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Discussion on: Reflecting on my Initial NFT Research and Applications of NFTs Around Open Education and Freely Accessible Culture

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jfarkas profile image
Janos Farkas • Edited on

Erica,

There are many loaded questions in your linked post questioning NFT for Sustainable Funding Solutions. My reflections would be longer than the post itself if I’d respond to all. So let me focus on addressing your question stated in the tile. I felt it is more important to respond here at our community than at the original post.

As background, I would like to provide a clarification on the definition of NFT. Tokens that are non-fungible have been used in commerce for centuries. See Section 1 of papers.ssrn.com/sol3/papers.cfm?ab.... Few of those tokens for example - listed in the cited reference - are negotiable instruments, securities, deeds of real property, bills of lading, certificate of tile for automobiles. (Please note that there are well-established legal frameworks around those tokens.) 


The term NFT has been “revived” by the Ethereum ERC-721 Standard and now the term is used also on other ledgers and marketplaces. NFT is unique, but NOT the asset it is linked to. This has been the crux of major confusions around NFT. The video “Applying Non-fungible tokens (NFTs) in education” - you have inserted – highlights this confusion and misunderstanding. Starting at 55s it makes a series of statements staring with:

"(i) it can be a song, (ii) it can be a book, a message, (iii) it can be even a Tweet, (iv) it can even be a certificate from famous institution or a diploma from a top university"

Those statements are simply incorrect. Let me cite another scholarly article for the explanation papers.ssrn.com/sol3/papers.cfm?ab...

"When someone is purchasing an NFT, they are purchasing the metadata file, and as a non-fungible token, this is transferrable as well. Some people have therefore compared NFTs with a signed copy of a work, which is somewhat inaccurate as the NFT is not a copy itself, it’s more like a signed receipt of a work, where the ownership is not of the work itself, but it’s ownership of the receipt."

The key takeaway from that paragraph “the ownership is not of the work itself”, so it is NOT a song, a book, a message, or a Tweet as the video erroneously states. See also section “What do NFTs represent?” at copyrightblog.kluweriplaw.com/2021...

This leads to the question: can an NFT represent the content/asset? For example, can it replace a certificate title of an automobile?

Certificate of title imprints the VIN (Vehicle Identification Number) of the automobile. VIN is unique to the vehicle and can be verified from third party sources. In other words, VIN provides a verifiable reference. This is not the case for the majority NFTs using Ethereum ERC721 tokens. Those link the content/asset by a “breakable” URL. There are multiple reasons why that URL is breakable. The most obvious one is that the ERC721 spec allows changing the URL after the token is minted by the function (_setTokenURI(tokenId, newTokenURI). See github.com/0xcert/ethereum-erc721/... at line 110 in the ERC 721 reference implementation.
In summary NFT cannot be considered as a verifiable “certificate of ownership” for a content/asset.

Trust can serve as a form of “reference”, however if it is unsupported the participants are exposed to scams, frauds, and harms. (Especially, because no legal framework around NFT has been established.)

IMO the NFT ecosystem today is based on unsubstantiated trust due to - most importantly - the lack of verifiable reference between the token and the content/asset. Is there a fix? Sure.

In conclusion, I would shy away from NFT in its current status for Sustainable Funding Solutions.

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ericahargreave profile image
Erica Hargreave Author

Thanks for your thorough response, @jfarkas . You touch on a number of my concerns and areas of ambiguity that I was discovering in my search to interpreting NFTs. I'll update the post accordingly, and remove the video of Studyum's.

In terms of the question of 'Sustainable Funding Solution', that's the title to a series we've been working on around exploring the various different funding solutions that creators are utilising to build the funding models behind their projects. The reality is that to date, we have not found one singular sustainable funding solution, but rather most creators need a combination of a variety of different funding solutions, and different funding solutions work for different projects.

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jfarkas profile image
Janos Farkas • Edited on

@ericahargreave I am aware and feel the pain about the lack of options for 'Sustainable Funding Solution'. We are working on an option and aiming to have that available in a reasonable future.

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ericahargreave profile image
Erica Hargreave Author

I shall be excited to experiment with that option, once you come out with it.

I've also updated the post incorporating your feedback.