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NFT. Past. Present. FOIL.

January 16, 2022

Hi, everyone!

How often do you encounter misunderstanding when telling friends about NFT?

Or maybe it’s already difficult for you to keep up with new technologies? Looking into the articles, you simply don’t understand what all these “DPoS”, “Pure NFT” mean, and where simple and understandable pump-dump projects, that have recently rant from every website about cryptocurrency, have disappeared?

Let’s try to figure it out by obvious spelling out and choosing the simplest definitions!

To begin with, let’s give a clear description of the NFT term. The “non-fungible token” definition itself may raise questions. You’ve probably seen one-type tokens issued by hundreds and thousands. In games with the NFT economy, these tokens perfectly replace each other. So why are they called non-fungible?

The answer is this: each non-fungible token in the blockchain, unlike the usual token, is a container in fact with a unique number (identifier) and with some information inside.

This definition is the most convenient, although in terms it isn’t completely correct. But it’s as clear as possible for a person who doesn’t have special knowledge.

It’s very simple. We find the NFT in the blockchain by its identifier and get access to the information contained inside. Smart contracts can also distinguish tokens by identifiers and perform various actions with them. For example, transfer them to another user or put them on the exchange.

Easy, right? It turns out that several tokens containing the same data but having different identifiers are unique for the network.

This NFT’s feature formed the basis for a new digital art form. Put a unique art to the NFT container, assign an identifier to it, and…

In theory, this should have been a confirmation of authorship (together with the public key and transaction number). Confirmation that you are the art object’s real author and have all the rights to it: distribute, sell, transfer to the museum, or anything else. But in fact, everything is not so good.

Authors are at risk
To begin with, despite the different NFT identifiers, the information stored inside is depersonalized. You can safely take someone else’s work, issue it as an NFT and sell it on the stock exchange. Even if there is already this work by the original author in the selected chain, you can mimic he or just release your NFT with his work in another chain. And there are already a lot of examples of such behavior. Fraud in the NFT field is becoming more and more, which undermines the trust in this form of digital art.
Why is this happening? Firstly, the popular blockchains used to create and store NFTs don’t have any internal control systems. Any anonymous account can create an NFT. Therefore, a fraudster won’t be punished for his actions.

NFT exchanges implement their own user verification tools, of course. They ask for a link to the site, public page for creative, social network or another place where the content was posted for the first time. But it hardly helps.

It is not necessary for a fraudster to use the exchange’s tools to create an NFT. He can perform all the necessary actions directly on the blockchain.

Exchanges try to protect themselves by embedding their own private keys — extra identifiers — into the metadata of NFTs created on their sites, and hide NFTs without these identifiers. But this leads to a paradoxical situation when a digital art object can be correctly identified only on a one exchange, without the possibility of using it on others, despite the fact that the blockchain used is the same.

Also, this protection is not absolute. This is confirmed by a recent case when the NFT metadata was simply copied, and fake art was sold without problems.

Many users of NFT markets just don’t know how to protect themselves from fraud, and often also don’t understand the difference between two “seemingly identical”. NFTs. This is also harmful.

In addition, banal inattention favour scammers. And the absence of any punishment for this leads to the fact that the volume of similar “activity” is growing by leaps and bounds.

But let's forget the scammers and return to using NFT as digital art objects.
How the content stored?
If you want to see how the NFT painting you bought (for example, on OpenSea exchange) looks like, you can expect a rather unpleasant surprise. The NFT itself contains an identifier, a little metadata and… No more?

The content you paid for is simply not there! At the same time, you can see and even copy this content in the NFT market.
Why is that? Storing data in popular blockchains is quite expensive, and the block size is limited by a small volume, so when released, only the identifier and hash are placed in the NFT. But the content is stored on the NFT-market’s servers. Sometimes, if approach is more serious, there is also a direct link to the content in NFT, and content stored on the market’s centralized server, or even in IPFS storage (link to the IPFS gateway).

As you understand, this means that the closure of the NFT market, the unavailability of a centralized server or IPFS gateway (in terms of reliability, this is about like a centralized server) will lead to the fact that you will no longer see the content.

Let’s recall the analogy with the container. You buy a chest, at the bottom of which there is a note where to look for the picture you need. At the same time, the note is unchanged: even if the location of the painting has changed, it will still point to the same place (even if it no longer exists).

IP gateways are even funnier in this case. It is impossible to change the link in the blockchain, and if you put only the hash to the storage, you will need another service to correlate this hash and take the file from IPFS.
I guess it’s not necessary to say that the service may also become unavailable.

Absolutely the same can be said about almost any decentralized storage. In simple words, if the media content is separated from the NFT itself, and links to third-party servers or a distributed storage access service are needed to access it, then these NFTs are unreliable by definition. Obviously, this is a huge minus. People who are familiar with the cryptocurrencies history may recall, for example, hacking Cryptopia, Coinmarkets, Mt.Gox exchanges …

These exchanges were completely closed after the hack, the information on their servers was unavailable. Who can guarantee that the same will not happen with the current popular NFT markets?

You will say that there are now a sufficient number of markets that can replace retired players, and in the future even more will open, but…
Let's recall the lack of backward compatibility between NFTs created on different exchanges, described above, in addition to the specified storage methods.
It may happen that the NFT you bought in a couple of years will turn out to be a regular set of symbols and links leading nowhere.
With zero utility and market value.
Separately, it is worth noting the Open Sea platform's technology called LazyMint. This technology works as follows: you initially create an NFT on the platform itself, and the release to the blockchain occurs when you purchase. At the same time, the commission for the NFT release falls on the buyer, which allows the authors to release a huge amount of NFTs without restrictions.

The technology is interesting, but there is one nuance. In this case, the NFT release is handled by the platform itself. That is, there is a problem of authorship confirmation.

Well, as you probably noticed, if the NFT that has not yet been purchased is stored on the site itself, then if it falls, they will simply disappear.

This can be said to be a development of previous methods of unreliable storage, only in this case you will not even have a hash in the blockchain.

Buyer’s rights
In addition to all of the above is the legal uncertainty of NFT content.
To avoid delving into legal subtleties, this uncertainty is described simply: “the buyer has no rights to the content purchased in the NFT format.”
This may cause surprise and outrage among those who absolutely seriously believed that by acquiring NFT, they get the rights to the content associated with them. Alas, no. The buyer acquires the rights only to the token itself, which in 99% of cases contains only hash and, perhaps with great luck, a link to the content.

This does not give him the right to even demonstrate “acquired” (sic!) for non-commercial purposes, not to mention the creation of merch, or something similar. In fact, the buyer acquires an entry in the smart contract table, which can indirectly confirm the authenticity of the content lying “somewhere out there”. No more.

The marketplaces themselves could change the situation by introducing separate contracts with content authors and with buyers. But in this case, NFT exchanges would be considered full-fledged participants in the transaction, which marketplaces are afraid of like fire, positioning themselves as “information”, “administrative” or “service” platforms.

Separately, here we can note the OpenSea, whose LazyMint technology is absolutely not combined with a disclaimer. In short, all content located on OpenSea servers belongs to OpenSea. It can be modified or even removed simply at will. With works not yet released into the blockchain, this is especially easy. Generally speaking, NFT-marketplaces can be understood. Being global platforms, they would have to take into consideration the peculiarities of copyright almost any country, take charge for forbidden and NSFW content, at the same time being the first target for deceived buyers to whom someone else’s work was sold.

In this case, they would have to take much more seriously the users’ verification and the created NFTs’ verification to the detriment of mass and simplicity. That is, in the current realities, NFT trading often takes place in p2p mode, leaving all issues of copyright and exclusive rights on the conscience of the users themselves. At the same time, most of them are not even aware that for a couple of ETH they have become the happy owners of a hash and a couple of links, but not of an object of digital art.

What is the result?
The result is a very unpleasant situation. You can call NFT “digital art” now, unless the following does not hurt your eyes:
  • Thanks to the blockchain, you can 100% prove the authorship of the NFT, but not the content itself.
  • NFTs do not contain media content itself. Only hash or links, the validity of which depends on third-party services.
  • When you purchase NFT, you do not acquire any rights to the content. If you wish to obtain these rights, you must resolve legal issues with the seller.
In justification, we can say that the NFT technology is still very young, and the above difficulties are quite solvable.
FOIL Network. Problem solving.
Protection of authorship
Protection of authorship
Companies offering their own solutions to NFT problems are already entering the market. Actually, I propose to evaluate the FOIL Network’s solutions.
Let’s try to do this completely unbiased, with a mention of subtle places and possible problems.

The primary problem of NFT - proof of authorship - in the FOIL Network has been solved by the introduction of on-chain user verification. This means that only a user who has passed the internal KYC/AML verification procedure can create an NFT in the blockchain. Crypto enthusiasts may be outraged at this moment — they say that FOIL encroach on one of the pillars of cryptocurrencies, namely, anonymity — but in the FOIL Network, a reasonable boundary is drawn between creation and ownership. An anonymous account can own any assets on the network, can transfer or sell them, but creation is the prerogative of verified accounts.

In fact, this is already present on popular NFT marketplaces, only here it is embedded in the marketplace itself. At the same time, third-party services will not need to deal with their own verification systems, it is enough to simply check the account for validity (for example, through the FoilMask wallet).
How will this help against NFT forgery?

Very simple. In this case, the authorship of NFT and content is not separate, but it is impossible to create a copy of someone else’s work in the blockchain without a verified account.

Yes, this doesn’t directly prohibit to copy someone else’s work. But if the real author decides to find out who did it, he will be able to get the fraudster’s data without any problems, which takes responsibility to a new level.
At the same time, a pleasant feature here is the confidence of buyers in particular authors. Well, the cherry on the cake is the lack of an opportunity to confuse the author of the content and a fraudster with a similar nickname.

At the same time, nothing prevents an anonymous account from honestly buying an NFT and then reselling it for more, investing in stacking, or even transferring it to a museum for a while. Very elegant solution that allows, on the one hand, not to fall into global censorship, and on the other hand — to maintain the safety of authors and buyers of NFT. If you are interested in the phrase about the inseparability of the authorship and NFT, then it’s time to tell about the content storage in the FOIL Network.
Decentralized content storing
As we have already found out, NFTs in which the content is presented as a hash or links are not suitable for long-term use and have serious reliability problems. Therefore, the logical solution is to store complete data inside the blockchain.

Actually, the “Pure NFT” standard from FOIL Network assumes this. Fortunately, blocks of size from 50 MB allow this with ease.
We can immediately predict the main questions to this decision. Most likely, the complaints will sound like “excessive data duplication” and “the huge blockchain size”.
The first may sound strange, but if you think about it, tens of thousands of nodes containing gigabytes of information that duplicate each other are simply not needed. This is quite relevant for classic cryptocurrencies, where there is especially nothing in the block except a list of transactions, but for storing media…

Fortunately, this is not required. Yes, in theory, anyone can download the full node with the entire blockchain. But in fact, the majority of users will use a web wallet, an extension-analogous called Metamask, or the mobile application.
“But where is decentralization?” - you ask.
And decentralization is completely in position. Full nodes with the entire blockchain will definitely be needed by those who want to do forging blocks and receive related awards.
In the Foil Network, management token and gas token are two different assets with different tasks.
MVolt — is the gas token, needed for transactions

And FOIL — is the management token.

In the context we are considering, one way of using FOIL is important to us. This is the generation of MVolt tokens when forging blocks.
Consensus mechanisms
Foil Network offers FOIL token holders four main consensus mechanisms for forging blocks.

The first is the well-known PoS (Proof of Stake) mechanism, when wallets with a certain amount of FOIL receive the right to create a block and receive a reward (the more FOIL on the wallet, the more often this wallet will forge new blocks). In the main network, you need at least 50,000 FOIL to start forging.

The second one is DPoS (Delegated Proof of Stake), an additional type of consensus, modified PoS. It establishes the rules of the protocol in such a way that the rights to certain actions in the blockchain are either regulated by statuses or delegated by the decentralized community. For example, you can delegate the right to create blocks to certain trusted nodes (validator) or transfer the right to register and verify new network users.

The third mechanism called LPoS (Leased Proof of Stake) is a special case of PoS, only allows you to use not only your own funds, but also tokens transferred (lent without the possibility of spending) by other users. It turns out a forging pool that allows owners of small amount of FOIL to receive the sought-after MVolt tokens.

And the fourth called PoI (Proof of Identity) is a unique consensus mechanism that allows you to receive rewards by confirming the identity of new users. Something like a suretyship, but requiring to have FOIL tokens on the account.

In addition, the wallets involved in these processes also receive part of the commission from the sale of NFT and currency trading on the DEX (decentralized exchange) built into the wallet.

Actually, these capabilities guarantee the availability and decentralization of a sufficient number of nodes containing the full FOIL blockchain. Not too large, due to the fixed volume of FOIL tokens, but adequate to the goals set. That is, in simple terms, the content of the full nodes will be on the owners of a large number of FOIL tokens, or on the creators of forging pools. Their number is limited, but it is enough for complete decentralization. Also, no one forbids raising a full node at home.
A huge blockchain? Is it really huge?
Now let's go over the issue of the “weight” of the blockchain. Suppose that 10,000 NFTs with media have been created on the network, approximately 10 MB each.

By simple multiplication, we will get a blockchain “weighing” about 100,000 MB. Or 97.6 GB, not counting transactions.

For modern machines, this is the size of one AAA-class game. For a storage server, this is not a size at all.
But let's assume that the number of NFTs is growing at a huge pace, new exchanges are emerging, launching their own collections…

Here the following feature of FOIL manifests itself — the existence of so-called sidechains and storagechains.

In fact, these are chains separate from the main network, connected to it by a bridge, but having its own parameters, its own tokenomics and, accordingly, its own database.

Avoiding the technical details, this technology will allow to create your own data storage chains for large projects, providing additional space for specific tasks.

Loading sidechains is optional and is not required for the functioning of the main network, but, depending on the projects, they may introduce additional rewards for supporting full nodes. Thus, FOIL solves the problem of indefinite, secure and convenient storage of content directly in the blockchain, without the necessity of using third-party services or repositories.

Modification and deletion of data is impossible, due to the large number of full blockchain nodes that duplicate the necessary information with a margin, and the scaling problem is solved thanks to sidechain technology.
Law nuances
And now, probably, the most delicious.

FOIL has created and operates a system for creating and attaching documents inside the blockchain.
What does this mean in practice?
Creating and attaching documents to the NFT will allow you to immediately when creating add, for example, a license agreement as an open offer. Or even an agreement of complete alienation of exclusive rights.

Generally, this alone is already a phenomenon in the NFT field, making it possible to buy completely copyrighted content along with the rights to use it, including commercial. Compared to trading hashes and links, this is a step forward, right?

Additionally, attached documents can enable authors to add to the NFT a story about its creation, sketches, drafts, anything! And due to the feature of data storage in the FOIL Network, an art object, a story, a video, and even a program or a whole game can be added as NFT content.

Having run through the main problems of NFT field and the related market (?), and evaluating the possibility of solving these problems, I recommend take a closer look at Foil Network, due to the availability of a ready - and, importantly, already working - solution.

Using the features built into the network itself seems to me the most convenient and adequate when compared with the need to use third-party services in other platforms.

I guess that in the future, digital art will increasingly move to platforms that support user verification, store all data inside the blockchain and have an adequate system of legal documents created within the network.
And FOIL has taken the first step towards creating such platforms.
Foil Network
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