Blockchain and Art Intertwine: Use Cases, Advantages, Flaws & Possible Solutions

Transcript

hello everyone my name is sasha i'm a researcher at paradigm and humanoid also i'm an artist and today i want to give a talk that will link topics that i'm interested in distributed technologies and art and phenomenon that connects them today is non-fungible tokens nfts the lack of conceptual conceptualization and contra concrete and systematic review of their potential for creative industries was limitation and the main driver for conducting this research in the last couple of years you all probably saw this nft hype as they certainly took blockchain space by storm they've been big news ever since

people's everyday 70 million dollar sale hit the headlines the crypto punks collection successfully auctioned on christie's and thought this and fetched millions earlier this year twitter launched profile picture verification and instagram introduced nfts while spotify max plans to support them these are just some notable examples and while some argue about longevity of this phenomenon and others are convinced that the hype is here to stay the numbers speak for themselves as nft sales reached nearly 80 billion dollars in 2021 up from 82 and a half million dollars in

2020 a jump of more than 200 times and despite the bear market uh analysts predict that the trend will continue to accrue as the global energy market will reach 21 billion dollars this year so what makes nft technology so attractive and are there any drawbacks or pitfalls let's get the answers first of all what is it what is nft i guess many of you know but i will briefly describe for those who are not completely familiar with them uh in short the term refers to a crypto

asset that represents an intangible digital file such as an image a video in game collectible and other creative products moreover it seems like anything that is digital today it could be an nft it may be a world wide web source code designer sneakers real estate a ticket to a festival for example lifetime passes to coachella or a ticket to a conference like ethereum conference it may be an item in the metaverse or even genetic data here on the slide you can see the main characteristics of nfts first of all it is uniqueness as unlike cryptocurrency

which requires all tokens to be identical hnft is unique and the authenticity of which nft is possible because each token has verifiable metadata that makes a particular asset different from the rest as well as a transaction log that can help prove the history of ownership rarity and scarcity are also important ingredients that makes nft so attractive while transferability means that nfts can be freely traded unlike for example sbts that are designed not to be uh freely traded and last but not least

since token activity can be opened for public verification and if these ensure transparency and trust and if these characteristics create many benefits on the one hand as well as several challenges on the other as for benefits there are a lot of them first of all nfts address long-standing digital r scarcity issue also their flagships of decentralization transparency and trust as i mentioned before um with nfts ownership records stored on blockchain as well as the entire history of the artwork nfts create the possibility to eliminate intermediaries from the communication

process allowing content creators to connect directly to the audience due to this they no longer have to depend on the creative industries middlemen such as galleries auction houses or major record labels then content creators have now a unique opportunity to honestly monetize their work due to the advantages of the blockchain technology and then can claim royalties directly and receive a percentage of secondary sales in a fully automated way what's more blockchain platforms are designed to make the experience interactive and profitable not only for artists but for the audience as well by offering all kinds of incentives

another nft advantage is availability as anyone can create nft regardless of age geographic location etc all that is required is a res registration of the platform of interest furthermore with nfts uh artists can access global markets and easily reach the collectors and the community of like-minded people and last but not least nfts introduced millions of people to cryptocurrencies for the very first time this leads to a more diverse industry and accelerates adoption of technology and innovation a smallest version of nft's potential

use cases is given on the slide they include prominent ones like digital art collectibles gaming music fashion which are of greater importance for creative industries on the slide their headlights the most common use case for nfts is visual art decentralized art marketplaces continue to emerge and increase confidence in online platforms as a mediator moreover they continue to reduce the overhead associated with maintaining a physical gallery and open the doors of investment to art lovers democratizing of art investment

the most visited and used platform is open cms marketplace one of the reasons it is so popular is that is self-service based and not curated like for example nifty gateway or super rare crypto collectibles are also significant in trend among animations cases they are designed in most cases to be bought sold and traded at as for example baseball cards first nft is an excellent example of an nft collectible while a cryptopunk is collectible and visually artistic this nft has value purely for its collectibility

and fts also have a large devoted community and on the way to adoption aggregators like open c have dedicated catalogs for music nfts but artists prefer to launch on music-specific marketplaces one of the biggest decentralized music platforms is audios with about a million or a dozen million monthly users also nfts get significant attention from the gaming community as they provide an opportunity to own data for in-game items and fuel in-game economic systems the new game model is named play to earn player players play games and

earn nfts that can be sold on marketplaces for higher prices one of the most prominent examples of this model is xc infinity the use of nfts in fashion is still a relatively new concept as a blockchain technology they have been able to fit seamlessly into the fashion world granting benefits for all participants in the supply chain with nfts consumers could easily verify the ownership information of their product digitally reducing the risk of contribute fraud the metaphors as a simulated digital environment that combines

multiple elements of technology such as er vr blockchain along with social media concepts has been one of the hottest trends in the tech space lately and in the nft basement versus users can own things like avatars land digital clothing and other items they can hit uh into an nft gallery and check out a live concert enjoying games trade assets basically the metaverse ecosystem covers nearly all nft's use cases other energy use cases are presented on the slide and of these could be a driver to flourishing virtual events

real estate um identity management and the main name ownership the five dollars they may be the membership proofs for clubs and communities and much much more main industry players by categories are presented on the slide however despite the apparent advantages of nft solutions it is still difficult not to pay attention to several problems the main is authenticity problem that relates to difficulty in finding the original owner of the nft as well as difficulty in assessing the uniqueness and understanding how many copies exist when uploading content to an open

non-created nft platform they will stop wondering that absolutely any media file can be solved on your behalf no matter if it is a selfie taken a few seconds ago a picture found on the internet or a masterpiece of a well-known artist significant issues that are linked with authenticity problems cyber security and fraud copyright theft copying of popular entities or false airdrops and giveaways are some of the major issues here also nfts confront barriers like management from the government on the other hand how properly regulating this nascent technology with the corresponding market is also a

challenge there are still no official public registers of copyright and no global standards of licenses since different rules apply in different regions storage issues also remain as blockchain layer ones are often limited in the amount of on chain storage capacity and not only fts all nfts are stored on this level and require another storage solutions like distributed file storage systems like ipfs or arv or even centralized ones so any nft can be potentially manipulated and the storage problem is deeply connected with security issues

as usual original files are in stores on blockchain thus might be a lost or damaged anonymity and privacy of nft is uh also understudied most nft transactions rely on the ethereum layer one and layer two networks which under provides pseudonymity rather than strict anemia privacy there is also a risk of smart contracts and nft maintenance as there are several scenarios where hackers attack defy networks and steal large amount of crypto examples are the poly network hack and the incident with the running bridge the

accessibility of nfd schemes is also an issue and the ability of a system to interact with other ecosystems fortunately most of the nft related projects adopt ethereum they share similar principles and data structure and can exchange under the same rules uh there is also an increased concern about energy consumption related to nfts as most nft platforms are ethereum based which still uses proof of work a single nft transaction requires as much electricity as an average home for a day and a half while a secondary issue there is a difficulty in determining the value of the nft

because there is no fixed standard for any particular type of nft the price may depend on creativity uniqueness scarcity and a lot a lot more moreover the quality of many works is rather doubtful as anyone can meet an nft without having any creative skills then there is usability issues as the main usability drawbacks of ethereum are inherited by the majority of nft platforms the two major challenges here are high gas prices and slow confirmation concurring these issues requires a redesign of blockchain topology optimization of its structure

or improvement in consensus mechanisms also for the audience and consumers it is still more common to use familiar familiar major services like spotify for example instead of audios as well as for the majority of non-techie artists much more simplification is needed so nfts are easily to use for people who know nothing about blockchain all these problems exist and researchers and engineers are puzzling over their solutions as you saw authenticity copyright protection and usability are beyond doubt the main problems in the nft space today and what we came up with is that

biometrics have the potential to rescue here for instance humanoid project creates the decentralized biometric identification layer that is not only used on the native humanoid platform but can be used in a variety of platforms and decentralized applications including popular nft marketplaces these biometric identifications ensure that nft is unique and authentic partially eliminating the copyright problem and authenticity issues then all their two scanning solutions and ethereum transition to serenity are the answer to usability issues and existing privacy preserving

solutions for example homomorphic encryption multiparty computation and zero knowledge proofs are more likely to solve an enmity in privacy issues the ethereum transition to prophet state hopefully solves environmental issues and implementation of suitable laws and management from the government will eliminate legal pitfalls that's it thank you i think [Applause] thank you tasha do we have any questions if you do have questions please meet sasha outside thank you again thank you [Applause]