Dr. habil. Jean-Marc Seigneur was selected as one of the blockchain experts for the European Union-funded project BlockStand. BlockStand aims to strengthen European leadership in global blockchain standardization and ensure that internationally used standards reflect European values and needs.
More trustworthy NFTs, known as Signed NFTs, can be created using the EU Qualified Electronic Signature Standard
The work on Signed NFT started as part of the United Nations (UN) International Telecommunication Union (ITU) Digital Currency Global Initiative (DCGI) where Dr. habil. Jean-Marc Seigneur is an academic expert and workstream leader of the DCGI Architecture, Interoperability Requirements, and Use Cases working group. After editing the collaborative report on stablecoins for this workstream, he proposed to edit a collaborative report on Decentralized Finance (DeFi) and Non-Fungible Tokens (NFT).
The first conference call sessions of the DeFi and NFT workstream focused on writing technical definitions of DeFi and NFT. The consensus on those definitions was eventually reached after many discussions among more than ten contributors to the report: Ilona Maklakova of Legal Nodes, Trang Fernandez-Leenknecht of Holistik, Bruno Lenski of Aura, Vipin Bharathan of DLT NYC, Micha Roon of Managination, Phillip Bradford of the University of Connecticut, David Deputy of Vertex, Yulgan Lira of Colb, Robin Renwick of Cybersecurity Trilateral Research; Clive Menzies of MacroRisk Connect, Alex Nikolov of GER Consultancy, Andy Ting of HeLa Labs, and Francesco Biviano of Arcton. Then, the technical building blocks of DeFi were depicted, as shown in the image below (DeFi Main Building Blocks Overview). The final version of the report containing the details of those building blocks will be available on the UN ITU DCGI Website.
Figure 1. DeFi Main Building Blocks Overview
The main building blocks of NFT are mostly similar to the DeFi main building blocks besides distributed file storages such as InterPlanetary File System (IPFS), which is used to store large files, such as art high-resolution images, too expensive to be stored on a blockchain.
Different remaining technical challenges and issues have been highlighted in the report for both DeFi and NFT. However, one specific NFT issue started to be addressed, namely, the problem of untrustworthy NFT. Although NFT selling and buying transactions are automated and guaranteed by smart contracts for both signing seller and buyer, the authenticity of an NFT and its given legal rights are still difficult to assess. For example, in the digital art use case of NFTs, someone may have copied the digital art and used it on a fake NFT hosted on a crypto address that the digital art initial artist doesn’t own. Also, the rights given to the buyer aren’t always detailed. An ad-hoc third-party identity check mechanism may be used to verify and certify the real-world identity of the owner of the creator of the NFT. Unfortunately, this does not solve the problem of such certification not being legally recognized de facto. It may be used as proof or evidence during a trial to try to convince a judge, who will likely not understand blockchain. It is not sufficient from a legal point of view.
This is why we have proposed in the report the use of Qualified Electronic Signature (QES), which is standardized in EU Regulation No 910/2014, eIDAS Regulation. These digital signatures are bound to the real-world identity of the signing party. They are legally valid in the EU and Switzerland without further checks, thanks to their being part of an already accepted standard in the existing real legal framework. It is important to be legally valid from the start of the technology without ambiguity because it is never sure that another technical approach will become legally valid in the future. It is a good example of reusing legally valid technical standards from other application domains to the blockchain application domain. Unfortunately, in the blockchain and cryptocurrencies world, the developers do not look at what already exists and sometimes try to reinvent the wheel, thinking that their approach will be easily adopted by others, which is rarely the case, especially when it concerns legal aspects.
A first implementation of our proposed solution is to have a link to a PDF stored on IPFS in the metadata description of an art NFT. Such PDF is signed with the artist’s QES and contains easy-to-understand readable sentences certifying that such NFT on a specific blockchain, with a specific smart contract blockchain address and NFT unique identifier, is an original piece of art of the artist with the rights and obligations for the buyer and the seller. We have called such an NFT linked to QES, a Signed NFT. The signed information could be provided in another type of document. However, Adobe Reader is quite popular and allows users to easily and securely check the digital signature.
Moreover, our solution is backward compatible with previously created NFTs. The only difficulty is that the signed PDF link won’t appear in the description of the legacy NFT because this part cannot be changed after the NFT is minted. However, having such a signed PDF in hands is sufficient even if there is no link in the legacy NFT because the signed PDF is a legal proof mentioning this unique NFT. Furthermore, a decentralized application (DAPP) relying on open-source Ethereum smart contracts will be available on https://www.signed-nft.com to easily find links between an NFT and its associated documents signed with QES. Thus, any legacy NFT can become a Signed NFT thanks to this DAPP.
The next steps concern the public release of the final edition of the UN ITU DCGI DeFi and NFT report and its presentation and communication on various professional social networks and channels. BlockStand support has already been beneficial in this regard.
To read more about related materials explore the “Resources & Publications” page below or visit the “Meet Our Experts” page to read about BlockStand experts and their main areas of work.
