Misconceptions surrounding NFTs
NFTs ensure transactions’ authenticity and uniqueness. They have the potential to dramatically expand circulation of digital assets. However, they currently do not necessarily ensure the uniqueness or authenticity of their underlying digital assets because only a portion of their data is recorded on a blockchain. Additionally, legal rights in Japan are fuzzy with respect to transferring IP and title to NFTs. Widespread adoption of NFTs will likely require standardized licensing terms and expansion of NFT standards.
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NRI - Nomura Research Institute
Founded in 1965, Nomura Research Institute (NRI) is a leading global provider of system solutions and consulting services with annual sales above $5.0 billion. NRI offers clients holistic support of all aspects of operations from back- to front-office, with NRI’s research expertise and innovative solutions as well as understanding of...
NFTs’ functionality and structure
NFTs are one-of-one (nonfungible) tokens minted on a non-falsifiable blockchain. Endowing a digital asset with nonfungibility ensures the asset is uniquely identifiable. Meanwhile, NFTs’ transaction history is preserved on a non-falsifiable blockchain as proof of the transactions’ authenticity.
NFTs have a multilayer nested structure1) (see diagram). The first layer contains information about the tokenized digital content itself (e.g., artwork, video clip or other collectible). The second contains the layer-one information plus registration information that points to where the layer-one data is stored. The third layer stores metadata pertaining to the NFT, together with the registration information. The fourth contains index data stored on a blockchain, in addition to the metadata layer. The key point is that only the index data is stored on chain (i.e., on a non- falsifiable blockchain) while the other three layers of data are stored off chain.
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