Data NFTs: Reshaping Blockchain Data
Data is one of the largest sources of controversies since the beginning of Web 2.0. In the past, we’ve had cases of data (both personal and professional) being used for financial gain, especially by larger tech firms and other data collectors and brokers.
Here at Itheum, we’re proud to be the world’s first decentralized data brokerage platform that’s aiming to change this model. We will do this by encouraging data ownership and peer-to-peer data trade made possible via blockchain technology. Due to the immutable nature of the blockchain, data ownership and integrity can be verified on-chain to enable the seamless and trustless exchange of data between counter-parties.
Itheum has approached the challenge of data ownership via a unique model that allows the actual data to be stored in a secure off-chain location while allowing for verification and trade to happen on-chain — this will especially be made possible through Data NFTs (Non-Fungible Tokens).
What are Data NFTs?
As the name suggests, Data NFTs are unique and one-of-a-kind datasets wrapped into a non-fungible token to allow for seamless validation and exchange. Essentially, any dataset can be unique, mostly because everyone’s data is different where owners experience various effects and influences uniquely.
Simply put, wrapping data into an NFT involves converting data either in JSON (or any other supported format) into a visual representation, usually into an abstract-type image. Converting will be done via an algorithm that will create this abstract image format based on the contents of the data, thereby guaranteeing the uniqueness of the image itself.
Tokenizing data into an NFT allows for the following benefits in regards to the ownership and exchange of data:
- The controlled exchange of highly sensitive personal data, as the Data NFT can be treated as a limited edition token
- Just like other NFTs, the sale of Data NFTs can generate royalties for the Data Creator when it is re-traded, offering the potential for passive re-trade revenue streams
- Widening the market for your data, as Itheum’s Data NFTs can be traded on its primary Data NFT marketplace and also on other secondary NFT marketplace platforms (e.g. OpenSea)
Storing Data NFTs
Data NFTs can be stored in a similar fashion to most other NFTs. This means that the actual Data NFT, which in this case is the abstract image format (unique generated art from the data set), can be stored like digital art NFTs. Therefore, while the Data NFT metadata and wrapped data will remain on secure off-chain or IPFS storage , the token itself can be stored in a software/hardware wallet.
Data NFTs can be stored on various software wallets such as MetaMask, which can be connected to any NFT marketplace. Software wallets are password protected and secured by a 12 to 24-word seed phrase. However, it’s important to note that software wallets are prone to hacking and can lead to loss of your Data NFT.
Hardware wallets function similarly to software wallets, except that the NFT is stored in an offline device that is password protected. This ensures that your Data NFTs are safe from hackers, as you are the full owner of your private keys.
Inter-Planetary File System (IPFS)
The IPFS is a form of off-chain file storage where bits of your data are stored on a peer-to-peer distributed system. IPFS utilizes content-addressing to uniquely identify each file in the storage network. Itheum provides the user with the option to use IPFS to store the metadata and wrapped data if the user is comfortable with the risks of decentralized storage (e.g. the inability to safely delete the wrapped data). We also provide the ability for users to store data in encrypted centralized locations that allow for data to be protected according to data regulation laws (GDPR) and also allow for wrapped data to be deleted if required.,
Leveraging Data NFTs
Data NFTs will revolutionize the exchange of data, as they allow data to be converted to an asset class of its own. This, in turn, benefits various players in the exchange of data (i.e. data owners can package and trade their data seamlessly while the buyer can verify ownership and accuracy of the data on-chain before before gaining access to it).
Additionally, Data NFTs allow for a new breed of Web3 middlemen, in this case traders, who can procure and hold the data in speculation that the value of the data will increase if the utility of the wrapped data grows to generate high-demand. As the data is stored off-chain, these middlemen do not need to access the data unless they need it, making it convenient for them to just concentrate on the trading part of data exchange.
The Next Evolution of NFTs
Itheum’s Data NFTs allow you to become the true owner of your data, giving you the ability to fully control the exchange of it. This means that data owners can trade their data with their preferred end-user, hence adding value to it as well as widening their market for data, as data NFTs can be traded on any NFT marketplace.
Itheum’s Data NFT technology will also work in unison with our N.F.Me ID (Non-Fungible Me ID) personal data backed avatar technology — allowing a user to “slice off” personal datasets linked to their N.F.Me ID, wrap them into seperate Data NFTs, then trade them on NFT marketplaces.
These Data NFTs greatly enhance the overall promise and utility of data, including what it means to really customize your own personal information.