NFT marketplaces rife with fakes as investors waste millions.
The PRüF protocol could save the fraud-ridden NFT market
As some unfortunate buyers recently discovered, determining the actual provenance of digital content NFTs can be risky. Because they can be created with little verification or even anonymously, many legacy NFTs are strictly buyer-beware. Some NFT contracts contain valuable data within themselves or a child contract, but most merely point to a media file on an image server, IPFS, or some other temporary storage medium. Aside from the near-certainty of server data eventually becoming inaccessible, there is also the problem of the media itself being the only tangible indication of the authenticity of the NFT.
For example, let us say that the Louvre decided to issue a limited edition official NFT of the Mona Lisa. Without PRüF, they would probably store a high resolution 3D scan of the painting on a server somewhere. Then they would issue tokens that pointed to this image, perhaps a series of 10,000 authorized NFTs. Then thousands of scammers would also issue tokens that point to the same image server or other copies of the picture.
Of course, as long as you visited the correct web page, you would be shown which tokens were valid, according to a (potentially corruptible) off-chain web resource. However, if you were to visit a web page put up by a bad actor, it would show that the fake tokens were real. There is no direct way inside the tokens themselves to verify whether their source is authoritative or not.
PRüF solves this problem by creating an authoritative, self-contained reference to the issuer’s official identity that resides on-chain, inside the protocol itself. Thus, authenticity can be verified on the issuer’s website, on any PRüF portal, or by directly querying the PRüF contract on-chain.
Source diversity creates the possibility of strong consensus on authenticity since the protocol can be easily implemented and replicated by nodes or independent actors. A fraudulent site trying to falsify authenticity would find its voice drowned out by a preponderance of independent actors not incentivized to perpetuate that particular fraud.
In addition to preventing fraud, the PRüF protocol allows the economical on-chain storage of media and other information through the ARweave blockchain. This allows brands to ensure that PRüF enabled assets are displayed in their own on-chain websites, even if the issuer pivots or goes out of business. This assures buyers that their blockchain assets will remain valid regardless of the future prospects of the issuer.
PRüF extends the legacy ERC721 protocol with features like storage providers, issuing authorities, mutable and immutable media storage, built-in business logic, and more. PRüF assets can be moved across blockchains, enabling migrations so that an obsolete chain won’t doom tokens in the future. The protocol allows NFTs to become first-class assets with verifiable provenance, long-term durability, and complete decentralization.
PRüF is extensible and will be governed by stakeholders through the PRüF DAO as Node staking goes live. The DAO facilitates stakeholder governance, ensuring decentralized operation with the flexibility and incentives to meet future challenges.
Under legacy protocols, NFTs will continue to suffer from massive-scale fraud, assets that go dark after a year or two, low buyer confidence, and a scam-tainted “smell” that will tend to keep high-end, image sensitive markets at a distance.
The PRüF protocol creates a backward-compatible, commercially viable option for tokenization that solves the critical credibility and branding challenges facing NFT issuers. In addition, using PRüF is easy. Issuing assets with PRüF requires no blockchain coding and little or no web3 expertise. Even non-technical creators can issue verifiable tokens with blockchain storage, built-in monetization, cross-chain functionality, and access to global marketplaces.
In a nutshell, without a next-generation tokenization protocol such as PRüF, NFTs will remain of largely questionable value. As a result, many NFT purchasers will continue to see their assets go dark, be the victims of fraud, and in general, be paying for something of dubious provenance — highly centralized and utterly dependent on the good faith and continued operation of the issuer.
