NFTs as user-owned data containers — a file-like building block for apps.

Could NFTs be used as standardized data containers like HTML or MP3 files, enabling user-owned, highly composable data storage?

Abstract — TL;DR

1. Blockchain-based apps could become easier to build than traditional ones through composability.

2. NFTs can act as file-like building blocks for user app data, enabling enhanced composability.

3. For example, an X-like (former Twitter) app could use NFTs for posts and profile data building blocks, making them reusable by other apps.

4. Using simple data standards for these building blocks, rather than more complex protocols, enhances innovation.

5. The approach leverages decentralization, potentially outperforms centralized systems, and helps redistribute concentrated tech power.

1. Intro — Composability could help Blockchain-based Applications win

While finance is the predominant use case for blockchain technology today, its potential extends far beyond. This text explores how blockchain-based applications could be easier to develop and foster more innovation than traditional ones.

Blockchain technology's ability to manage data collectively created a trust foundation that gave everyone the ability to innovate on financial assets. But collectively managed data is not only more trustworthy but also more accessible.

A collectively accessible data layer can form the basis for an ecosystem where applications seamlessly interact and build upon each other's data. This composability can create unprecedented levels of innovation.

As Chris Dixon puts it, "Composability is to software as compounding interest is to finance."

To fully unlock this composable potential, we can structure our shared data into simple, standardized building blocks usable across applications.

The current state of user data across applications is like a world where software programs can't utilize common file formats like MP3, HTML, or JPG to use each other's data.

2. NFTs as the "Files" of the World Computer

Blockchain technology began with digital assets in the form of Bitcoin's fungible (interchangeable) tokens. Ethereum then made it easy to run custom code, enabling everybody to create fungible and non-fungible tokens (NFTs). The community-created standards for these tokens (ERC-20, ERC-721) drove their success by ensuring accessibility and interoperability, creating an innovative ecosystem around them.

While fungible tokens dominate blockchain transactions today, most assets in the world are unique, or non-fungible. NFTs, popular in the past for representing ownership of art and collectibles, are versatile data containers that can represent ownership in anything. At their core, NFTs are simply data objects managed by highly standardized blockchain programs.

NFTs have standardized functions (like creation and transfer) and data structure (metadata standard). The metadata typically includes details like the creator's name, the title, a link to an image, and other custom data.

Given their flexibility and widespread adoption, NFTs can be used to manage user data for applications. By acting as standardized containers that point to this data, they can achieve a high degree of composability, allowing different applications to easily use and build upon each other's data.

To maximize interoperability, there need to be standards for various types of data. These standards would define how different kinds of information are structured within NFTs, ensuring that other applications can understand and interact with data created by other apps.

Modern blockchains are like collectively owned world computers. NFTs could function as their "files," standardizing data structure and interactions. The proposed data type standards are similar to file types like MP3, HTML, or JPEG.

This approach creates composable, interoperable building blocks for blockchain-based applications, leveraging the shared nature of the blockchain.

3. Example of How a Blockchain-Based X-like App Could Use NFTs as Building Blocks

A X-like app could use NFTs as standardized "files" for posts and user profiles.

Users could create posts by minting NFTs with a standardized metadata format. Here's a simplified example of what this might look like:

{

  "name": "x_post",

  "description": "Post via x_postStandard",

  "x_postStandard": {

    "id": "0xb180Fc7dB413D965D0E6f8098F37e2df33a4347E_1",

    "text": "This is a post"
  }
}

Other users could already read posts by just querying a blockchain address for NFTs that are using that standard. Blockchain's inherent features handle the underlying data management functionality that includes storage, retrieval or access control, replacing the need for custom infrastructure or additional protocols.

For sensitive or private data, NFTs can store encrypted content. Users would grant explicit permission to decrypt and access this data when connecting to applications.

Features of this X-like example app could be extended through additional building blocks, for example, by using a "profile-file" standard for the user profile. This profile could then be used across various applications, from social media to games.

This is the strength of composable applications. A game could use the same "profile-file" and additionally create "badge-files" for achievements. These badges could then be implemented by our X-like app and grant access to community channels, for example.

It would also be very easy for people to create their own version of this X-like app by using the same "tweet-files" and "profile-files" and, for example, only innovate upon the content distribution.

This open, standardized approach fosters innovation beyond what closed, proprietary solutions can achieve. Closed apps silo data, releasing it usually at a late stage through APIs, if ever. Here, the data is open and accessible for anyone to use, given the user's consent.

Development of NFT-based apps is also simplified due to a broadly distributed NFT infrastructure, like wallet connections, NFT reading, and minting.

4. Data Standards vs. Protocols

While many blockchain-based applications like Farcaster and Lens rely on protocols, simpler data standards for NFT-based applications could offer greater flexibility across domains.

Protocols provide optimization, consistency, and governance structures for specific use cases. In contrast, data standards offer implementation guidelines without dictating execution, allowing developers more freedom across contracts and chains. Like Lego bricks, simple standards enable complex systems while reducing integration barriers.

If file formats were protocols, MP3 might require a specific playback interface, or JPG might mandate zoom functionality. As pure data standards, they enable diverse implementations and applications.

The simplicity of data standards comes with trade-offs: developers must implement their own security measures, and coordinating ecosystem-wide upgrades becomes more challenging without centralized governance.

Web 1.0's development offers valuable lessons. Marc Andreessen explains their priority: "Text-based protocols are much less efficient, much slower, but the enormous advantage is you can program a text-based protocol by writing text, and you can read it by reading text... We collectively decided to just break that rule ... because what was on the other side of breaking that rule was openness and creativity and empowerment."

Similarly, Tim Berners-Lee emphasized in 1990: "We should work toward a universal linked information system, in which generality and portability are more important than fancy graphics techniques and complex extra facilities."

NFTs, like early web protocols, are simple and accessible. Openness is a spectrum. While protocols offer valuable features, data standards maximize openness and innovation potential across contracts, chains, and applications.

5. Conclusion — Openness for a Democratic Future

The concentration of technological power in the hands of a few major companies threatens both innovation and democracy. To counter this trend, we must find ways to distribute this power more widely. We need to create superior products that outperform centralized alternatives, offering users compelling reasons to choose decentralized solutions.

The strength of decentralization lies in its ability to let anyone create and innovate. By allowing ideas to come from unexpected places, not just from central decision-makers, we can foster novel solutions and broader participation. History shows that open systems often outperform closed ones, as demonstrated by the success of market economies, the open internet, Wikipedia, and open-source software.

By using open data building blocks that make it easier to create applications and services, we can unlock levels of innovation that will be hard to match for centralized alternatives.

An added benefit is that users would be in charge of their data. Our lives are becoming ever more digital, but the data that governs these lives is owned and managed by very few. AI accelerates this trend further. We need approaches that can level the playing field in the coming age of AI, making user data available not only to big companies but also to more decentralized alternatives. Instagram, TikTok, or X, for instance, that function as our global communication systems, own all communication on their platform, and decide which AIs can access it.

Now is the right time to work on decentralized applications. Recent improvements in blockchain technology's scalability, cost-efficiency, and user experience have expanded its viability beyond finance to potentially all kinds of applications.

The evolution of digital applications and data storage could follow this path:

1. Local Apps: Data owned by users and stored on local devices.

2. Internet-Connected Apps: Data owned and stored by big companies.

3. Blockchain-based Apps: Data owned by users and stored on shared networks.

Like the majority of applications have become internet-connected in the past, they might become blockchain-based in the future.

NFTs offer user-owned, widely accessible data storage that enables easy third-party interaction. If we use them to store application data in an interoperable way, we can foster an innovative ecosystem that could outperform centralized alternatives.

An earlier version (2022) of this idea can be found here.

I'm very grateful for any questions and comments :).