Learn More about Vaulted Objects

Learn More about Vaulted Objects

Vaulted Objects are digital tokens. They are similar to NFTs in that they are ownable digital assets that deal with electronic media, but there are some important differences as well, which we explore here.

What? No blockchain?

The most profound difference is that Vaulted Objects are not blockchain ledger entries. They use their own entirely different cryptographic infrastructure. The security paradigm around this achieves a deterministic security profile, as there are currently no known vulnerabilities to attack.

Blockchain is just one information architecture among many possibilities within the world of cryptography. We use another, more suited to the task.


Embedded Media

Another major difference is the way that Vaulted Objects handle digital media. Blockchain NFTs don’t actually contain any media. They can generally only store a text string hyperlink (a URL) pointing to a media file sitting on a webserver. There is no security around the file itself, and that is a problem. Anyone with access to the webserver can change the content of the media file, and the owner of the NFT may not even know that a change has been made.

If anything bad happens to the domain, the folder structure, the filename or the file itself, the link can break entirely. This is called a 404 error: Resource Not Found. This has happened to countless NFTs, and holders of those NFTs have suddenly found that the resale value of their now image-less tokens have gone to zero overnight.

Vaulted Objects don’t have hyperlinks, so there is nothing to break. They aren’t necessary. The media file is embedded within the token itself. The file is in fact encrypted inside the Vaulted Object, and only the current owner of the object has the ability to extract and view a copy of it.

Legal Enforceability

Block chain-based NFTs have several questions around the enforceability of legal title. It is not clear in what sense a person can be said to "own" an NFT.

Firstly, as we have just discussed, it is quite unclear what the blockchain token refers to when it points to a digital file off-chain. As that file could change at any time, it is in no way clear what ownership of the token means in terms of a right with respect to any file that could be at that location.

Further, it is axiomatic that legal rights of ownership can exist in, at most, two ways; namely, via a chose in action or a chose in possession. “Chose” is a French word meaning "thing.” Chose in action refers to a right of ownership of a thing based on the right to bring an action in a court of law. Chose in possession refers to a right of ownership based on the actual possession of the thing. An NFT, being a ledger asset, is not and can not be possessed. Neither does it give rise to a right to sue, as is the case with other ledger assets, such as in registered title in land, because no underpinning legislation exists in the case of blockchain assets. The axiom states that there is no tertium quid;that is,no third way of attaining rights of ownership.

Network Economics

A further challenge that vaulted Venture is addressing concerns the costs associated with creating (or "minting”) NFTs.

Blockchain information architecture typically involves limits on the size of the blocks that form the ledger. That means that, at a certain amount of use, access to the next block for inclusion of a transaction becomes competitive. At this point, the transactions that pay the most in fees are most likely to be included in the next block. This mechanism is a recipe for ever-increasing transaction costs, as the network becomes successful and starts to scale.

Several "layer two” scaling solutions have been proposed for the popular proof-of-work block chains, and many more alternative blockchain architectures have been proposed, all with the goal of reducing transaction costs. This comes with an array of concerns around the security of the resulting architecture. The essential point here is however that the tendency of blockchains is for prices to increase on a per-transaction basis with greater scale rather than decrease.

As the Vaulted Objects infrastructure is based on cloud services it involves no such difficult economics, and the unit cost is able to be driven lower over time with increased scale and use.