Make Way for New NFT Tech
|By Jurica Dujmovic|
Non-fungible tokens have taken the world by storm.
Despite the expanded utilization of NFTs, the truth of the matter is the smart contract they’re based on is quite limited. While their use as unique certificates of authenticity is undisputed, many of the incredible features NFTs currently perform — such as the “unlockable content” feature on OpenSea or the royalty system implemented in several NFT marketplaces — are not a part of NFT tech at all.
Instead, it’s a clever combination of web2.0 technology and the NFT. Let’s call it web2.5.
Although web2.5 solves the problem of limited NFT functionality, it still pollutes the pure, decentralized blockchain approach by relying on centralized technology. And this singular flaw throws the entire concept of decentralization off kilter.
For example, let’s say an NFT you purchased came with unlockable content. If OpenSea servers were down before you viewed your hidden content, you would be unable to access your NFT before OpenSea comes back online.
Similarly, if OpenSea or a similar site gets hacked, a hacker could gain access to whatever your NFT unlocks ... as well as any other features that rely on the centralized infrastructure. To top it off, they could even redirect royalties to themselves.
Then, there’s the issue of immutability. While immutability is a key feature that increases the efficiency and security of a blockchain, NFTs could benefit from variability.
For example, if NFTs were able to edit embedded content — i.e., fixing book typos, adding chapters, changing the artwork, etc. — capabilities such as this would enable one NFT to provide a growing set of features to its owner, thus increasing its value over time.
Next is the issue of privacy.
If you love memes like I do, you must have seen those that made fun of early NFTs. They questioned the purpose of owning a digital item if it was automatically visible to everyone. While the issue was first raised with digital images in mind, it also pertains to video, audio and other media that can be previewed without owning the actual token.
Marketplaces like OpenSea provide a workaround by using traditional, centralized databases to store “locked content,” which is unlocked after ownership is recognized. The issue with this approach is NFTs themselves do not provide this functionality — you need to mint them on OpenSea (or another centralized marketplace that enables “unlocking”) to access the content.
Finally, let’s discuss a feature that artists all over the world were thrilled about when NFTs were first introduced: residual royalties.
Simply put, an artist earns a percentage of profit every time one of their NFTs is sold. Unfortunately, this is yet another feature that NFTs can’t natively support because the code is too complex for an average NFT.
The workaround boils down to borrowing functionality from centralized web2 solutions, which is precisely what OpenSea and similar marketplaces do. They keep track of every sale and use web2 code to assign royalties to sellers.
So, if you trade your NFT on a marketplace that doesn’t support this functionality, you don’t get royalties.
Royalties are a big deal since they’re not something that only artists covet; businesses would also love to get in on the action. But unless they have a corresponding web2 solution attached to it, they’re out of luck.
To solve this problem and expand the usefulness of NFTs in general, developers from the Newton Project (NEW, Tech/Adoption Grade “E-”) came up with a new kind of token, called an Encrypted Variable Token.
Theoretically, EVTs solve all these problems because unlike static NFTs, they’re dynamic. They can evolve over time due to various programmable parts that allow certain changes to be made in their metadata. This is their first advantage over NFTs.
In practical terms, this means EVTs enable modifying artwork attached to them, adding complex code that facilitates residual royalties. Most importantly, minters can now hide all valuable content from prying eyes, giving access only to those they deem worthy.
This alone is a foundation for a plethora of features that were previously impossible to implement using only NFTs. It also removes web2 almost entirely from the picture, pushing the concept even further in the decentralized direction.
The biggest question is whether EVTs will get the recognition and adoption they need (and perhaps deserve), and whether the code they’re built on is up to the task. As with anything else, only time will tell.
Many of our readers subscribe to NFT Wealth Builder, a service built from the ground up for trailblazers and pioneers ready to dip their toes into the lucrative world of NFTs. For you, and the rest of the NFT connoisseurs, I have a question:
As someone who owns (or maybe even mints their own) NFTs, would you be interested in switching from NFTs to EVTs? Share your thoughts with us by tweeting @WeissCrypto using the #WeissNFT hashtag!