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The non-fungible token (NFT) community is a joyous bunch — a global group dedicated to the growth and prosperity of their respective projects. This support is indeed positive signaling for Web3 and its counterparts, but there is another very visceral side to that coin (excuse the pun). Behind the frenzied gang of digital token evangelists lies a fatigued audience, drained by the excess promotion of NFTs and the declarations of such to shift the world as we know it.
The claims of NFT value appear to be growing more egregious with time, almost entirely independent of where the crypto asset class is trading at large. As Bored Ape Yacht Club and CryptoPunks maintain their positions atop NFT wish lists with price points running upward of $200,000, an important discourse regarding verification must be pushed to the foreground lest there be any more devastating thievery. As more people look to exchange capital for ownership in these assets, the need to verify their authenticity grows dramatically, and as such, we must welcome the ideology of decentralized identity and verifiable credentials (VCs).
Understanding Decentralized Identity and Verifiable Credentials (VCs)
Decentralized identity is an emerging ideology that suggests identity should be an asset only held by the individual it represents. In other words, one’s identity should solely be in the custody of that person, not a third-party intermediary. In line with this concept, VCs are simply the various pieces of information that, in aggregate, make up a tokenized version of one’s identity. These credentials are stored in a wallet that isn’t dissimilar to a traditional leather wallet a person would keep in their pocket, only that it is digital and not physical. Through this framework, individuals can release aspects of their identity and personal information at their discretion on request — a far cry from Web2’s model of platform ownership.
Today, oligarchs and their social inventions control, mismanage and exploit a reservoir of user information for their own capital gain, leaving both the platform and user susceptible to attacks and data leaks. By taking ownership of their identity within digital wallets, users can exercise autonomy over their data and VCs and take back control of their digital identity.
The Big Picture
While there are endless ways decentralized identity standards could improve the quality of our lives, one specific use case is a thriving industry currently operating at the frontier of Web3: the creator economy. With a community of 50 million strong, the creator economy is charting a new path for alternative revenue streams to the traditional 9-to-5. Albeit an incredibly welcome change, serious system cracks in the creator economy model have come to light.
The never-ending rat race of chasing notoriety and goliath following numbers is a result of a purposefully archaic system that champions poor value extraction for creators. The contemporary social media model is so inequitable that content creators are often pushed to extreme lengths, buying “bots” or artificial followers to bump the numbers and ensure income. Of course, a fraction of this stems from vanity, but the majority of those compelled to take said action do so to maximize their potential value to a brand.
As we look to introduce concepts like creator or community tokens as avenues for monetization, it becomes exceedingly important for fans to trust that they can verify the notoriety of the creators they choose to support. There is a direct proxy between this verification and the potential upside on any given asset that’s being created or promoted. Integrating decentralized identity standards into social media experiences means that creator following metrics could be verified on-chain and thus, numbers would more accurately reflect the size of that creator’s fame. The following metrics then become nothing more than an additional credential that sits within a creator’s information wallet, solving the aforementioned transparency issue.
As cryptocurrency as an asset class matures and grows in total market capitalization, it isn’t unfounded to think that it will rightfully draw the attention of global regulators. Considering the nature of these entities and their mandate to ensure all financial markets sufficiently safeguard consumers from potential fraudulent activity and monetary volatility, there needs to be more transparency. This can be achieved through the availability of prospectuses and other investment materials for asset holders — with the absence of gatekeepers and public accessibility as a prerequisite to the success of this, of course.
A Well-Oiled Machine
Tokenization could usher in an entirely new world of financial empowerment for those directly suppressed by the colossal platforms that rule today’s social media landscape. While a handful of content creators have been able to fight back, some of the ways they’ve chosen to derive value from the ecosystem have directly impacted the viability of an entirely trustworthy marketplace for creator assets. Still far from dinner table talk and mainstream ubiquity, the acceptance and application of decentralized identity ideology is fast approaching. Whether or not apathy to its nuanced details continues, decentralized identity and VCs are a vital cog to what could ultimately evolve to a regulatory-approved effective framework for tokenized influencers and more valued and valuable communities.