NFTs are becoming the go-to tech for secure transactions in the future. An NFT (Non-Fungible Token) is a digital asset that represents an object or concept like art, music, a video, a certificate, or a key that gives the owner exclusive access to something. NFTs are a new asset class that are so much more than just collecting jpegs, video clips, or other kitschy digital items. They’re actually a super powerful tool. NFTs provide businesses a practical approach to highly secured online transactions.
Blockchain technology is what makes these secure transactions possible. Blockchain technology generates records of transactions using cryptography. These records are unalterable and remain on the chain indefinitely. NFTs use unique illustrations called cryptographic tokens. These tokens represent an asset. The asset attached to the token remains easily trackable and identifiable, adding an extra layer of security.
Designed for More Secure Transactions
Paper-based transactions are susceptible to human error. Anyone who works with paper documents know that misplacing them is very easy. But paper documents offer the unique advantage of proving authenticity, which is where digital documentation has often failed. Online documents are vulnerable to hackers, duplication, or alteration, all of which can result in expensive errors for companies.
NFTs solve for this by providing the technology that works two-fold. First, it’s secure enough to minimize or eliminate hacking, duplication, or alteration. Second, it houses a built-in ledger that provides authentication. Basically, an NFT serves as a new kind of a certificate of authenticity – in digital form.
Reducing Transaction Costs
Analog systems have historically come with high transaction fees. By removing the need for administrative activity, NFTs [and the technology behind them – blockchain] have the potential to drastically reduce transactions fees. This may also increase capacity to perform larger transaction volumes as well.
Anyone involved in a transaction related to an NFT remains attached to the ledger. Maintaining this record offers a level of transparency and security that we’ve never seen before in digital transactions. These records are permanent and unalterable meaning things like stolen card information and identity theft could become a thing of the past.
Proof of Ownership
Imagine eliminating all middlemen in the sale of your home – mortgage brokers, lawyers, agents. This means the elimination of fees in the sale process. Furthermore, the sale of your home could become as simple as your standard B2C transaction. The ownership of the home would shift from you to the new owner via a transaction on the blockchain. And that record of ownership would remain connected to the home indefinitely.
Instead of having to track down proof of ownership – for your home and other assets – the information would all be accessible on the blockchain. Forging ownership would become nearly impossible once this system becomes fully implemented.
Security and Personal Data
The unique characteristics of NFTs make them ideal for use in data and sophisticated identification software. An NFT can pair virtual assets stored on the network with the individuals who are using them. By pairing assets directly to users, there is no need for a third party to be involved in transactions on the network. This direct connection between asset and user establishes a whole new level of data security that will revolutionize the way we use the internet.
Current Security Challenges
Scammers always find way to take advantage of new trends where big money can be made, and NFTs are no exception. However, given that NFTs are still so new, there are some concerns about the security of the tokens. Because right now, the level of security available, is not exactly foolproof. Scams like rug pulls are common in NFT drops. A rug pull is performed when a scammer impersonates a popular platform, exchange or wallet to steal another user’s private data. Once the scammer has the data, they have quick and easy access to a user’s virtual assets. With this access, they can remove the assets before the user is able to notice or act on it.
Minting or tokenizing works made by another creator is also a huge problem in NFT security. In this scenario, scammers impersonate a creator, mint their work and sell fake certificates of ownership to that work. One of the most popular cases of this happened when a user who called themselves Pranksy, impersonated the famous street artist, Banksy, selling a so-called “authentic” work by the well-known artist for 244,000GBP. Unfortunately, these things happen so fast that an artist might not even know that their work has been stolen and minted before it’s too late.
This is where centralized platforms play a part in protecting users. By storing the private keys of all assets on the platform, there is a higher security protocol. These centralize platforms are necessary to protect buyers from scams.
Like any new tech, we’re still learning how to maximize the potential of blockchain. And while there are some kinks to work out, there are plenty of players in the space ironing these out. Ultimately though, NFTs have the power to offer users the most secure way to protect their personal data. And after years of giving away data to third party platforms [like social media and e-commerce sites], customers, fans, brands and creators now have a technology that allows them to take back control of their own personal data.