NFT technology enables the creation, ownership, and trade of digital assets using blockchain, each backed by a verifiable certificate of ownership. While the NFT ecosystem has been growing rapidly, it faces several challenges, some of which digital watermarks can address. One issue is the weak link between the NFT data and the digital content they represent, leading to risks like copy minting — where digital content is illegally duplicated and reminted as counterfeit NFTs.
Digimarc digital watermarks are added to NFT assets to create a strong link between the NFT data and the digital asset it represents.
As Binance puts it:
“[…] buyers need to be careful because an explosion in the value of the NFT market has seen an accompanying rise in scammers […] You may think that because each NFT has its own identifier, you can buy one safe in the knowledge that it is the only one of its kind. But here’s the problem: authenticity. While all NFTs are indeed unique, there’s nothing to stop a scammer from digitally copying someone else’s work, minting it as an NFT, then selling it with the false claim that it’s an official release.”
This is an acute issue, OpenSea disclosed a few years ago: more than 80% of the NFT assets created with their free storefront contract were plagiarized works, fake collections or spam.
This is where digital watermarks provide a solution by creating a strong link between the NFT data and the digital asset it represents. The principle is very similar to what we are building to create a strong link between online assets and their provenance data (C2PA content credentials): Digimarc’s Media Authentication solution integrates solution integrates invisible digital watermarks into images, audio, or video files. The digital watermark can encrypt or link to critical NFT information such as a blockchain ID, contract address, and token ID and be added to the digital asset prior to minting the NFT (or after if the metadata are not frozen). Once the NFT is minted, it can be displayed on popular NFT marketplaces, where its authenticity can be verified. This could be achieved through integrations with marketplaces (read on for a concrete example) or via a browser extension. The verification process reads the embedded digital watermark and ensures it matches the NFT information.
Now, let’s imagine a malicious actor attempts to counterfeit the NFT by copying the asset and minting a new NFT with the same content. The counterfeit NFT is listed for sale, targeting unsuspecting buyers. However, thanks to Digimarc’s advanced digital watermarking technology, a marketplace, application, or browser extension can detect that the digital watermark information does not match the original NFT’s provenance data. This flags the NFT as counterfeit, protecting consumers and creators alike.
Digital watermarks can do more than simply secure NFTs, they can also be used to license the use of digital assets or enhance interactivity. With Digimarc Engage for example, anyone can scan an NFT asset with a mobile phone to access content such as exclusive artist updates or token-gated digital experiences. This gives NFT artists an unprecedented way to deliver dynamic content without altering the design of the NFT art itself (e.g., like a QR code would do). NFT collections also inspire a broad range of physical merchandise (e.g., Pudgy Penguins). Digimarc’s Brand & Consumer Authentication solution creates a unique link between the physical and digital worlds.
Digimarc is the pioneer and global leader in digital watermarking technology. Trusted by the world’s central banks, pharma companies, retailers, and consumer goods brands to protect physical and digital assets. Now, this patented technology can be used to protect NFTs as well. Xeal is Digimarc’s first customer in this space, connecting media assets to the blockchain through NFTs. Xeal is a blockchain infrastructure that uses Digimarc's watermarks to link digital and physical assets securely on blockchains such as Story Protocol and Apechain. Xeal enables creators and users to authenticate and verify ownership of assets through NFTs to protect creator rights, creator royalties, and simplify asset verification.
Xeal is also working with Digimarc to utilize this technology for embedding digital watermarks into physical merchandise to link them to NFTs and digital experiences as well as enhance brand integrity. This empowers artists to engage with their audience across multiple channels, while enabling detailed analytics on interactions with genuine NFTs and any unauthorized copies.[1]
The Xeal ecosystem leverages digital watermarks for NFTs to allow authentication, licensing and interactions with digital assets and merchandise.
Digital watermarks can safeguard artists’ work, boost buyer confidence, and create new opportunities for artists to connect with consumers across both digital and physical realms. We are excited to see how our technology will be used in this creative ecosystem. We invite you to contact us if you’d like to protect the authenticity and boost the potential of your NFTs.
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