VCs vs NFTs: How Should I Store Academic Credentials?
Original Publication: February 9th 2022
Edited and Republished October 19th 2022
By Jake DiBattista
NFT of article: https://beta.educoinapp.com/marketplace/class/de5744d9-cdd5-4963-941e-c2f32079f756
Revised Forward:
2022 has been far from the ideal year for those in the web3 space. While technical achievement continues to push forward, the public perception of crypto currencies and blockchain based solutions has turned sour. As an active teacher and entrepreneur in the space, I have seen faces come and go and the average blockchain club on campus shrink as fast as the cash and misconstrued ideologies once flush in the industry. With that said, there still is reason to be hopeful. As we push forward the role of blockchain solutions will become mundane but powerful. Enabling a better internet, one owned by its constituents and held accountable by the masses. I hope that if anything the failure of early projects has taught us that this time will be different and hope that the dreamers in the space with proper intentions keep building towards a better future. If you purchased this piece thank you so much for supporting my work, shoot me a message on Discord and I will make sure you get rewarded. If not, enjoy and I hope you find this helpful in your learning journey.
**Original Publication with Edits: **
Key definitions
What’s an NFT and IPFS
An NFT (non-fungible token) is documentation of ownership via an ERC-721 token on a blockchain. It was originally created by the Ethereum blockchain, but now supported by many chains after its early success. Unlike a generic token (such as Bitcoin) it’s uniqueness allows it to be particularly useful by smart contracts and applications that rely on unique assets and digital ownership. An NFT is non-divisible, aka it’s is a one of one entry, and benefits from many of the advantages of traditional on chain data. While you can associate data to the token on chain (such as an image file), generally ERC-721 tokens do not have associated metadata on the original chain with it (such as Ethereum) due to cost. As a response to this over 60% of NFTs now use IPFS (InterPlanetary File System) to associate properties to NFTs. IPFS is essentially a secondary blockchain which allows developers to store data connected with on-chain tokens. IPFS stores the data for the tokens so that you can benefit from the security of being on a chain like Ethereum without paying the cost of storing data alongside the tokens. The remaining 40% of NFTs use localized storage (such as AWS) for metadata properties, meaning that there is no immutability to the data associated with the on-chain tokens.
What’s a VC
A verified credential is the federal approach to digital ownership of key assets such as licenses and diplomas. It has become a standard for implementing digital certificates and is starting to see traction within certain local municipalities as a replacement for paper certificates and more centralized models of digital data storage (such as Single Sign On). Not so dissimilar from a blockchain it uses a model of peer to peer trust where issuers, holders, and verifiers form a triangle of trust with a verifiable trust registry sitting in between issuers and verifiers. It is more of a model for trust and validation online, in contrast to NFTs and IPFS which are technical implementations of data storage models.
So which one is best?
The blockchain functions to record and validate transactions, while reducing the need for “middle men” in workflows via smart contracts. In a recent IBM White Paper it was identified that the following benefits could all be netted by blockchain adoption: enhanced security, transparency, traceability, increased efficiency and speed, and automation of tasks. While the core ledger nets these benefits, gaining user adoption will require engaging tools and modern product designs. It is with this in mind that I will advocate for NFTs as the primary form of documentation for the future of most academic achievement, in compliance with the Verified Credential model.
Human nature to collect and share: The value of NFTs starts with blockchain technology, but evolves into a question of human nature and adoption. A model for verification is only as good as a holder's willingness to partake in the ecosystem. Humans like to own things. It’s why we frame diplomas and wear hoodies from the campus store. We like to be included and show something for what we have done. NFTs are a valuable solution to showing and displaying achievements in learning. They present meaningful visual representations of achievement which can be easily shared across a number of applications. Due to the ease of referencing tokens on chains, scaling the ability to utilize an earned token across a number of applications is core to the value of an NFT, and also the human desire to share.
Community building and token gating: NFTs also have the distinct value of community building. Token gating is the process by which access to an application is restricted only to accounts which hold a certain token ID. By connecting your wallet to the application it gets permission to check for ownership of the token and make a decision on admittance. This type of check is exactly what VCs had in mind with its Zero Knowledge Proofs, and create a social layer to incentivize widespread adoption of this technology. Token gating is already supported on popular platforms such as Discord and Zoom, and could easily be expanded out to higher stake communities (such as national citizenship) with due time. It is a framework that already has strong incentives and communities in place to establish much needed norms for access.
The error of internet experts: Social networks such as Twitter and Meta are already allowing users to use NFTs as part of their profiles. We envision a world where academic profiles are part of the online identity as people begin to transact more online and need a way to quickly vet and trust who they are speaking with. We see an evolution of Linkedin where one can create an unverified image and use social influence to garner stature, and want to tie actual academic accomplishments to online identity. NFTs and block explorers allow for users to quickly reference the issuing body and validity of academic credentials and even review proof of work by related IPFS entries. This will be key as a verifying public registry which is able to be commonly used and accessed.
Incentivizing, tooling and valuing teachers: NFTs enable otherwise competing and dispersed institutions to have common tooling which can be utilized by their students and teachers. Relinquishing control, empowers the teachers to validate at the point of transfer and ultimately could improve the value of educational credentials to students. Purchasing a class NFT could provide students with textbooks, connected event access, and a lifelong pass to the outputs of that class while it is taught by teachers. Teachers in this model have new opportunities for revenue streams and are incentivized to provide NFTs with related skills that are highly valued within the ecosystem and by their owners (the students). Using a blockchain ledger to review transactions would make it impossible for students to prove ownership of said content without actually completing a purchase.
Downsides
The biggest issue surrounding NFT technology is that by design it is subject to individual error. Owning an asset in a personal wallet is a liability. A user can lose access to this account (aka their Private Key) they would also lose access to all associated assets within it. There is no way to duplicate the original token and its associated data, or reset access to the Private Key. With that said many solutions now are in place such as semi-permissioned blockchains and custodial wallets to ease the burden of trust and liability on end holders of assets. Another downside would be cost. As we discussed increasing layers of security and verification on chains (such as a layer 1 solution like Ethereum) would add costs to issuing and securing digital assets. Again a permissioned or private chain may be an alternative if participating in the greater ecosystem and leveraging its advantages is not a priority, with the potential to bridge chains later on.
In conclusion the NFT for many use cases is an incredible asset in academia. Most education is by design decentralized. It’s 1 on 1 mentorships, gig-work, and class projects that are in many ways not captured in the transfer of a degree. If our priority is to build digital learning records we cannot simply transfer existing models into new technologies but rather think how we can improve and incentivize better behavior in the ecosystem. The NFT is a path forward, increasing the utility of learned skills and credentials as they unlock benefits across a suite of applications and lean further into the ethos of decentralization which VCs set out to create.