With this article we aim to provide information and food for thought. Not just for those who are at the beginning of their NFT adventure, but also for those who are well versed in NFTs — and may be experiencing obstacles that are limiting their capabilities and preventing them from advancing further.
The most important issues with NFTs are the question of whether we are actually dealing with an original, and whether it can be altered.
Provenance — it’s all about the origin
As with everything unique in the world, it all comes down to provenance. How do we know that a painting said to be a Vermeer has been painted by the great master himself? There are a limited number of people and techniques that can, to a high degree of certainty, say that a painting is the original — but we still don’t know for sure. And that is because we don’t have a trail back to the studio and time where the great master produced the painting. Interestingly this is exactly why one of the greatest Vermeer forgers in the world — Han van Meegeren — was famously able to sell a forged painting to Hermann Göring during the Second World War.
Christ and the Adulteress — Fake, by Han van Meegeren
Smart NFTs: Immutable — traceable — true
In the modern age, where digital art is rapidly coming into fashion and big money is paid for it, the issue of provenance can easily be addressed using blockchain technology. Because the blockchain is public and immutable, it is very easy to establish if the digital token representing the ownership of a piece of artwork is what it claims to be. Every single unique NFT on the blockchain can be traced, through every address it has ever visited, all the way back to both its creator and even the exact time that it was created.
Any NFT on the blockchain can invariably be traced back to its origin
The crucial cryptographic hash
However, for it all to work it is extremely important to consider what is actually being stored on the blockchain itself, and this is where we should introduce the reader to the concept of cryptographic hashes — an item’s digital fingerprint. As an example to illustrate what this is and why it is crucial, let’s suppose that we want to buy a piece of digital artwork. An art NFT on any blockchain will be keeping an external reference to the artwork. But what if, for whatever reason — be it system failure or a hosting company having ceased operations — the external reference is no longer accessible. How would we then know if the artwork being presented for sale through its ownership NFT is actually genuine? The seller will surely confidently assert that it really is the original — but we have all heard similar things before, and common sense dictates that this alone should not convince us.
The unique element guaranteeing authenticity
The only way to guarantee that the artwork we are considering buying is the genuine, original piece, is to store not just an external reference such as a URL on the blockchain, but also a cryptographic hash corresponding to the artwork. A cryptographic hash is the result you get when you run a digital input — such as a piece of digital art — through a cryptographic algorithm. A cryptographic algorithm is deterministic, meaning that it will always come up with the same end result. You can run it through the algorithm a million times, but the result will never change. Furthermore, it is impossible for two dissimilar inputs to result in the same cryptographic hash being generated — even a single pixel difference in an 8k artwork will result in a wildly different cryptographic hash. On top of this, it is impossible to reverse engineer the cryptographic hash to generate the original artwork from the cryptographic hash stored in the NFT.
Great minds make Smart NFTs
We now know that, when evaluating an NFT, it is important to verify that the cryptographic hash of the associated digital art is being stored on the blockchain. This revelation also triggered a desire to dig deeper and understand which additional aspects are important with regards to NFTs. After digging long and hard, we ended up in Canada with a person who in our opinion is one of the greatest NFT minds in the world: Vincent Geneste, the founder of GhostMarket. Vincent is living and breathing NFTs, and he has chosen the Phantasma blockchain on which to implement his vision for NFTs. To hear more about Vincent’s vision — in particular about self-minting of Smart NFTs — we recommend House of NFT’s interview with Vincent.
Learn more about Phantasma Smart NFTs
Your NFT metadata is powerful!
According to Vincent, one key differentiator when it comes to NFTs is whether you can prove that 100% of the NFT metadata is being stored on the blockchain. This is something that unfortunately is not doable on Ethereum because it does not have the concept of ROM (NFT storage). In contrast, Phantasma’s built-in NFT capabilities do indeed enable storing the metadata on the NFT’s ROM. This is essential when considering the ability to verify the authenticity of large files which must be stored off-chain. There are many different ways to store these — and for artistic creations the general consensus has been that the InterPlanetary File System (IPFS) is the best choice as it offers high capacity while maintaining decentralization. The challenge is then to be able to prove that the NFT representing ownership is associated with a particular piece of digital art stored using IPFS. The solution is as simple as it is elegant — as you can store the cryptographic hash of the associated piece of art in the immutable ROM of the NFT. Any alterations to the art would invariably result in a wildly different hash, and the cryptographic hash in the NFT will always remain truly 1:1 with the art we own.
Furthermore, NFT ROM allows for securely storing access to locked content in NFTs, as the URL of the locked content can be stored on the blockchain — encrypted in the ROM of the NFT. When someone attempts to decrypt this URL, the request will be handled on the chain by a smart contract, and only the owner of the NFT will be able to decrypt and read the URL providing access to the content. Any other external request will be automatically denied — simple, elegant, safe! By now you are probably starting to realize why we aren’t minting NFTs on Ethereum these days…
Virtually free for developers
All of the above comes on top of the simple fact that minting NFTs on the Ethereum blockchain is very costly — and slow as well. In contrast, we found that minting an NFT on the Phantasma blockchain costs a mere fraction of a cent, and that it even allows minting on demand. Whether you are a gamer buying in-game items or an artist creating a new artwork, this means that your new NFT will be in your wallet just a few seconds after submitting the minting request — a groundbreaking achievement. However, there are many grand claims being made in the world of blockchain technology, and for that reason we set out to seek supporting evidence for these claims. This search then brought us from Canada all the way to the other side of the globe, to the Australian gaming studio GOATi Entertainment, creators of a racing game called 22 Racing Series. Tightly integrated with the Phantasma blockchain, GOATi has minted over 280K NFTs using Phantasma’s minting on demand feature. According to their Managing Director Garth Midgley, this has cost them around $50. In contrast, minting this number of NFTs on demand for each order on the Ethereum blockchain would have cost them, depending on a number of factors, an whopping $100,000 — $300,000.
The cost differences are mindboggling
Royalties are not just for royals
Back in Canada, talking to Vincent a bit more brought up an interesting challenge for digital artists, whether they create digital artwork, music or other types of digital art. Once our digital art has been sold we have lost ownership — but what if it becomes a highly sought after piece of art down the line, supremely valuable, and we as artists sit back tearing our hair out for not being able to see this happening and letting it go for peanuts? According to Vincent, this is where royalties come in to save the day. He explained that the Phantasma blockchain offers a native marketplace smart contract with royalty features, and this allows a life long royalty structure to be established. This feature can give the artist significant peace of mind, as it guarantees that every single time the art NFT is being sold to a new owner, the original creator will automatically receive their exact royalty share delivered straight to their personal wallet. There is no need for intermediaries, manual calculations or trusting others as it is all handled by an immutable smart contract. It is worth pausing for a minute to properly digest this before reading further, because this feature is too important to miss.
Hardcoded, trustless royalties for the creator
Infuse — anything, everything
In our quest to properly understand NFT capabilities in the blockchain space we have of course also researched first movers such as Enjin andRarible. While they both offer some nice features, it turns out that only Phantasma can offer them all. In short, Phantasma offers the combined features of Enjin and Rarible — and more. As an example, Rarible offers royalty but not infusion, while Enjin offers infusion but not royalty — Phantasma offers both.
So, what is infusion? Infusion is the practise of storing other assets in an NFT. Like the Russian Matryoshka doll, where a set of wooden dolls of decreasing size are placed one inside another. In the case of NFTs these dolls can take the form of other fungible or non fungible tokens. This is a very powerful and promising feature, and choosing a chain that can offer this significantly expands and enriches the possibilities one has when creating NFTs. While Enjin does offer infusion, it became clear that they only allow its native token ENJ to be infused — but not other tokens like ETH, nor any type of NFT. In contrast, Phantasma allows simultaneous infusion of all types of tokens that the chain support, both fungible tokens such as ETH, NEO, SOUL and KCAL, as well as all types of NFTs.
Phantasma multi asset NFT infusion
Fractional ownership and interoperability
Before we wrap up this deep dive into the world of possibilities that NFTs have to offer, another important feature to consider is fractional NFTs or sharding, such as being offered by Niftex. This allows the ownership of the NFT to be split amongst a number of people. As an example, this would allow a very expensive racehorse to be owned by a consortium of owners. In the case of NFTs, this allows the original NFT owner to unlock liquidity and volume and sell parts of his NFT on the marketplace, where buyers can get access to unique and valuable assets at a low price threshold.
The final important feature of NFTs that we would like to highlight is interoperability. In plain terms: Can an NFT move from one chain to another? Throughout our journey we have learned that Ethereum based NFTs are constricted to the Ethereum blockchain. According to our NFT guru Vincent however, Phantasma will support cross chain migration of NFTs as part of its global oracle based solution for swaps. This development is currently ongoing, and according to Vincent’s estimation it is approximately 90% complete at the time of writing. As a prerequisite to being able to implement this, the Phantasma developer team early on ensured that the Phantasma NFT standard was compatible with other NFT standards like Ethereum’s ERC721/ERC115 and NEO’s NEP11.
With this article we hope to have covered the major factors that play a role in choosing the right blockchain for minting, storing and trading NFTs.
Our primary goal has been to help those who are searching for a blockchain when they are at the very beginning of their journey to mint their first NFTs, as well as those who are either already, or shortly will be, hitting obstacles in their NFT implementations. Take comfort in knowing that there are blockchain available where these obstacles can be resolved. As the saying goes, it is better to stop half way than to completely go astray or persevere in error.
Until next time,
The Writer’s Lounge