NFT: HTML for Internet value

Time:2021-9-8

Reading guide
This is a reasonable speculation.
Looking back on the development of information internet for decades, the world wide web (WWW) is one of the most important developments. Nowadays, when we refer to the information internet, we mostly refer to the world wide web; Web1.0, Web2.0 and Web3.0 we often refer to the world wide web. The three most important technical specifications of the world wide web are:
• HTML (Hypertext Markup Language): hypertext markup language
• URI (Uniform Resource Identifier): Uniform Resource Identifier
• HTTP (Hypertext Transfer Protocol): Hypertext Transfer Protocol
In the information internet, Hypertext Markup Language HTML is used to normalize information, Unified Resource Identifier URI is used to identify the name and location of information, and Hypertext Transfer Protocol HTTP is used to transmit information.

“Value Internet” is a new word proposed in recent years to distinguish the traditional “information internet”.

At present, blockchain is mentioned in most places where “value Internet” is mentioned, and it is believed that blockchain will be the basis of “value Internet”. The information internet transmits information, but the information may be false and lack of credit. The blockchain may solve this problem and enable the transmission of value.
Naturally, we wonder whether there are technologies like HTML, URI and HTTP in the “value Internet”? This paper holds that NFT will become HTML in the value Internet and play a role in standardizing the value.

NFT vs FT
How to express value? Value, generally speaking, is an asset. The blockchain indicates that assets are tokens, but there are actually two kinds of Tokens: fungible token (FT) and non fungible token (NFT).
Erc-20 is the most extensive technical specification for FT and erc-721 is the most extensive technical specification for NFT. Ft and NFT based on these two specifications mainly have the following differences:
NFT: HTML for Internet value
Considering the assets in the physical world, an ordinary person may have the following assets:
• physical assets: books, mobile phones, clothes, shoes, luggage, personal computers, transportation tools, living places
• virtual assets: game props, digital collections
• financial assets: stocks, bonds
• …
If these assets are digitally represented on the blockchain, there are two ways: ft and NFT. You can anchor a piece of clothes, props in a game and stocks of a stock you own to an FT or NFT on the blockchain.
Based on the above differences between FT and NFT, we find that NFT technology has more advantages in the digitization of physical assets:
Non homogeneity: your computer and other people’s computers may use the same model, but their serial numbers are different, they install different software, and they store different files
inseparable: your books can’t be 0.5, and your mobile phone can’t be 0.25
There is an external information association method: each NFT has an attribute that can be associated with an external URI. This URI can link to some details of your asset, such as manufacturer, production date, appearance picture
In addition to physical assets, it is more convenient for virtual assets to be represented by NFT, because the form of virtual assets itself is digital. For example, a game prop can be associated to an NFT through URI.

Of course, FT also has advantages over NFT. Most financial assets are more suitable to be expressed by FT, because many financial assets are homogeneous, just like the same type of stocks of a company, one share is the same as the other. Of course, financial assets that vary from person to person, such as insurance policies, are still suitable to be represented by NFT.

In summary, homogeneous assets are more suitable to be represented by FT, while non homogeneous assets are more suitable to be represented by NFT. However, the assets of the physical world are essentially heterogeneous. Even for the standardized products produced on the assembly line, there are subtle differences between different products. After the products are sold and purchased by different customers, the degree of non homogeneity between these second-hand products will further increase because of different ways and intensity of use of the products by different customers.

Although NFT and FT are viewed in a competitive and comparative tone, in fact, they are complementary. NFT may be HTML of value Internet, and FT may be JSON / XML of value Internet

Technical specifications of NFT
At present, the main technical specifications of NFT are erc-721 and erc-1155 on Ethereum.
Erc-721 is the original NFT specification, but it is troublesome to manage multiple NFTs with a smart contract, and does not support batch transfer NFTs. Erc-1155 has made many improvements based on erc-721. A single contract can manage any combination of FT, NFT or other configurations (such as semi ft, half ft). However, at present, erc-721 is more widely used than erc-1155.
Both erc-721 and erc-1155 have basic methods for asset transfer, asset authorization, querying the user of the asset and querying the asset owned by the user.
In addition, the NFT of erc-721 specification generally has the following properties:
• tokenid: the unique NFT ID in the contract, which cannot be changed in the life cycle of NFT (to realize the uniqueness of the whole chain, a tuple composed of (contractaddr, tokenid) must be used)
• Name: name, similar to the name of erc-20
• symbol: symbol, similar to erc-20
• URI: a link to external information, usually a JSON, which contains further and more specific information
An example of NFT of erc-721 specification:
{
tokenId: 20210203

name: nft_name
symbol: NN
uri: https://path/to/uri/

}
Format of JSON file pointed to by URI:
{

"title": "Asset Metadata",
"type": "object",
"properties": {
    "name": {
        "type": "string",
        "description": "Identifies the asset to which this NFT represents"
    },
    "description": {
        "type": "string",
        "description": "Describes the asset to which this NFT represents"
    },
    "image": {
        "type": "string",
        "description": "A URI pointing to a resource with mime type image/* representing the asset to which this NFT represents. Consider making any images at a width between 320 and 1080 pixels and aspect ratio between 1.91:1 and 4:5 inclusive."
    }
}

}
As mentioned earlier, erc-1155 improves erc-721 (erc-721 has some advantages as well as erc-1155). The main improvement points are as follows:
A single contract can manage both ft and NFT: This is mainly realized through tokenid. This variable is a uint256 type variable. Erc-1155 recommends halving this 256 bit variable, with the first 128 bits as the base_ token_ ID (can be used to indicate the type of NFT, such as a specific model of mobile phone), and the last 128 bits are used as index (can be used to indicate the ID of an NFT under a certain type, such as the serial number of a specific model of mobile phone)
Batch transfer is supported. Multiple types of ft or NFT can be transferred at one time
Minor changes have been made to the format of the external JSON document to which the URI is linked
For specific erc-721 and erc-1155 specifications, it is recommended to refer to the EIP document.

Application scenarios of NFT
This paper holds that NFT, as the HTML of the value Internet, can use a wide range of application scenarios. Two thirds of the scenarios using blockchain as the solution can use NFT to achieve more standardized implementation. NFT can be used in all scenarios that need to express value.
Earlier, we divided the assets owned by an ordinary person into three categories: physical assets, virtual assets and financial assets. We also look at the application scenarios of NFT according to this classification.
▲ real economy
Commodity traceability: Map commodities to the Internet and package them into an NFT. The commodity producer is the NFT issuer. Tracking and traceability can be realized by operating this NFT according to the actual situation during commodity circulation.
Intellectual property: map the intellectual property to the Internet and package it into an NFT. The intellectual property office is the publisher of the NFT. If the user owns the NFT, it means that he owns the intellectual property.
Evidence storage: electronize and package the evidence into an NFT. The evidence generator is the NFT issuer. The user’s possession of the NFT means that he has the evidence.
Electronic bill: electronic bills are packaged into an NFT, and the bill issuer is the NFT issuer. If the user owns the NFT, it means that he owns the bill.
Electronic certificate: the certificate is electronized and packaged into an NFT, and the certificate issuer is the NFT issuer. The user’s possession of the NFT means that he has the certificate.
In addition, there are many similar blockchain scenarios that can be implemented with NFT. Because NFT is more standardized, the cost of such a solution is lower than redefining a set of data specifications. However, it should be noted that NFT is one of the specifications of blockchain technology on digital assets, and NFT cannot solve the problems that blockchain technology itself cannot solve.
▲ virtual and financial assets
NFT is widely used in virtual assets. At present, it has become the de facto standard for representing the value of virtual assets in the blockchain field. From 2017 to 2018, Ethereum’s most popular DAPP encrypted cats (cryptokitties) are represented by NFT behind each cat.
At present, the application of NFT in virtual assets mainly includes the following categories:
Digital collection
– representative projects include cryptokitties, cryptopunks, NBA top shot, etc.
– NBA top shot is the most popular NFT project recently. It is a card collection project launched by the original encryption cat team in cooperation with the NBA. It packages the wonderful moments of NBA stars playing on the court into an NFT based card. NBA top shot surpassed cryptokitties this year and became the largest NFT project in history.

Game assets
– representative projects include: Gods unchained, axie infinity, my crypto heroes, etc.
– gods unchained is a card game; Axie infinity is a virtual pet development game; My crypto heroes is a role-playing blockchain game.
virtual world
– representative projects include decentraland, the sandbox, etc.
– decentraland is a virtual world built entirely by NFT, in which land, equipment, etc. are in the form of NFT.
Encrypted artwork
– representative projects include async art, superrare, etc.
– the so-called encrypted artwork means that the expression form of artwork itself is digital, such as art paintings, and then packaged into an NFT to become an encrypted asset. Digitization enriches the expression forms of art. A painting can be dynamic or even interactive, which can not be done in the physical world.
– async art is a programmable encryption art platform based on Ethereum; Superrare is a social networking platform for art creators and collectors supported by blockchain technology.
finance
– representative projects include: aavegotchi, yInsurance, etc.
– aavegotchi is a gamfi project integrating defi + NFT + game + Dao; YInsurance uses NFT to implement insurance policies.
other
– representative projects include: ens, etc.
– Ethereum name service (ENS) is a distributed, open and extensible naming system based on Ethereum blockchain, which packages domain names into an NFT.
The future of NFT
NFT technology, application scenarios and ecology are constantly developing.
After erc-721 was proposed, many new NFT specifications emerged, such as erc-1155 mentioned in this paper. In addition, there are erc-1523 (insurance policy NFT), erc-998 (combined NFT), eip-1948 (variable information NFT), eip-2981 (NFT royalty), etc. Erc-721 and erc-1155 are currently in final status in EIP, while others are draft. Of course, these are NFT specifications on Ethereum.
In addition to Ethereum, the role of other blockchains in NFT can not be ignored. Wax has always been known as the “king of NFT”. At present, among the top 20 projects of NFT total trading, 8 are on wax. At present, the NBA top shot with the highest total transaction volume in history is located in a blockchain called flow, which is maintained by the encryption cat team.

In addition, there is also a special NFT pallet in the substrate of Boca ecology, which allows developers to develop parallel chains using NFT functions more quickly. At present, many NFT projects in Poka ecology have obtained w3f grant, such as rarelink, usetech, perpetual altruism Ltd, nftstore, dnft protocol, etc. Rarelink is dedicated to dynamic NFT, which makes NFT respond dynamically to the physical world through oracle.
In terms of application scenarios, 2020 is the year of encryption art for NFT. The epidemic has led many artists to be trapped at home. Online art creation and sale combined with encryption technology has become a new way for them to generate income. Therefore, encryption art began to break out and become the main growth engine in the field of NFT in 2020.

Of course, defi in 2020 is also very “fire”. It can be said that defi is a “raging fire” and NFT is a “spark”.
In 2021, we can expect more protocol innovation and application innovation of NFT.

summary
The World Wide Web uses HTML to carry information normatively. The value Internet also needs a similar technology. NFT is the most qualified technology so far, but ft can complement NFT.
At present, NFT specifications mainly include erc-721 and erc-1155 on Ethereum. NFT can play a big role in asset representation in real economy, virtual assets and other fields. At present, it has been widely used in a variety of blockchain virtual assets. NFT will continue to develop in the future, and other blockchains other than Ethereum also have great opportunities.

Introduction to the author
Lou song
From bitxhub team dedicated to “building blockchain Internet and opening up value island”
Research direction: Web3+