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NFTs: The Future of Art?

NFTs: The Future of Art?

Written by Science Centre Singapore on Digilah (Tech Thought Leadership)

Illustrations by Sung Jernin

At this point, everybody has heard of an NFT. Some have commended them to be the future of art, while others have been more conservative with their praise, believing NFTs to be a gimmick. 

Let’s take a look under the hood at how NFTs work and decide how viable they are as the artwork of the future or as digital assets.

NFT, meaning “non-fungible token”, refers to an online asset that is not interchangeable; like trading cards or precious artefacts in how they are individually irreplaceable.

NFTs seek to create the same kind of value in the digital space – digital items with their own unique identities. 

They have become a household term after exploding in popularity in 2017, with the craze being started by groups like CryptoPunks, a brand specialising in pixelated avatars. Their work has been traded for astonishing amounts – with Alien CryptoPunk #7523 infamously sold for 11.7 million USD. 

First, let’s try to understand how NFTs work and what makes them unique. NFTs utilise ‘blockchain’ – the same technology as cryptocurrencies. Think of blockchain as a digital ledger that records transactions. The term ‘block’ refers to individual stores of data, and the term ‘chain’ describes the way these different blocks are linked to form one cohesive network. 

When each data block in the network reaches its predefined storage limit, it is rendered totally immutable, and data begins to flow into the next block instead. 

This technology guarantees lasting security, because once a block is set, its contents are forever unchanged. In the case of NFTs, this technology is used to store an address on the web or another method of access. 

The blockchain itself does not store the image or video. A key that enables access to the site on the blockchain where the NFT address is stored is kept in the buyer’s digital wallet.

The appeal of NFTs is difficult to rationalise. It might be their novelty, the futuristic appeal of the blockchain itself, or their hype and celebrity. Their guarantee of uniqueness contributes to an image of absolute exclusivity. 

In addition, the security afforded by blockchain increases buyers’ impression that they have just acquired something irreplaceable, and they take pride in ownership of these digital artefacts. 

Like trading cards, some characteristics in NFTs are more sought after than others. In the CryptoPunks collection, there are some common characteristics and some which are much rarer, like alien skin; those with that characteristic are likely to go for hundreds of thousands of dollars, if not millions. 

These art pieces also act as status symbols. There are events and exclusive clubs/communities that only permit those who have ownership over specific NFTs. 

This desire for celebrity status is a central driving force behind the NFT rage – people seek to take part in a lifestyle they have not yet gotten to experience. 

The example of basketballer Stephen Curry, who spent 180,000 USD on Bored Ape #7990 and made a tweet showing off his new purchase and his acceptance into an exclusive discord server, highlighting the usage of NFTs as a status symbol. 

When high-profile people make these purchases, it beckons more people to enter the market and try their luck.

It seems clear to at least some degree that the explosive growth of cryptocurrency over the past few years, with Bitcoin and Ethereum becoming household names, has had a major effect on propelling NFTs to the global stage. 

The NFT market has also been boosted considerably by an irrational fear of missing out on “the next big thing”. Nowadays we all hear about prophets who made bulk purchases of Bitcoin around a decade ago when it was cheap and are now multi-millionaires; people feel they would be missing out on a trend of a similar calibre if they were to ignore the NFT market.  

Therefore, people are anxious to jump in as fast as possible, leading to questionable financial decisions. To some extent, the hype around NFTs is a self-propelling cycle, attracting more and more prospective buyers as it grows larger and more tempting.

There is also something to be said about NFTs being an inevitable offshoot of the transition from the physical to the digital that has taken place over the past two decades.

Think of the migration of the cinema experience to online streaming services, or the migration of media from discs to files on the cloud. It seems like a natural progression from tangible art to NFT.

The idea of keeping things physically and valuing the ability to touch and to feel seems antiquated.Of course, despite their inevitability with increasing focus on the digital space, NFTs have not been universally accepted.

For instance, game developers are against NFTs specifically because the focus of NFTs has become their selling price rather than the quality of the digital content. Some view NFTs as a platform ripe for illegal acts like money laundering. 

The Ethereum transactions powering most NFT markets are environmentally detrimental – with the amount of computing power necessary to make transactions being a limitation on how time-efficient and energy-efficient these transactions can be. 

According to an article linked on Ethereum.org, Ethereum’s total annual energy consumption was around 112 tera-watthours per year, and their carbon emissions totalled 53 megatons per year. As pointed out in the article, this is equal to the total annual carbon emissions of Singapore! 

NFTs are marketed as being secure due to their decentralisation in the blockchain, but this decentralisation leads to its own complications. 

There is no real central authority or government agency in any country overlooking NFTs. The regulatory guidance on the subject is in a fledgling state and proof of ownership is not as secure as it could be. 

It has even been expressed that there is a risk of hackers making purchases or transferring assets using others’ accounts. This is because, as mentioned before, the code/key to access the NFT in the blockchain is stored on a digital wallet and not on the blockchain itself. 

Therefore, while the web address of the NFT is secure, the code to access the NFT is theoretically vulnerable to cyberattacks.

The decentralisation of cryptocurrency, and NFTs by extension, is a factor contributing to their massive monetary value: the supply is tightly restricted by the costs and high barriers to entry of mining operations, and the demand continues to rise, with neither supply nor demand subject to intervention from authorities. 

This leads to great price volatility (fluctuations in prices) creating a speculative market. It is reliant upon ‘greater fool’ theory; people only fork out their money hoping that a bigger risk-taker will be willing to pay an even larger sum. 

As opposed to other options like the stock market, NFTs come with far greater risks and are subject to greater price volatility, reflecting the cryptocurrency they parallel.

Payment can theoretically also be made in fiat currency, as was the case in the 11.7-million-dollar purchase of CryptoPunk #7523.  However, the issue of unregulated markets and price volatility is not addressed, because while the buyer may be protected from the risk of cryptocurrency investment, any investment into an NFT comes with the same risks arising from the tight supply and growing demand.

Overall, I think that in their current iteration, NFTs cannot fully replace traditional art. However, each has its advantages and disadvantages; and NFTs bring very new and innovative ideas to the table; shaking up the scene significantly. 

And, of course, we must address that while art pieces like physical paintings can technically only be expressed along two dimensions, NFTs can dip into four, as they can be 3 dimensional objects which change over time. 

For example, the supposed ‘first-ever’ NFT, Quantum, which sold at the same auction as CryptoPunk #7523, is a geometric shape that morphs and bends with time. However, their environmental effects and the security concerns limit their sustainability for now.

At the moment, it seems unlikely that NFTs are going to be phased out anytime soon; but outliers with ludicrously high valuations will become increasingly scarce; these are just symptoms of the excitement of the market and are not reflective of the way NFTs should progress. 

NFTs are fundamentally different from traditional art in many positive ways; for one, NFT trading is much more accessible in the modern day given that all one really needs is a computer and internet connection. 

NFT markets and creators should move forward with an intent to promote openness and continue to innovate.

Glossary:

Greater fool theory: It is when people disregard the actual valuation of an asset and make a purchase with the intent of selling it off to a higher bidder.

This relies on a speculative market. When the so-called “speculative bubble” dies down, the asset is left in the hands of the unfortunate highest bidder with nobody to sell it to. 

For further reading: https://www.fool.com/investing/how-to-invest/greater-fool-theory/

Fiat Currency: Acts legal tender by the decree of a government or authority without any kind of intrinsic value on its own. As such, it is backed by authorities and is subject to regulation.

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Science Centre Singapore


Categories
Security Tech

Protecting your personal data in times of uncertainty

data protection

Written by – Kiran Kari on Digilah (Tech Thought Leadership)

It has been couple of years since COVID-19 brought the world to a standstill. While countries are opening their borders for business and tourism, it wasn’t long ago that the world shut itself up in a cocoon. The pandemic brought a lot of good when the going was bad. The good was brewing in the human mind – innovation! Businesses and large enterprises have found new ways to engage, employees have found ways to be efficient and productive, and consumers have found creative ways to purchase and consume. 

In the pandemic, the consumer was wary about touching soiled currency notes, the interactive screen at the ATM, or share their credit/debit cards to make that necessary purchase. These are all high touch points in a daily life. The only way to overcome these challenges was through usage of mobile apps. Mobile apps provided us with the convenience of booking a taxi, ordering food or make payments without making physical contact with a third person. 

Like it is in any business, with every advantage comes the corresponding disadvantage. The use of banking and financial mobile apps was always certain to grow but, in the pandemic, it grew much faster than anticipated. No one expected the number of users accessing digital services would grow so fast, so soon and so exponentially high. With such high usage in digital payments also came the threat in the form of malicious actors or more commonly known as, hackers! 

Banks, wallet payments firms or any enterprise with a consumer facing mobile app need to protect their apps from the threat vectors emanating from their consumers devices. Similarly, the consumer must be equally responsible for their own data and privacy. The hackers are looking for ways and means to steal credentials, data, create fraud, take over accounts, change the behaviors of the apps, etc., all of which amount to huge losses to the business and the consumer alike. Hackers have access to very sophisticated tools to ‘mix and match’ their attacks. A lot of compromises to the consumer devices happen through sophisticated malware, screen overlay attacks, advanced jail break or rooting techniques, root enablers and reverse engineering.

There have been many instances of hacks and compromises across the world in the recent past and it will continue to make headlines. Most recently, the OCBC bank SMS scam in Singapore lead to huge losses to account holders and the bank was penalized heavily by the regulators. So, what can we do as consumers to keep ourselves safe?

It is a healthy practice to not only keep your mobile devices clean and safe but also be cautious about your surroundings. Some of the basic hygiene that you can follow is as below:   

Some of the basic hygiene that you can follow is as below:

  • To begin, don’t click on the links that come as text messages (or email) on any of your messaging platforms, especially when it is from an unknown source. This is the biggest reason for phishing attacks. Phishing scams look so real that you end up thinking its genuine.
  • Similarly, be wary of vishing attacks, wherein someone calls you, pretends to be from your bank or a government agency and have you share your critical data, OTP, et al. 
  • When in doubt, call your bank or the agency to verify the information. When you know it’s not true, register your complaint on the fake call you received. Be a good Samaritan. 
  • Never share your personal information with any unauthorized person. No legal entity will ask you to part with your personal data. 
  • There are many frauds happening on social media platforms including your messaging apps. Don’t fall prey for anything that looks too good to be true.
  • Always download apps from the authorized app or play store.
  • Do not jail break or root your mobile devices. 
  • Ensure that you have a well-known anti-virus installed on your phone that also checks for phishing attacks.
  • Never store critical info like passwords, bank account information, etc. on your mobile devices.
  • Spend some time educating yourself on cybercrimes.

In the current climate of uncertainty, it is impossible to predict what is going to happen next. But we know that the malicious actors are going to be a lot more active than ever before.

It is time for consumers to be data proactive and strengthen the security on their mobile devices. 

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Categories
Security Tech

RIP Access Cards

Written by Jagat Parikh on Digilah (Tech Thought Leadership)

Remember when you used to swipe your access card through the electromagnetic reader at the office door?

That norm will soon be done away with.

In the contemporary context, the world of access control and visitor management systems will be run by mobile-based credentials.

Instead of on a card, the visitors who come in will have their identity information on their smartphones, smartwatches, and other devices. This will be authenticated by the workplace’s physical access control system—be it a turnstile or digitally-lockable door—before allowing them access inside the premises.

In 2017, Gartner had reported that 1 in 5 companies would use smartphones as vehicles for identity management and access control by 2020.[1] That number will only be set to increase as social distancing concepts gather momentum, and the need for contactless protocols rises.

[1] Gartner Says That 20 Percent of Organizations Will Use Smartphones in Place of Traditional Physical Access Cards By 2020, Rob van der Meulen.

Access cards, while still handy, have several drawbacks which mobile access credential systems solve.

1. Reduced Costs 

The cost of material, micro-wire, and printing for each card can dent a company’s revenue. Some companies in the U.S. pay as high as $15-25.

In the event that a company adopts mobile-access credentials, this whole cost process is eliminated. Due to the easy availability of smartphones in the world today, your employees will already have the bare bones of the protocol. Should identification be needed, there are several protocols available to a smartphone due to its versatility: QR code, One Time Passwords (OTPs), face recognition, and other biometrics.

2. Time Needed to Implement

When a new employee or maintenance staff is recruited, the process from production to obtaining their card can take 5-7 days! Employee codes have to be known, the data has to be entered into the card, and the material needs to be bought and paid for.


When you use mobile credentials, this process is whittled down to a 3-minute process. The analogy is the process of onboarding an employee into your company: you send them a company laptop with usernames and passwords. Similarly, you only need to send them an email with the directions to download a company app that has their access credentials ready for smartphone usage whenever they make a trip into the office. 

3. Contactless Process

Access cards often required the visitor to swipe through a card reader or place it face down on a different type of card reader. This process involved contact with surfaces. While this is not a major plot point in the prevention of fatal danger, it can be salient to health standards. 

With a smartphone, on the other hand, you do not always need to make contact with a surface. There are a variety of technologies out there that allow remote and contactless entry.

One such example is near field communication (NFC), which has already been used in access control, due to its ability to operate on low frequency, proximity and provide selective access. NFC devices can also record the access information, time of access, how long the access is granted and other security metrics. This information can be helpful to security professionals and HR managers alike. Other technologies like Bluetooth and Bluetooth Low Energy can also be implemented to arrange a secure and safe protocol through personal area networks (PAN).

4. Complete User Experience

Physical access control systems are often closed systems and have an inability to integrate with other IT infrastructure. But with greater availability of mobile and cloud technologies, the user experience is now superior. Employees and visitors can be notified of any workplace emergencies on their smartphones through the integrated visitor management app. Credentials and other identity information that need to be updated (such as promoted designation, higher clearance, etc.) can be easily undertaken on a mobile phone, which avoids the lengthy process of creating a new card with new credentials.

Mobile phones are also just more valuable to people and are less likely to be lost than a card!

In the world of visitor management systems (VMS) and identity and access management (IAM), it is becoming clearer and clearer that mobile-based credentials have too many advantages to not dominate the future. Smartphones, due to their quality, are conducive to several multi-factor authentication parameters which can only people to feel secure, safe, and efficient over time.

The views in this article are Jagat’s personal and not endorsed by any organization.