Introduction: At Expensivity, Bernard Fickser explains that a non-fungible token (NFT) is a unique token in cryptography that represents, say, real estate or art rather than money. Because the tokens have unique identities (non-fungible), they can be bought or sold while reducing the risk of fraud.

So how do they work?: The series is called How Non-Fungible Tokens Work: NFTs Explained, Debunked, and Legitimized (July 30, 2021). In Part 7, we look at 12 steps to make NFTs economically viable without Ethereum.

7 A Protocol for Handling NFTs on eBay

The best way to challenge an existing idea is to replace it with a better one. In this last section, I’m going to lay out a protocol for handling NFTs that dispenses with cryptocurrency-based blockchains and works in ordinary online marketplaces like eBay. As an added benefit, transfers of ownership of the underlying digital asset will have full legal force (none of this phony baloney “ownership” of the digital asset solely from the standpoint of the Ethereum blockchain but nowhere else).

STEP 1: Establish clear and true online identity.

In line with SuperRare’s guide to prospective digital artists, you need to have a clear and true identity that people can associate with the digital assets you create. Unlike cryptocurrencies and fungible tokens, where anonymity is a virtue, anonymity is a vice for creators of non-fungible tokens. For simplicity, let’s assume therefore that you have a blog where your identity is made manifest.

STEP 2: Create digital asset.

Next, create a digital asset. As a matter of intellectual property law, as its creator, you own it, and you can transfer ownership or license to it under whatever conditions you wish.

STEP 3: Assert ownership of digital asset.

Make clear that this is your digital asset. This can be done by posting it on a blog, and perhaps only by making it partially available (recall the first of the three approaches to digital scarcity in section 5). One powerful approach to partial availability is to post an “anticipatory hash,” i.e., use a cryptographic hash function such as SHA-256 and apply it to your digital asset (which is just a digital file). Post the hash. Because hash functions are one-way functions, no one is going to be able to figure out from the hash what the digital asset is. The moment the hash appears on your blog (or at whatever space on the web that you control) and is marked with a clear time and date…