1. Introduction
With the advent of the fourth industrial revolution, technology-driven changes are the way that future interactions are occurring. With these technological innovations, it provides for more industrial development; at the same time supports the realization of new and innovative business models. In 2008, there were two major events that helped shape the global political, economic, and cultural patterns: the global financial tsunami triggered by the US subprime mortgage crisis, and the other was the Bitcoin White Paper published on the Internet by a person (or organization) called Satoshi Nakamoto. This was the genesis of cryptocurrency called Bitcoin. Cryptocurrency is now synonymous with all digital currency.
In the Bitcoin white paper, the blockchain was proposed as a new way of storing, encrypting, and manipulating data. Blockchain was designed to serve as a public and transparent transaction ledger for cryptocurrency. The necessity for blockchain was that it was meant to solve the “double spending” problem without the need of a central server or trusted authority. The blockchain has created and enabled a very secure, fast, and effective peer-to-peer payment, open bookkeeping system, in a decentralized network. Another cryptocurrency based on Bitcoin, Etherium, tried to solve the problem of deploying applications also running on a decentralized network.
When we examine the layers of the blockchain that are wrapped in modern technology and try to explore the nature of these phenomena, we have realized that it contains far more than a technological or a currency revolution; it is a far-reaching “trust revolution”. Blockchain technology is a radical innovation with the potential to challenge or even replace existing business models that rely on third-party trust. With the popularization of blockchain technology, the digital economy will become more authentic and credible, and the economy and society will thus become fairer and more transparent.
At the same time, some people chose another track, Non-Fungible Tokens or simply NFT. In order to prove that the blockchain can be applied outside the decentralized financial field, Roham Gharegozlou, the founder of Dapper Labs, and his partners started the research of deploying smart contracts on the Ethereum network to develop applications, and launched CryptoKitties at the end of 2017. The gameplay is mainly pet development and collection. The role of NFT in this is to act as a representative of game assets (cats), combined with the blockchain, to achieve open source, random, traceable, and easier to circulate code for the mating and generation of cats, which is largely solved the trust problem behind the centralized platform.
NFT has the characteristics of non-tampering, indivisible, and irreplaceable. This makes it possible to anchor the concept of commodities in the real world, such as tokenized tickets, a bottle of precious wine, uniquely designed jewelry and so on. NFT enables us to certify any valuable things and trace the ownership of the information, thus realizing the intersection of information and value.
Project Embrace (Embrace) includes EmbraceChain, which is used to issue NFT assets and process transaction data on the blockchain. Embrace will use artificial intelligence (AI) to deploy smart techniques to ensure NFT safety, update optimal value of the entire NFT collection, and provide for smart pairing of existing NFTs, that may enhance the value of both items due to previous and present consumer demand. Embrace will be deploying the website, EmbraceNFT.io to provide users with convenient and simple trading solutions, and to lower the threshold for users to mint and issue NFTs.
2. Challenges
2.1 Pain Points
The world of art, entertainment, fashion, sports, and collectibles, like the emerging world of cryptocurrencies, is an elusive and mysterious field. There is no clear direction guide for NFTs, and there is no complete regulatory mechanism, which not only makes it impossible for individuals to complete entering these markets, but also due to unregulated and lack of transparency, “fraud” has become the norm in the industry.
Traditional digital artworks are mainly traded through intermediaries in trading places such as galleries and auction houses. Artists display their works, and buyers can easily copy the artwork after payment. In this transaction mode, appears the following problems:
(1) The threshold of the traditional art market is too high, only a small number of people can participate in an auction. Too many people participate in the process of account opening, agency, commission, and it is difficult to 100% protect a guests’ privacy.
(2) Art transactions are limited by time differences, region, and crowd. Traditionally the audience is small. For or most audiences, there is almost no exposure and liquidity.
(3) Although the existing technical can maximally guarantee the authenticity of the artwork and prevent the re-sale of the duplicated edition, there are still buyers who can easily copy the artwork and sale it in the secondary market, which leads to the reduction of the scarcity and collection of the artwork and decrease the collection value.
(4) The commercial value of the artists’ creativity is underestimated due to the limitation of the exposure and promotion of their works. The current traditional operation model is impossible to track the influence and popularity of a particular work. A digital picture of a master painting can be casually quoted on the Internet; a writer’s golden line often used on social media; all of these have raised questions about intellectual property. Music works are particularly easy to copy and steal due to it format. Current technology is facing challenges to trace all channels online, intellectual property owners can’t receive any commercial benefit from it.
2.2 Opportunities and Solutions
The COVID-19 has weakened people’s connection to the physical world. People spend more time in and interact with on the virtual spaces, the appreciation to virtual goods, services and contents has increased significantly, market experts saying it also due to the rise of NFT in the past two years. With the change in social methods brought by COVID-19, creativity, the self-severed space of human spirit and emotion, will inevitably move towards digitalization.
NFT is a differential digital asset base on blockchain. An NFT-compatible blockchain is like a database that can record any commodity. In theory, NFT can anchor all things with non-homogeneous characteristics in the real world, realize the localization of the real world, and form a digital asset space of interconnected value and information.
Bring assets in the real world onto the blockchain through NFT can improve asset’s liquidity and effectively reduce transaction costs and thresholds, therefor expand the appreciation space for assets.
NFT is the key to innovation and provides a native tag of digital asset ownership (which exist in the digital world, or from digital world assets). Once these methods are deployed for the creator, it puts an end to the possibility of piracy, and for collectors of the NFT, its ownership is also recorded on the blockchain and provides protection and traceability.
Like other blockchain-based digital assets and currencies, NFT is encrypted and immutable. Information about the version number, mint number, creator, creation and uploading date, and collectors in its metadata will be permanently sealed. As a result, NFT owners do not have to worry about buying a fake or having their collection damaged or stolen. Additionally, we will be developing AI resistant technology within EmbraceNFT.io, to ensure that future versions of AI cannot tamper or steal the NFT asset through nefarious means.
In addition, NFT may replace centralized copyright certification agencies and content distribution departments once the ownership of digital works is determined. In this way, the artist can make a profit by selling the work directly, without having to go through a third party such as a broker or auction house, and can take a cut of each subsequent second-hand transaction — even if the work no longer belongs to him — without the risk of piracy, creating a sustainable economic model.
