Private NFTs! The Next Big Thing!

BLOCKCHAIN and CRYPTO have gained tremendous popularity over the last three years. The world saw tokenized art, video clips, sports cards, and other digital assets sold for astronomical prices. And these digital assets are likely to become an indispensable pillar of the digital economy. These digital assets are NFTs (Non-fungible tokens), which celebrities and artists are diving into as they see emerging opportunities to connect with fans.

NFTs are fundamentally unique, and technically no individual NFT can be duplicated. NFTs are built on BLOCKCHAIN, and a sneak peek into this technology on which NFTs are built shows there is so much potential for these tokens in the future.

BLOCKCHAIN is different from a bank ledger, as no country or third party is in control of the network, but anyone can become a part of the network.

At this point, you need to understand what NFTs are and what it means to own them privately. So, let’s talk about NFTs.

What NFTs Are Not

To understand the concept of NON-FUNGIBILITY, there is the need to have a firm grasp of fiat money and fungible tokens.

Fiat money is a currency established as a legal means of exchange by government regulations, but they lack intrinsic value. Fiat money owes its value to the public’s trust in the issuer: the government.

Then, fungible means items or tokens that users can exchange with other assets of the same type and value. Fungible tokens are assets that are not unique but are divisible, and you can exchange them readily for other assets of the same type. The tokens are made such that each fraction of the token is equal to the next.

Fiat currencies such as the US dollars are fungible. The term fungible means that when an individual gives one person a USD 1 note, that person can still give back another USD 1 note to the original person. The notes have equal value and are exchangeable, so long as they are genuine.

In BLOCKCHAIN technology, CRYPTOCURRENCIES such as BTC, ETH, SOL, etc, are not fiat, but they are fungible tokens as each coin has the same value as another coin of the same type. For example, 1 ETH equals another single unit of ETH in value, which makes CRYPTOCURRENCIES a suitable medium of transaction in the digital economy.

Are They Safe?

NFTs also use BLOCKCHAIN TECHNOLOGY,  just like CRYPTOCURRENCIES, and they are generally secure. BLOCKCHAIN is distributed, and it makes it difficult to hack NFTs. However, one security risk NFT owners could face is losing access to their NFT if the platform hosting the NFT runs out of business.

What NFTs Really Are

In contrast, NFTs are ‘Non-fungible tokens’ which are digital assets that represent real-world objects such as music, videos, artwork, real estate, etc. NFTs are unique cryptographic assets created and sold on a BLOCKCHAIN NETWORK with distinct identification codes.

NFTs are similar to CRYPTOCURRENCIES because they belong to a borderless, decentralised, digital global ecosystem, where they are created and acquired. However, NFTs differ from fungible CRYPTOCURRENCIES in that they cannot be exchanged with one another, which means that two NFTs cannot be the same.

The uniqueness of NFTs makes them sought-after collectibles. NFTs can be transferred from the seller to the buyer using BLOCKCHAIN TECHNOLOGY, which creates a verifiable digital trail. Therefore, the new owner of the collectible has exclusive ownership of the assets secured by codes.

NFTs can represent real-world items like artwork, individual identities, music, real estate, and property rights. Because NFTs disrupted the crypto world by making each token distinct and irreplaceable, the tokens are scarce even in a world of “Internet surplus”.

You can buy NFTs with Ether and other CRYPTOCURRENCIES. The first step is to own CRYPTOCURRENCIES stored in digital wallets. Next is to buy desired NFTs from an online NFT marketplace such as OPENSEA, RARIBLE, and SUPERRARE.

These digital tokens have great potential, but the public nature of the BLOCKCHAIN impedes this potential. And buyers do not often feel like the actual owners of these tokens. Hopefully, the introduction of Private NFTs solves the problem (to be discussed in the next sub-heading).

Private NFTs

PRIVACY BLOCKCHAIN has been much more discussed in 2022 as concerns for privacy online become paramount and public thought. Private networks have privacy by-default, which differentiates them from ETH and Solana NFTs that are public.

NFTs are designed to be unique, and anyone who owns a traditional NFT (to be discussed later) can be known by everyone. However, private NFTs are built to make up for this shortcoming. Private NFTs are non-fungible tokens with programmable privacy features that exist on private networks.

Private NFTs can validate fungibility without exposing verifiability to the public. This process means verifiable ownership of goods and artworks must not be public. The procedure for validation on private networks occurs without exposing any private data or proof of authenticity and transfers. Therefore, private NFTs are disrupting the landscape of crypto art, empowering token owners, and protecting digital rights.

Private NFTs VS Traditional NFTs

Private and traditional NFTs are two different types of NFTs, and they are both non-fungible, which means they have their own distinct values. Although these NFTs are similar, the basic difference between private and traditional NFTs is how ownership is displayed.

Here are the outlined differences between both NFTs:

1.    Private Metadata: Traditional NFTs built on ETHEREUM, BINANCE SMART CHAIN, Solana, etc do not support private metadata. However, private metadata provides a field that opens up opportunities like NFT arts with encoded secret links and other features for creators and collectors.

2.    Private Ownership: NFTs are designed to be scarce, so, any Internet user can know the owner of a traditional NFT and identify individuals. However, private ownership ensures collectables and transactions are kept private from everyone.

3.    Control Access to Connected Content: The creators of NFTs can regulate access to their content. The creator can use a thumbnail or watermark the content for public view. So prospective buyers can have an idea about what they are buying. However, the full-resolution version will be viewed only when purchased.

Public and Private Metadata

Private NFTs work well with both public and private metadata. The reason for private NFTs supporting both metadata is because programmable privacy is a choice. You can make ownership private or entirely public for anyone who desires to see it. Private NFTs also have an optional private metadata field.

What is Programmable Privacy?

Programmable privacy is the central goal of a private network. And the main goal of most privacy solutions in the BLOCKCHAIN is to encrypt transactional privacy, particularly hiding data on senders or receivers of transactions. However, programmable privacy has a more expansive vision, allowing applications to use encrypted inputs, outputs, and states. This process allows for new use cases for smart contracts and other decentralised applications.

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