply chain. These applications make a lot of people excited.
But are NFTs the best mechanism for digital identity? Maybe for some specific use cases (like virtual goods and tracking verified transactions). NFTs feel too lightweight for some of the more robust authentication use cases deeply known to identity experts. Still, previous work isn’t stopping exploration of NFTs for new social media platforms.
Proponents of the NFT approach to digital identity say that true ownership of digital content is necessary to free one’s digital ID from the control of dominant online platforms.
It’s the culture
The most convincing thing about NFTs is the energy, enthusiasm and money going into the space. I keep thinking about the phrase “culture eats strategy for breakfast” by Peter Drucker to explain why the best of intentions can fail. I’d adapt it to “culture eats the technologically superior solution for breakfast.” You can quote me on the revision.
I’ve talked with folks who argue there is nothing valuable with NFTs – it’s all hype and scam. And I’ve read tweets, articles and posts that argue NFTs are the wrong technology to do digital identity. And I am sympathetic with that point. But at the same time, if there was already a solution for all these enthusiastic people finding fresh energy and building collections, wouldn’t they be using it?
Wearing my W3C community group co-chair hat, I’ve witnessed more than my fair share of discussions about superior technologies; I really wish it was easy for the superior technology to win. Unfortunately, that is not always the case. The technology that wins depends on a lot of non-technical factors.
Today’s youth don’t have the 20 or 30 years of sunk cost (or experience) with today’s technology paradigms, so they have a lot less to lose by using something new. They are also going to be around a lot longer than us, and they’ll have to live with the consequences of NFTs longer than the older generation. Wouldn’t it be amazing if we use the energy behind this trend and learn from the past at the same time? I know, it’s a radical idea.
My advice? NFTs aren’t going away. And the people doing NFTs aren’t going to stop because the technology you built, maybe decades ago, might be better suited than what they are proposing today. Part of building a new technology is having the power to build that technology as you see fit. But there are opportunities to learn from the past – but that can’t happen if the experts of past and present technologies don’t dip their toes in the water.
So if you can’t beat ‘em, join ‘em. And that’s how to influence the future of NFT identity.
About the author
Heather Vescent is a digital identity industry thought leader and futurist with more than a decade of experience delivering strategic intelligence consulting to governments, corporations and entrepreneurs. Vescent’s research has been covered in the New York Times, CNN, American Banker, CNBC, Fox and the Atlantic. She is co-author of the The Secrets of Spies, The Cyber Attack Survival Manual and The Comprehensive Guide to Self Sovereign Identity.
authentication | blockchain | cryptocurrency | digital identity | NFT | secure transactions | tokenization