Introducing NFAs - The New Frontier of Blockchain-Backed Asset Ownership
While NFTs gained much attention during the boom of blockchain-backed digital assets over the past few years, a quieter but equally important revolution is taking place to bring other types of assets into the Web 3.0 universe as NFAs
You could be forgiven for missing the rise of non-fungible assets (NFAs) amid the hyper-growth and buzz surrounding non-fungible tokens (NFTs) over the past few years.
After all, when digital JPEGs of fabulously cartoonish apes and other miscellaneous and often-strange fictional characters were being traded for the equivalent of hundreds of thousands of dollars on the blockchain as NFTs, the idea of trading other, seemingly-mundane assets on a similar basis received less attention.
But to be sure, the revolution is underway.
In essence, what you saw with artists, photographers and cartoonists backing their digitals creations on the blockchain, and then selling them on the basis that they could also collect infinite royalties on future trades, the same can now be said with just about any other physical or digital asset through blockchain technology being developed by Zenotta.
In this article, we would like to provide an introduction to NFAs and some of the ways we believe the blockchain will revolutionise asset ownership across
industries.
Digitising asset ownership
Unlike NFTs, which are essentially digital collectibles, NFAs are programmable and come with what is known as ‘smart data’, and unlike fungible assets like cash or commodities, which can be easily exchanged for one another, NFAs are one-of-a-kind. This makes them perfect for things like collectibles or art, where each individual item has its own value.
But NFAs are more than just digital versions of traditional assets. They also are programmable. This means that they can be used to create smart contracts or to store data.
This makes them incredibly versatile and opens up a whole world of possibilities for how they can be used.
Where NFAs and NFTs differ
It’s important to take a step back and look at how NFAs and NFTs differ. While both are types of digital assets, NFTs are pieces of data that represent or point to something else - usually a physical asset, like a piece of art or a collectible card.
NFAs, on the other hand, are unique items that cannot be replaced if lost or stolen. Each NFA has its own value, which is determined by factors like rarity and condition. This makes them more like traditional investments like stocks or property.
The key difference between NFAs and NFTs, then, is that NFAs are actual assets built on smart data, while NFTs are merely tokens that represent them.
The smart data revolution
Smart data capabilities open a whole new world of possibilities when it comes to digital assets. For example, an NFA could be used to represent ownership in a piece of art. The art could be stored on the blockchain and the owner could receive royalties every time the art is sold in future.
Alternatively, an NFA could represent a share in a company, and the shareholder could receive dividends based on the company's performance, triggered by rules set by the smart data hosted on Zenotta’s Layer-1 Proof-of-Work blockchain technology.
In the past, data has been seen as a static entity, acting solely as a storehouse of information. However, with the advent of blockchain technology, data is being seen in a new light. By combining data with the security and immutability of the blockchain, smart data enables the off-chain world to become smart - a powerful tool that can be used to set parameters around the ownership of just about anything.
This allows non-blockchain assets to be imbued with smart functionality, backed by the blockchain. By harnessing the power of smart data, we can unlock a world of possibilities for the way we interact with data.
Digitising property – potential use cases
As the world becomes increasingly digital, we are seeing a trend in which more and more assets are being converted into digital form. This has many advantages, including 24/7 accessibility, increased security and lower costs.
However, one of the challenges with digital assets is that they can be easily duplicated. This is where blockchain comes in. By using Zenotta’s blockchain technology, we can create smart data that cannot be duplicated or tampered with, while rules could be set up that govern things like future trades and royalties in perpetuity.
We will write an in-depth series on the individual use cases, but in the meantime, we thought it would be useful to give a brief introduction to some of the possibilities.
As NFAs are unique identifiers that can be used to track creative works and other digital assets, the creative industries could benefit from adoption.
In the music industry, NFAs can be used to track song compositions and sound recordings. This information can then be used by music publishers and rightsholders to ensure that royalties are paid appropriately.
Meanwhile, in the art world, NFAs can be used to track digital images and other artwork. This information can help artists and rights holders to manage their portfolios and ensure that their work is being used lawfully across the world.
NFAs can also be used in digital rights management to help rights holders protect their intellectual property from unauthorised use. By tracking the use of NFAs, rights holders can identify when their work is being used without permission and take appropriate action, or collect royalty payments.
NFAs represent a new class of digital asset that offers many benefits over traditional NFTs. Smart data is the game changer, and Zenotta’s
Layer-1 solution is able to convert files of any type into smart data, allowing owners to trade peer-to-peer anywhere in the world.
Keep an eye out for a series on the many different use cases that Zenotta’s technology could digitise on the blockchain. The opportunities are potentially endless, and no matter what your business or asset, we believe most will be able to find a home on our blockchain technology.
About the Author
This article has been authored by Alex Searle, Head of Communications at Zenotta.
