As cryptocurrency and blockchain adoption grows it will be essential for users to verify authenticity of digital assets. This applies to anything that can be tokenized, including art, music, collectibles, and even securities.
Authenticity is of utmost importance to serious collectors. Obviously, authentic art with verifiable history can command higher prices than otherwise.
In the art world people use the word provenance to refer to the history of ownership of a painting or other work of art. Provenance or authenticity can take various forms, including a certificate of authenticity, photographic evidence, auction sale records, etc.
In the crypto world, provenance has the same meaning. Since a blockchain is a public ledger, it should follow that verifying authenticity and history of digital assets should be a straightforward process. However, that is not the case when using smart contracts.
The Case Against Smart Contracts
Unfortunately smart contracts are the wrong tool for tokenizing assets. These are unnecessarily complex, inefficient, and expensive, when all we are trying to do is creating and transferring digital assets. This complexity introduces multiple vulnerabilities that can lead to errors and/or fraud.
I won’t get into the precise details of what it takes to verify the authenticity of a digital asset within a smart contract, because frankly that is a futile exercise. Let me just say that doing so is nearly impossible for the average person. This would involve finding the smart contract address, using Etherscan or a similar blockchain explorer, dissecting code and metadata, and then trusting that any externally stored information connected to the smart contract can’t be tampered with.
Oh, and let’s hope that there isn’t a Decentralized Autonomous Organization (DAO) with rights to do whatever they please without your consent.
By the end of this extensive exercise hopefully you’d be able to somehow match numbers and letters to some online identity to satisfy yourself that the art was created by the rightful artist.
Then you’d want to engage in trying to understand which party owns what rights to the art. That is unless you are purchasing the art through some third party that may have some fine print addressing digital rights.
Before moving on, it is important to note that there are multiple ways in which bad actors can take advantage of loopholes in smart contracts. For an example on this I recommend reading What Is Sleepminting And Will It Ruin NFT Provenance?
The Case for an Asset Aware Layer 1 Protocol
A better solution for managing digital assets is to mimic Bitcoin’s Unspent Transaction Output (UTXO) model. In other words, it would be ideal to manage digital assets as simply as it is to execute a bitcoin transaction. This brings me to Ravencoin (RVN), a fork of Bitcoin, designed specifically to handle assets utilizing the UTXO model. RVN is an asset aware layer 1 protocol that does not need the complexity of smart contracts to handle digital assets.
How To Verify Authenticity of Digital Assets When Using Ravencoin?
To verify the authenticity of a digital asset on the Ravencoin blockchain all you have to do is read the information directly from the blockchain using a blockchain explorer or viewer. This is made easy by the fact that Ravencoin allows for the use of unique, human readable names, a folder like structure and Ravencoin’s ability to link any digital file using IPFS to a token.
Let’s look at an asset created by artis Kevin Lynch (@LynchStudios) as an example.
On the bottom right corner of this tweet you see the asset with the name KEVINLYNCH/LANDART#2. This is a human readable asset name that can be authenticated on the blockchain.
Kevin created the main asset KEVINLYNCH on Ravencoin. There is only one KEVINLYNCH asset name in the entire Ravencoin blochkain. Kevin owns that main asset and he is the only one that controls what can be created or minted under that asset. This is possible because Kevin owns the private keys to this particular asset.
He later created a sub-asset called LANDART. Think of sub-assets as sub-folders. If he desires he can create sub-assets for WATER_ART, MODERN_ART, PIXEL_ART, etc. Finally, he created a unique asset #2.
If a party wanted to sell art claiming it is art created by Kevin, all you would have to do to verify authenticity is to confirm that the main asset name is KEVINLYNCH. Then you would go to the Mango Farm viewer and type the chain address to see the art image directly linked to the blockchain.
In some cases, the asset has additional information such as the information shown on the right side of the image below. In this case the asset includes Kevin’s name, royalty requirements, a payment address for royalties, and his website.
How simple is that? When assets are created on Ravencoin, verifying authenticity is a breeze.
Conclusion on Verifying Authenticity of Digital Assets
I expect that in the not too distant future it will be common to see peer to peer transactions of digital assets like tokenized securities. In other words, you and I would be able to trade tokens representing stocks, real estate, collectible items, etc.
As with art, it will be essential to authenticate these digital assets. Doing so is extremely difficult if the underlying asset is created using smart contracts. As shown above, verifying authenticity of digital assets is very easy when assets are created on the Ravencoin blockchain.
Udate
Shortly after writing this article I learned the featured art piece is now owned by BickBC Projects. See Brick’s gallery