Private off-chain NFT transactions are possible! Find out how
Grab a hold of any crypto wallet address and plug it into an explorer, and voilà! Everything, from the transaction date, the address the NFT was sent to, how much it was sold for, and all other chains of transaction history that such NFT address may carry. Good for record-keeping and transparency, right? Yes, until the issue of privacy and security of digital asset owners jumps into the question.
The open nature of blockchain transactions (NFTs are digital assets built atop the blockchain) makes it easy to track, record, and validate transactions and, more importantly, immutable! So, once a transaction is recorded on the blockchain, say bye-bye ever to have it removed. Of course, the same goes for all regular NFT transactions, irrespective of the use cases it was applied to.
So, whether it is tokenised real estate and other tangible assets, a collection of pricey art pieces, sports, and event tickets, NFTs continue to transcend our imaginations on newer use cases.
An alternative to the radical transparency of blockchain transactions (always remember that NFTs are assets on the blockchain) would be a way of concealing sensitive details and still being able to validate such transactions between transacting parties. This is where privacy-enabled NFTs come in handy.
What are private NFTs?
NFTs is an easier name for Non-fungible tokens. NFTs are unique digital assets (are not interchangeable with other NFTs like we have with regular cryptocurrencies) created and traded on blockchain networks establishing the verifiability and digital scarcity of the digital assets. As we already pointed out above, NFTs.
It is on this premise that we can now define what private NFTs are. Non-fungible tokens that allow transacting parties to validate their authenticity without opening the verification process to everyone are called private NFTs.
It becomes even better when such NFTs can freely interoperate among the various blockchain protocols available. From private blockchains like Hyperledger Fabric to the Ethereum public blockchain that has set universal standards for NFTs (ERC 721, 1155, and 2981; royalty standard for NFTs), Solana, Polkadot, Avalanche, etc., users and corporates should be able to move their tokenised assets in the form of NFTs across these various chains with little to fewer frictions.
PolkaCipher protocol was created precisely for this purpose — using zk-Proof technology, NFT users should and can privately transact over multiple blockchains through off-chain or user-generated data. PolkaCipher achieves this using on-chain smart contracts while keeping node operators off-chain.
The technical architecture of PolkaCipher’s privacy-enabled cross-chain NFT protocol
Our technical architecture ensures that on-chain smart contracts spun off from Polkacipher protocol horses a host of other smart contracts such as proxy contracts, system monitoring, data requester, and digital lockers. These can relay their information to off-chain nodes helping in node registration and verification, consensus formation, reward distribution, and synchronous processing.
Use cases of private NFT transactions
Beyond the fact that blockchains’ use cases have extended to several industries from finance, supply chain, entertainment, health and medicine, sports, etc., in the simplest sense of it, the blockchain ledger is just a list that records events and makes them pretty much tamperproof.
We established that the missing link between the burgeoning DeFi industry and institutional adoption is the lack of privacy in DeFi transactions. NFTs, on the other hand, which are by design unique and not to be interchanged with similar or different NFTs live on the blockchain and have continued to find inroads into sectors never earlier thought possible.
The unique architecture of NFTs means we can use them to tokenise real-world assets on the blockchain. Holders or owners of such NFTs can trade or transfer their blockchain-based ownership rights to other parties facilitating newer economics on the blockchain. These NFTs can be tokenised “certificates of ownership — C of O” for real estate, rare art items like Beeple’s “Everyday: The First 5000 Days” that sold for 69 million, ranking as the most expensive NFT art sold to date, and the third-most-expensive art among all living artists, in-game assets sort of like digital skins, etc. The list is almost inexhaustible.
But the potential use cases for NFTs extend into other non-conventional and somewhat complex use cases, too — rights! Spanning from access rights, control rights, usage rights, exclusive consumer rights, or even the right to destroy, any of these types of rights can be digitised, minted, transferred, or traded as NFTs. But, of course, each of these specific rights can only thrive and be maintained if privacy is protected, underscoring exactly why privacy-preserving NFTs are a paradigm shift, more so when they can be seamlessly moved across different blockchains.
Benefits of private NFT transactions
Here are some other benefits of private NFT transactions per sector
- Eliminates the danger of go-betweens in financial transactions: DeFi turns the norm in financial transactions right on its head by removing middlemen (banks, clearinghouses, wholesalers, etc.). Whether it is a financial deal for real estate or any kind of deal, parties could tokenise the terms of such contracts into an NFT (e.g. see eDATA and bNFTs by PolkaCipher), totally removing financial intermediaries. Beyond removing excessive paperwork and the usual bottlenecks legacy financial institutions mandates for transacting parties to follow, this lack of go-betweens also reduces risks to privacy-breach that could dovetail into more harm if it falls into the hands of ruthless hackers or operators of the dark web.
- Protects users' online identity and uninterrupted, secured online access: Big tech platforms like Google, Facebook, Apple, etc., offer websites and applications users the convenience of not needing to enter passwords but just log in using their social accounts. By this, these centralised bodies abstract away the authentication but at a cost — privacy!
Although these centralised alternatives to authentication may provide a seamless experience for websites and applications users and even tout to offer some level of privacy to such users, if anything, we can establish these users don’t truly own their identity. And as long as this is the case, true online privacy remains a pipedream with centralised options making more Cambridge Analytica scandals inevitable.
The most secure is the adoption of private NFTs to be used as secured Web and applications login. NFTs do not rely on centralised intermediaries to verify and store sensitive data but instead a decentralised blockchain database; these can represent secure, private, and user-owned digital identity.
By hashing a user’s ID information and securing it on-chainNFT-based digital identity can become the ironclad alternative for online privacy. With this, there will be either reduced or no need to share personal information with third parties. Rather, vital data are collected and stored in a decentralised manner, making it possible to authenticate user information for secured web and app logins without needing to share such sensitive information in a manner that can be compromised. Check out NFTzie by PolkaCipher to see how to take advantage of this feature and a whole other suite of products for your existing or next application. - Can further spawn the growth of the privacy economy: The first two benefits we outlined above, if properly harnessed, can help build a truly decentralised and private economy on a macro level.
Think about it again: ownership rights are tokenised and turned into NFTs for financial transactions and a truly secure and privacy facilitating online IDs for web and app users. Marry these two, and people could efficiently and transparently and efficiently trade the ownership of their assets or conduct other financial transactions without compromising their privacy. It becomes even better when questions like “how do I do these without a care for which blockchain does my asset live on?” is not a factor. This is the awesome power of privacy-enabled NFT, yet cross-chain NFTs solutions like PolkaCipher.
Yes, yes, buzzing NFT minting and trading platforms like Opensea, Rarible, NBA Top Shots, etc, for digital art collections or the next will continue to exist and keep prolonging the NFT hype. However, secured financial transactions for the real estate sector, a universal but secured online ID for web and applications login are the next frontiers where NFTs seem poised to disrupt.
And if these must happen, the natural progression of NFTs into these sectors is one where transactions can be carried out privately while still leveraging the power of a decentralised ledger. Private and off-chain NFT transactions are the next big thing to keep an eye on, and PolkaCipher’s cross-chain and privacy-preserving oracle network built on Polkadot makes it easier for anyone — individuals and corporations to reap these benefits.
About PolkaCipher
PolkaCipher is a privacy-preserving oracle network on the Polkadot Blockchain focused on bringing the use case of private NFTs to off-chain businesses and be a bridge for seamless integration to on-chain Defi apps.
PolkaCipher’s unique offerings help push the use-cases of the NFTs in real-world scenarios while still being connected to a cross-chain network that is fair and accurate. PolkaCipher intends to achieve business goals by helping users transact privately and securely using NFTs as a mode of access to different decentralized apps (Dapps) and real-world business rewards.
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