NFT: Setting new security standards in blockchains

About NFTs

NFTs (non-fungible tokens) and blockchain technologies are some of the most popular innovations in recent years. As the world becomes increasingly digital, keeping data private is more critical than ever. These two technologies set a new standard for data security and identification, and they are poised to be significant tools in combating ever-increasing hacking and identity theft issues.

Blockchain technology, the driving force behind cryptocurrencies, uses cryptography to generate unchanging records of transactions – in other words, these records cannot be altered. NFTs are represented by these unique cryptographic tokens, and this means transaction records are well managed, secure, easily tracked, and verified.

NFTs use a decentralized platform to safekeep data and protect organizations from cyber attacks. They are difficult to duplicate or link to other digital assets and are versatile in that they can be used in a variety of ways, such as:

• Providing an extra layer of security in the digital ecosystem, which ensures every asset is tracked and verified.
• Serving as digital assets which represent rights and privileges.
• Representing something scarce like in-game items or collectibles.
• Making digital representations of physical assets like paintings.
• Storing digital assets and securely transferring them between users.
• Maintaining intellectual property and combatting data breaches.
• Verifying identities.

NFT Security

How does blockchain technology, and therefore NFTs, provide a more secure infrastructure for companies?

The following are different features of NFTs that allow this technology to provide optimal data protection:

• Security through Blocks: The blockchain is a distributed database that maintains a continuously growing list of data records called blocks. Each block includes a cryptographic hash of the previous block, a timestamp, and transaction data.
• Private and Public Blockchains: Information can be stored in public or private blockchain databases. In private blockchains, parties can communicate without any overhead authority. In public blockchains, anyone with internet access can view transactions. This makes them the ideal communication platform for enterprises.
• Decentralized Technology: Decentralization ensures that one party cannot control anyone’s identity or financial information. Hacking attacks on the network would be impossible.
• Smart Encryption and Validation: NFTs’ encryption and validation technology are unrivaled. Each unit has a digital signature which makes it impossible to reproduce and automatically links it with its correct owner. This can prevent theft, such as stealing the artwork of others.
• Transparency: The blockchain is completely transparent, allowing everyone on the network to see all transactions and data.

Ways to Implement NFTs In Your Business

NFTs are excellent to use in the business world because they:

• Thrive on scarcity – Because NFTs are rarely mass-produced, they make sensible investments.
• Power the metaverse – Any companies hoping to operate in virtual worlds like Decentraland will need to invest in virtual assets like NFTs that can be used there.
• Boost brand recognition and consumer loyalty – Brands are investing in limited-edition NFTs available to select customers.

Here are some ideas on how to implement NFTs in your business:

Smart Contracts

Use these self-executing contracts which leverage blockchain technology to enforce terms automatically. These contracts build trust, enforce security in a business, are tamper-proof, and 100% transparent. Investors can use them to track identities, preventing identity theft and fraud.

Business Messaging, Identity Approval, and Digital Signatures

NFTs can be integrated into encrypted messaging services, data storage platforms, and digital signatures on transactions. Identity providers can also leverage NFTs for authentication, ensuring users are not impersonated.

Develop Products for the Growing Metaverse

Businesses are commissioning branded NFT items like sneakers, clothing, and devices to sell them for use in virtual worlds like Decentraland. Firms are minting NFT versions of real-life products and selling them through Rarible, OpenSea, and other NFT marketplaces. Because NFTs cost little to make, returns have the potential to be quite large.

For example, Nike has filed patents to produce virtual sneakers. Coca-Cola has also sold an NFT bubble jacket in honor of its 200th anniversary.

There are a number of consumers who are not yet comfortable with investing in the metaverse. To help these hesitant consumers adapt to the new NFT trends, consider tying a physical product with a digital asset.

For example, Nike has created CryptoKicks. After buying Nike shoes, customers get a digital pair as well.

Companies can also claim a percentage of future profits and program the functionality into the NFT with smart contracts. This way, whenever the NFT is sold, the company takes a certain percentage of the revenue from the sale.

Create Limited-Edition Merchandise

Use NFTs to reward loyal customers and achieve higher recognition with limited-edition merch.

For example, Taco Bell’s taco-inspired GIFs, NFTacoBells, sold out in minutes. Coca-Cola also launched a digital “loot box” with NFT products, including a redesigned Coca-Cola logo and virtual jacket.

Reduce Counterfeiting of Products

NFTs operate on the open, permissionless, and trustless blockchain, making verifying ownership and validity easy.

An NFT tied to a physical product can help limit counterfeiting cases. Customers can scan an NFT barcode on an item to confirm its originality.

For example, the specialty winemaker Ackerwines is selling wines with accompanying NFTs to authenticate their merchandise.

This technology can also protect vent tickets, discount coupons, ownership certificates, and licenses.

Raise Funds for Social Causes

Companies are providing free NFTs as incentives to get others to donate to charity.

For example, Taco Bell and Coca-Cola are using NFTs to raise money for social causes by selling company memorabilia NFTs and sending proceeds to charity.

Improve Supply Chain Management

By implementing NFT tags on physical goods, businesses can track inventory across the supply chain. Each NFT is updated with relevant information, like the origin of raw materials and techniques used in production at different points of the throughput process. Defective products can easily be identified and subsequent processes causing defects can be quickly improved.

Lastly, since blockchain information is publicly available, buyers can ensure the quality of their goods by confirming manufacturing details.

Difficulties Implementing NFT Technology

The reliability and security of NFTs make them exciting prospects for business leaders. Several projects like Request Network, POA Network, and Civic have already used NFTs to represent tokens in their networks.

However, it’s important companies understand how to use NFTs and what the unique benefits to their company could be before implementing this technology.