From Tangible digital to NFT: Non-Fungible Information Communication Model for Internet of Value
Although blockchain is seemed as an implementation of Internet of Value but there is no fundamental model of IoV. First the vision to make digital tangible is discussed from data management perspective. Then Shannon communication model reviewed and non-fungible information communication model is proposed as the foundation of IoV.
Human never stop to find ways to manipulate digital objects as physic ones. Back to Tom Cruise’s Minority Report to recent tangible digital of Hiroshi Ishii from MIT media labs. As one of these efforts a smart device was invented to grab and drop data as real physic objects by me in 2013. [refer to Tagtal t-stylus] In that project, a vision of making digital tangible was proposed and numerous efforts was made to try to fulfill it. In 2016, some properties of blockchain technology drew my attention in sense of making digital tangible, such as blockchain data can not be “destroyed” or “copy/cloned” as physic matter neither. From that time I start to realize that there should be a way to make digital tangible as physic object with blockchain. But how to do so is not clear at that time. Although up to now, the key has been found but the pathway leading to it is not straightforward.
In data governance, there is a prominent issue that it is hard to control data copy and clone in existing data management system (or IT system). Fro instance, Alice sent a data set(e.g. table) to Bob. It is hard (if not impossible) for Alice to keep Bob away from forwarding the data to Charlie. Hence although big data era was claimed years before there is few successful story about data economy. In opposite to there are many data misuse or leaking in the field. The root cause is that there is no way to prevent the “data assets double spending” mentioned above. It seems the cure lies in the technology of blockchain.
The idea to prevent double spending of blockchain is great but it can not be applied directly to data management for performance and one more fundamental issue which I will come back later. The performance issues is obvious. Even Crypto currencies have such limit data payload (e.g. amount of account) the TPS is not high not mention the volume of big data. The often trad-off is so called on-chain/off-chain combination solution, e.g. CyberVein, DLattice, Dagbase, REPUX etc. In those solutions, different ways used to mapping off-chain data with on-chain data, in most cases by hashes of off-chain data. Those solutions have two common issues, the first is that they do not have a common model of the transactions of data exchange which is indeed existing for many years in data management field, aka, ETL (Extract-Transform-Load). The second issue is that there is no standard for binding off-chain data with on-chain data. Hence there is no interoperability among those so called data assets system powered by blockchain. They only create more blockchain-base data islands instead of data integration.
As mentioned ,there is a fundamental issue in solving “data assets double spending”, i.e. the information in data in fungible. The root reason is that Shannon information itself is simplified information communication model instead of data assets transfer model. In Shannon communication model, the sending side and receiving side both has the same time/space reference frame (Cartesian Reference Frame) that make the information is fungible in both side. So although the data storage media are non-fungible physically and/or electronically (computer memories, storage disk or optical disk) but no one can tell the difference of information decoded from those data copies with the same origin. This is a very good feature in telecommunication to make sure the information identical. But in sense of assets, any data should be non-fungible as tangible assets. In real world, the data assets usually are transferred in isolated physical data storage instead of by sending it over internet. This is beyond the capability of Shannon information.
We need a better data assets communication model after Shannon information model for value exchange. In which we keep virtual data ( as representation of the fungible information) non-fungible as physical data storage media that we can solve the issue of “data assets double spending”. What makes physical data storage media non-fungible? The answer is the physical reference system itself. We can always tell the difference of two data storage devices in different level from assemble to atom, nano or even quantum level. One could always consult physical environment to differentiate two data storage media. In sense of Game Theory, the physical environment plays the role of trusted intermediate.
As mentioned , although there is no such trusted intermediate in Shannon communication model for any value (assets) exchange. Take the most simple example in Shannon information exchange, Bob received a message saying “I’v sent 1 BTC to you ” from Alice in an online chat app. Bob have to check the wallet (the blockchain as trusted intermediate) to make sure the message is true or not. Since the “1” in the message is fungible in both side of Bob and Alice. In another more traditional message could be “I’v sent 1 CNY to you”, you have to consult your bank as trusted intermediate to make sure it. In both cases, they have trusted intermediate which plays the role of reference frame. But it is obvious that blockchain is closer to physic reference frame than a bank. We could add blockchain to Shannon information communication model as a trusted reference frame to make a data assets exchange model.
Before diving into the vast technical details we’d better to have a brief discussion about high level model of value reference frame (VRF). As claimed Cartesian RF is too simple to exchange value but what RF should be used to exchange value via communication networks. It is not responsibility of computer or network communication scientists to invent VRF so we have to examine it in economist’s works.
In traditional value function of Expected Utility Theory, the reference point is fixed. The Prospect Theory proposed improved reference frame with respect to human’s behavior. The bottom line is there must be a reference frame in economic activities. For value exchange over networks the reference point (or reference frame) has to be sent at the same time. We call this kind of networks as in-bandwidth value exchange networks(IBVN). As said, the backbone of IBVN need more powerful communication model rather than the conventional Shannon model. This is non-fungible information communication model (refer to B in Fig2 ) as an upgrade of Shannon model which only support fungible information communication (refer to A to Fig2).
In conventional Shannon fungible information communication model, the reference frame is implied as Cartesian Reference Frame on both side to make sure the information identical, also fungible. So the assets as reference dependent level, according to expected utility theory or prospect theory in economics, can not be exchange with Shannon model at theory level. That is why people claimed that the information internet must to be upgrade to internet of value (IoV) from technology perspective.
In proposed non-fungible communication model, reference frame is sent from source to destination along with signal. So the information is no longer fungible, e.g. Alice sent Bob a message saying “I’ve sent 100 CNY to you”. The reference frame of CNY is sent to Bob from Alice as well as the message. So 100 CNY is not just a symbol but the distance from the zero point of CNY reference frame. It also means that 100 CNY in Bob side is not a copy of 100 CNY of Alice who is no longer has the “100 CNY”.
It’s not hard to point out that blockchain as global distributed ledger is a very good candidate for reference frame. The contribution of non-fungible information model is first time to have a theory model of value exchange or communication. With this theory model, we could understand blockchain and Internet of Value better and have long term vision about the future of blockchain and IoV. For instance, we can understand NFT from non-fungible information theory perspective.
In respect with above theory model, Non-Fungible Token (aka NFT) at least has a piece of non-fungible information. Although NFT is been used in cryptoart or collectibles it has greater potential to be a key part of technical implementation of IoV for every thing. For instance, non-fungible data could be used in data trading. As we discussed above, the existing blockchain based data management platforms do not has non-fungible information theory support. As networks of data value they are in very early stage. As well as the Shannon communication model and theory made fungible information telecommunication and internet possible, non-fungible information theory and model will make network of value and internet of value rising on the horizon.
