NFTs are an interesting buzzword these days. The first time I interacted with this creature was while playing around on Gitcoin. They can be considered as “Kudos” in the Gitcoin community, where you can create and share your Kudos. Technically, these Kudos are called collectibles which is also a form of a “non-fungible token”. They are a form of “art”, which can be obtained by playing some interesting quests on “Gitcoin Platform”.
A non-fungible token (NFT) is a unit of data on a digital ledger called blockchain, where each NFT represents some unique entity that can’t be interchanged.
NFT can also be a tweet, audio, video anything that represents creative work. I have some of these collectibles (Kudos), you can check them on my Gitcoin profile.
Celebrities from Eminem to NFL’s Rob Gronkowski are in on this NFT adrenaline rush.
You can also trade the NFTs on a marketplace over Ethereum such as OpenSea: Buy Crypto Collectibles, CryptoKitties, Decentraland, and more on Ethereum. Here, you can use an Ethereum based crypto wallet (Like Metamask) to sign in and trade collectibles.
My team at Muellners is also working with a combination of both the above platforms, using the Avalanche platform. On Avalanche Exchange Chain (X-Chain), you can actually create your own collectibles, mint as many as you want, and transfer them across the platform using our Finscale Wallet.
Now, let’s talk about what is already happening on Open Source. Open Source software (OSS) are mostly funded through grants, donations, and quadratic contributions.
Theoretically, an open source IP does belong to its creator but practically, the Open Source’s intangible IP doesn’t really belong to anyone as the project roadmap improves over its life lifecycle. Basically, it’s not a “copyright” but a “copyleft”. Different OSS licenses provide mechanisms for using, consuming, re-engineering the open source IP. The primary source code is itself usually held or maintained by an entity. E.g like Apache FSF, Mojaloop Foundation, Muellners Foundation, Mifos Foundation, Ethereum Foundation.
Sometimes tech companies have also released parts of their technology into open source. E.g Google.
I think NFTs in the context of Open Source should work fine, maybe outperform the expected use cases. NFTs can be said to be internet native Intellectual Property. Intellectual property valuation is considered as one of the most critical areas in finance; it plays a key role in many areas of finance such as buy/sell, solvency, merger, and acquisition. Yes, in its entirety, if someone wants to gain ownership of an Open Source Software and quantify its value, this can be facilitated using NFTs. IP valuation of OSS is quite important and can be understood as the ‘necessity’ today. In 2021, we understand that a good software created in Open Source, dies out or lags due to a clear lack of IP valuation. This lack of valuation hinders the OSS participation by For Profit entities.
We are indicating that blockchain and consequently DeFi is finding its feet at a time of great urgency when the global economy is going through dynamic reforms.
IP valuation is the process of determining the value of intellectual property assets. Prevailing methods of registering an IP are patents, trademarks, copyrights and trade secrets. If you plan to buy, sell or license IP, you need to carry out an IP valuation to understand the value of the IP assets in question. There are a number of reasons you might need to value IP. You might be selling intellectual property rights in a licensing deal.
Whatever your reasons for quantifying the value of an Internet native technology, there are many IP valuation methods which can be used to value IP and associated rights. These fall into three main categories:
- Market or sector based;
- cost of creation based; and
- Future income based methods.
It’s entirely up to you to decide which approach is the most appropriate for your project’s IP valuation. Different approaches are more suited to some types of valuations than others – it really depends on the IP’s stage of development, the aim of your valuation, and the availability of reliable data.
Now, the industry has started looking seriously at the NFTs’ ability to quantify the value of an open source technology, amidst the current pandemic situation.
Let’s talk a bit about Finscale and use it as an example to understand how we can arrive at NFT based valuations of open technologies.
Finscale is an open source financial technology platform for embedded finance. Finscale’s re-engineering & usage licenses are openly accessible to almost every Internet user or in fact the whole population of the world. Finscale’s product valuation directly depends upon the number of use cases fulfilled with its current architectural concept. Few metrics that guide this are: a. Number of forks b. Number of users/firms (collection of users) who interact with the Finscale presentation layer whether through core banking systems or blockchain-based solutions. Though this gets covered by point a, I feel it’s important to highlight this. c. Integration is also one of the major factors affecting Finscale product valuation. Integration with multiple products across the globe is one of the use cases. As is the case, Finscale platform can be used with core banking systems to integrate with blockchain and crypto, thus creating a bridge. d. Also, the Finscale wallet can also be used to transfer funds, collectibles (NFTs) along with collectible’s creation and mining. This methodical valuation can simply be progressive in the case of Finscale’s valuation.
Issuing NFT against the total population of the world can determine the market value of NFTs mined over Finscale and hence will directly be proportionate to the product valuation of Finscale.
Let’s understand some limitations here. The global population is huge and maybe someday everyone will have the knowledge of NFTs and curious enough to mint one themselves but this is limited by two things: i. At the moment, there is a finite population that understands the concept of holding a NFT and having an understanding of its underlying value. ii. Secondly, there’s this demand-supply tradeoff i.e. Demand is inversely proportional to supply.
So, if the world population increases and everyone wants to own NFTs against an open source technology, then surely the demand increases as stated above. (refer i. And ii.) Theoretically, even if everyone starts making NFTs, their value is very likely to reduce. Unlike altcoins, NFT isn’t a clone of some entity (say BTC). It’s more like a collectible in terms of tech with some unique properties that can’t be replicated.
As promising as it sounds, if there is a single NFT for each living human being to access any research and development project, the project becomes purely open-sourced. To buy this NFT or issue these NFTs, users must pay an NFT ledger transaction fee or an issuance fee.
It is possible to collect this fee via a Finscale Stablecoin. Remember, NFT is simply a smart contract enabled token to execute the open-source solution license deed here.
Role of Github: The ability to use Finscale and contribute through the open-source is already in place. There are platforms such as Github, where these contributions can be consolidated. There are numerous open source projects that are flourishing on github. And if and if someone wants to re-engineer Finscale, he/ she can simply fork the source repository.
The ability to allow issuance of NFTs can be added for each successfully merged PR to the finscale repo and useful fork of the finscale repo on GitHub. Like we have done with Finscale wallet over Avalanche. Of course, each successful PR must go through the open community’s agreed upon PR mechanism. Some organisations maintaining OSS use lazy consensus. Whatever consensus rules we wish to use, the mechanism simply enables more incentivized contributions to the OSS.
My team at Muellners is working on various projects to enable this framework.
The above example illustrates assigning value to the access rights to not only development rights but also rights that all Internet users must enjoy for a specific OSS project. Thus, a human user may not be re-engineering the project but still sponsors for the open license and may wish to do anything with the OSS project, once access is gained. This also componentizes the access to open source, thus creating a network effect based appropriately provisioned roadmap.
To the layman, I must say open source is not free, it is free to re-engineer and at times re-distribute, depending on the type of open license involved. This NFTs based access gateway akin to secure authentication of open rights serves the human users a gateway to their rights to use, consume, re-engineer an open project. The total NFTs in circulation against an open project thus becomes a highly definite parameter to value an OSS initiative.
Just a side note, imagine if the global COVAX program applied such principles for vaccine manufacturing and distribution across the diverse populations across the countries.