Blog:
Who is HUMAN for? Grants use case: NFTs
NFTs are not a passing fad. Of course, the current usage of NFT technology as digital art ownership may, or may not, last – but this is only one application of NFTs. It is worth remembering the vast utility of NFTs – or non-fungible tokens, which simply create a unique smart contract on-chain which has no directly swappable counterpart. It is unique, or non-fungible.
HUMAN Protocol’s Proof of HUMANity has many potential applications, as discussed in this article. There is, however, another dimension of application in the world of NFTs.
The latest NFT platforms are bringing on-chain auctions to NFTs, such as is seen by Metaplex (Solana Labs). While on-chain auctions may be appealing to both buyers and sellers of NFTs, it comes with a risk. When you are bidding at a traditional auction house, you can see who you are bidding against. In Web 3.0, you cannot. Just as malicious bots can front-run DEXs and manipulate market prices, so they can in on-chain auctions. They could bid higher on pieces, artificially driving the price up, or else orchestrate with other bots to manipulate the appearance of a bidding war (if you think you are up against 1,000 bidders, you may be likely to walk away, not knowing they are bots).
Proof of HUMANity stops bots at source. In this example Metaplex could integrate Proof of HUMANity to operate as an essential test which all bidders are required to pass.
It is worth looking at other applications of NFTs to understand the potential determinant that bots could have on such a technology and ecosystem. NFTs are simply a unique digital code for which there is no equivalent tradeable asset; they can be traded for other things, but there is no direct replacement for it. It is ‘non-fungible’, whereas a dollar is fungible: one dollar is the same as another.
NFTs will most likely, therefore, be used as a form of identification in Web 3.0. Anything else unique – whether tickets for a sports game, the cinema, a plane ticket, or any kind of QR code – could be an NFT.
Any form of bidding that could take place on these NFTs could benefit from a Proof of HUMANity check. Whether one is selling Bitcoin through DeFi, or Superbowl QR code tickets through an online marketplace, the principle remains the same; bot protection is essential.
Proof of HUMANity could also be a test required in the minting of the NFT itself.
To mint an NFT is not very difficult. As bots become more sophisticated, there is a possibility that they themselves could create NFTs, whether for art, identification, or event tickets, to name just a few uses of NFTs.
In this instance, Proof of HUMANity would not only be used in any bidding process or DeFi protocol, but also as a way to ensure humanity at different stages of the NFT life-cycle – whether to authenticate that the minter of the NFT is a human, or that the holder of the NFT is a human.
Such information is important if NFTs are to become forms of identity, or QR codes; for what is to stop a bot minting its own QR codes to con buyers?
Proof of HUMANity will not likely standalone as a solution to protecting Web 3.0 NFT creation, bidding, and ownership, but will be part of a broader KYC or background-check verification process. Nonetheless, an on-chain bot blocker has endless use cases to protect Web 3.0 as it moves towards utilizing non-fungible tokens in more useful, and commonplace, ways.
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Legal Disclaimer
The HUMAN Protocol Foundation makes no representation, warranty, or undertaking, express or implied, as to the accuracy, reliability, completeness, or reasonableness of the information contained here. Any assumptions, opinions, and estimations expressed constitute the HUMAN Protocol Foundation’s judgment as of the time of publishing and are subject to change without notice. Any projection contained within the information presented here is based on a number of assumptions, and there can be no guarantee that any projected outcomes will be achieved.
