Conference PaperPDF Available

Use of Blockchain Technologies Within the Creative Industry to Combat Fraud in the Production and (Re)Sale of Collectibles.

Authors:

Abstract

The music industry has evolved significantly over the last few decades, from cassette to compact disk to MP3 and now to subscription-based streaming. Simultaneously, there has been a return to analogue, especially to vinyl records. In 2021, a major record label will introduce a new kind of vinyl. From the original master tapes, one-of-a-kind copies will be made. These will be manufactured in very limited quantities and sold exclusively as collectors' items. In a world where purchasing these collectibles is as simple as tapping the screen and where there are also numerous trading markets between private individuals, new creative ways to protect consumers and digitally protected analogue collectibles must be found. This relates to both the product's authenticity and the legitimate possession of the valuable vinyl. This work in progress paper aims to determine whether digital identities of suppliers, distributors, and consumers on the one hand, and decentralized encrypted data storage on the other, can be potentially the future technology to safeguard collectibles that the creative industry should be more than just looking at.
Proceeding of the
20th European Conference on Cyber Warfare
and Security
ECCWS 2021
A Virtual Conference
Hosted By
University of Chester
UK
24th-25th June 2021
Use of Blockchain Technologies Within the Creative Industry to
Combat Fraud in the Production and (Re)Sale of Collectibles
Alexander Pfeiffer1, 2, 3, Stephen Bezzina2, 3 and Thomas Wernbacher1
1Center for Applied Game Studies, Donau-Universität Krems (DUK), Austria
2Department of Artificial Intelligence, University of Malta (UoM), Msida, Malta
3B&P Emerging Technologies Consultancy Lab Ltd., St. Julians, Malta
Alexander.pfeiffer@donau-uni.ac.at
mail@stephenbezzina.com
Thomas.wernbacher@donau-uni.ac.at
DOI: 10.34190/EWS.21.055
Abstract: The music industry has evolved significantly over the last few decades, from cassette to compact disk to MP3 and
now to subscription-based streaming. Simultaneously, there has been a return to analogue, especially to vinyl records. In
2021, a major record label will introduce a new kind of vinyl. From the original master tapes, one-of-a-kind copies will be
made. These will be manufactured in very limited quantities and sold exclusively as collectors' items. In a world where
purchasing these collectibles is as simple as tapping the screen and where there are also numerous trading markets between
private individuals, new creative ways to protect consumers and digitally protected analogue collectibles must be found. This
relates to both the product's authenticity and the legitimate possession of the valuable vinyl. This work in progress paper
aims to determine whether digital identities of suppliers, distributors, and consumers on the one hand, and decentralized
encrypted data storage on the other, can be potentially the future technology to safeguard collectibles that the creative
industry should be more than just looking at.
Keywords: collectibles, blockchain, digital ID, vinyl
1. Introduction to the topic
Collecting not only for survival but for cultural or educational reasons has accompanied mankind for thousands
of years (Wilde, 2015). The very first collections of cultural goods as burial artefacts go back to 3000 BC in ancient
Egypt. Early collections of books already existed in the ancient world by Polycrates of Samos and Euripides. Since
the 6th century AD, collecting has been the privilege of the European ruling houses and the churches in their
treasuries. This demonstrated power, wealth and influence (see ibid). For the first time, in the Renaissance,
tendencies towards individualization become noticeable, and with it begins the golden age of collecting luxury
goods that serve the "knowledge of the world". The first private collections emerged in the 14th century, and
from 1450 onward, specific rarities and precious objects were collected, such as antique manuscripts, coins,
statues, but also plants and the first cabinets of curiosities were created. In the following period of the
Enlightenment, the society becomes modernized, and consequently collecting is socialized and democratized
and enters the classical bourgeoisie. Two types of collection, the public and the privately owned, were
established side by side (Werner, 2018). In the private sector, a new type of collection emerged in the 19th
century - the small collection. Its purpose is to give cultural and intellectual pleasure to the collectors and add
value to social life. The private collection is often an expression of the personality and identity of the owners
(Wilde, 2015).
In the 21st century, the trend towards private collections has manifested itself. Research shows that every third
German has a collecting impulse. For Austria, with its population of just under 10 million, a country that is
culturally close to Germany, it is assumed that three million people collect items privately (see Schindelbeck,
1997, Sommer 2011, Jolmes, 2014). The most diverse things are collected; from curiosities, antiques, collectible
stickers to music. Also, in the 21st century, collectables increasingly include digital items, such as computer
games that were installed without data carriers, items as part of computer games or music songs and albums in
their pure digital form or access to a streaming service (Werner, 2018, Pfeiffer, 2018).
In regard to Blockchain technologies Serada et. al. (2020) analyzes specific characteristics of value created
through digital scarcity and Blockchain-proven ownership in cryptogames. Although their research relates to a
digital collection game, conclusions can be well drawn for our project. Pfeiffer et. al. (2020) have also examined
Blockchain technologies and found that it is precisely the safeguarding of collective objects, in other words digital
items of real-world value that can be optimally secured by Blockchain. The connection between real-world
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objects and Blockchain technologies for marking ownership and ensuring that it is an original is very well
illustrated in the developer docs of the company Riktig. These provide an important resource for our work. 1
2. Planned research aims and methods used
This work in progress / case study paper deals in particular with the current trend of collecting vinyls2, specifically
within the conceptualization of a major record label to produce strictly limited special editions directly from the
original master tape. Besides the new complex manufacturing process and the strict limited availability, the
aspect of counterfeit protection on the one hand and the proof of ownership on the other hand are of utmost
importance. In addition, new business models are to be considered. For this purpose, the use of Blockchain
technologies, specifically a demonstrator on the Blockchain Ardor/Ignis3 is being developed. The first iteration
of this demonstrator is described below. This served as the basis for the expert opinions in the frame of this
study.
The research questions for the final paper are divided in two parts. In the first quantitative study, collectors of
vinyls will be surveyed regarding:
their overall motives;
why this medium is so attractive to them as a collectible;
how they see the future of the collecting of vinyls;
whether the protection and certification of an authentic item plays a role for them;
and finally, if the link to a digital identity and the connection to a customer to customer (C2C) sales platform
handled via smart contracts could offer advantages.
The second part will be conducted in the form of expert interviews. In this work in progress, the key statements
of the first interviews are presented, which have served to find the questions for the upcoming planned longer
series of expert interviews. The focus here is on the issue of counterfeit protection, allocation to identities and
the establishment of a C2(B)C marketplace. The latter means that customer sells to customer, but companies
are integrated as part of the automated smart contracts via Blockchain. This present two key advantages, mainly
for identity verification of the traded object and its owner on the one hand and on the other hand in the form
of receiving a brokerage commission as part of a new business model.
3. Presentation of the developed demonstrator
As part of the demonstrator, restrictive utility tokens are created on Ignis, the Blockchain Ardor's childchain,
which will act as the digital counterpart of the respective limited edition vinyl. Restrictive means that the
conditions under which the utility token can be sent from one wallet to another are defined in the form of
approval models. For example, wallet addresses can be whitelisted, multi-account signature processes can be
defined, or it can be determined that the possession of an authorization token is necessary to initiate certain
actions.
Two different types of tokens are generated. The first type of tokens are singleton tokens (NFTs). These are
unique tokens of which exactly 1 piece exists and which have their own transaction ID. This would be ideal for
particularly valuable unique pieces. Here, the token description can be used for a general publicly visible
description of the token, for example, which real good is digitally represented including, for instance the serial
number and other factors which describe the product in general and show its unique characteristics. For each
transaction, encrypted or unencrypted messages can be used to store meta-data.
This possibility is essential for our demonstrator, because the digital signature that identifies the owner is written
into this as attached message, stored on Blockchain, accessible in form of the unique transaction ID. The second
token corresponds to the number of pieces of a planned edition. Here the token description is the same for all
tokens. If for example, a limited edition of 2000 pieces is produced, the same amount of tokens which share the
same token ID and a common public description of the token properties are generated. The individualization,
1 See https://riktig.io/docs/developer
2 See https://www.catawiki.de/stories/735-warum-man-jetzt-mit-dem-sammeln-von-vinyl-anfangen-sollte
3 See https://www.jelurida.com
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such as the serial number, which vinyl it is, the issuer, the year of issue, the owner and other relevant meta data
is therefore attached as an encrypted message to each transaction.
Using the marketplace of the Blockchain Ardor, the sales process from one account to another is simulated in
the form of a role play. This involves the transfer of ownership rights, payment processing directly with
cryptocurrencies or via digitally signed instructions to the house bank and the possibility of matching with
databases of the manufacturer for additional verification of the vinyl, including update of the respective legal
owner. We will also work out how to implement concepts where the system records and verifies private data
(including ownership) but no unauthorized people can read this data. As such, future research should be directed
towards what is commonly referred to as zero knowledge proofs, whereas one party can prove to another that
they know a value x, without conveying any information apart from the fact that they know the value x.
4. Preliminary expert statements
In this Work in Progress / Case Study Paper, we would now like to sum up briefly the results from the first round
of expert interviews. The statements refer on the one hand to the feedback on the first iteration of the
demonstrator and on the other hand to essential points, which have to be considered for the completion of the
full paper and the development of the questionnaire for the collectors. For this work in progress / Case Study
we refer to statements from three selected experts
E1 is a tech-savvy musician who also manages his band. The amateur band usually plays in front of audiences of
around 150 people and sell about 500 CDs per edition. Furthermore, they have a few thousand counted streams
of their songs per year. The creation of a small edition vinyls for the closest fans has already been considered.
Even though it's probably not a big issue for his band yet, he finds the collector's edition aspect exciting. For his
fans, this is also a bit of gambling on the band's future success. For him, it is important that he, as a small self-
publisher, gets access to the use of the systems, via for example, a licensing system of external providers (such
as the vinyl or CD pressing plant be). Also, he will get the possibility, after a review of certain factors, to register
his own label with large major labels and sell the limited editions, as well as to use the new resources, such as
the online store, for collecting such special editions.
E2 is not from the music industry, but an expert in Blockchain based processes and smart contracts. He finds the
demonstrator very exciting and the concept well developed. He suggests thinking about the possibility of multi-
chain connections early on, so that different systems and Blockchains can communicate with each other. He also
suggested a design where the private information is mapped separately from that of the collection piece, but
nevertheless through approval models one part does not work without the other. In this way, current European
data protection law can be better addressed, such that private information remains private. For him, it is
important to look at the transaction costs and who will be responsible for them. An important issue is the area
of digital identities, and here it is particularly important to think beyond national borders.
E3 is the executive director of the major label releasing the novel collector's edition s. While the launch of this
collection is not yet secured on Blockchain, there is interest in the technology and this independent
accompanying research serves as an initial evaluation. While the rising consumption of streams has become the
backbone of the recorded music economy, the vinyl is the only format that defies the decline of the physical
business. The reason for that is the iconic history and emotional value of the vinyl disc and the fact that it is
strictly analogue i.e. anti-digital. The question is, how a very digital and modern concept as Blockchain sits with
the hardcore vinyl collectors and how the value of such an evidence of ownership can be communicated.
Another requirement would be the easy usability for both the manufacturer of the limite d editions, as well as
the owners.
5. Conclusion
The initial expert interviews provided a sound basis for the development of the quantitative questionnaire.
Further steps can also be taken for the second iteration of the demonstrator, which will then be discussed in the
next expert round, where we plan to discuss the results of the online survey together with the second iteration
of the demonstrator. With regard to the development of the demonstrator further possibilities offered by the
Ignis Blockchain will be explored in further iterations of the demonstrator, such as the division into 2 token
systems for the same collectible. One token will contain the private owner data (encrypted) and another token
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the public data around the vinyl. Both tokens can only be sent together, which is guaranteed by the
corresponding approval model. The work so far shows that the topic of combining Blockchain-based digital
identities with tangible collector editions may be novel but very exciting for both the industry and the end user,
namely the music fan and collector. Finally, such findings are potentially of interest for applications within other
creative industries.
References
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Kleine, J., Jolmes, M. (2014) Sammeln : Im Spannungsfeld zwischen Leidenschaft und Kapitalanlage, Steinbeis Research
Center for Financial Services, München
Pfeiffer, A. (2019). Doktorat Alexander Pfeiffer: Auf dem Weg zur ludischen Gesellschaft. 10.13140/RG.2.2.21808.30725.
Pfeiffer, A., Kriglstein, S., Wernbacher, T. (2020) Blockchain Technologies and Games: A Proper Match? In International
Conference on the Foundations of Digital Games (FDG '20). Association for Computing Machinery, New York, NY,
USA, Article 71, 14. DOI: https://doi.org/10.1145/3402942.3402996
Serada, A., Sihvonen, T., & Harviainen, J. T. (2020). CryptoKitties and the New Ludic Economy: How Blockchain Introduces
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Ruppichteroth
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614
Conference Paper
Full-text available
Not only have virtual currencies in digital games from the pre-Blockchain era helped to understand digital currency systems, but the idea that digital objects can have monetary value is a question of faith that has been expressed primarily through the gaming industry. In the world of business this is now called the 'token economy'. Blockchain as a technology can do much more, besides payment processing with cryptocurrencies, utility tokens can be created to secure in-game currencies and items, gamification systems can be made more transparent while strengthening the privacy of the players and even whole game ecosystems can be secured by Blockchain. However, this is still a very young technology and that there is a certain technological war of faith as well as a big area of scams around and with Blockchain-based systems and tokens. In this paper we will present a bird's eye view, based on results of the expert interviews, of how Blockchain as technology is connected to the different aspects of games and play.
Thesis
Full-text available
Spiele, in allen Formen, verändern sich derzeit in Bezug auf die gesellschaftliche Wahrnehmung. Analoge Spiele werden dank Smartphones zu hybriden Spielen. Interaktive digitale Unterhaltung hat (in den U.S.A.) die Kinoindustrie Ende der 2000er Jahre überholt (NPD Group, 2009), (Serious) Games tragen zur lebensorientierten Bildung bei, und Unternehmen nutzen Spielprinzipien mit dem Ziel der Kundenbindung einerseits und der Verbesserung der internen Unternehmensprozesse andererseits. Laut einer Studie von GfK im Auftrag von ÖVUS aus Oktober 2017 spielen 4.9 Millionen ÖsterreicherInnen digitale Videospiele. Das Durchschnittsalter dabei beträgt 35 Jahre und die Durchschnittszeit pro Woche ca. 10 Stunden. Gespielt wird dabei am PC/MAC, am Smartphone, mit Spielkonsolen oder auf Tablets/Handhelds. Diese Dissertation beschäftigt sich mit den Phänomenen „Spielen (play)" und „Spiel (game)" und vergleicht Definitionen zu diesem Thema von Plotin (244 ad) über Huizinga (1938) bis Jesper Juul (2005) und darüber hinaus. Der Vergleich der bisherigen Spieldefinitionen erfolgt auf Basis von Literaturrecherchen und wird im Rahmen von Expertinnen Interviews diskutiert. Ziel der Arbeit ist es, die Gültigkeit bestehender spieletheoretischer Ansätze zu diskutieren (Ist z.B. das Konzept der Freiwilligkeit noch relevant?) und anschließend zu untersuchen, inwieweit spielerische Ansätze bereits Eingang in unseren Alltag gefunden haben. Weitere Aspekte dieser Dissertation sind Spielmotive, Spielertypen, die Wirkung von Spiel, Serious Games, Gamification/Nudging und „Immersive Technologien als Begleitfaktor in der Spieleentwicklung". Im Rahmen eines Exkurses werden „Spielerische Prozesse im Kontext des Blockchain-Hypes" und das Thema „Glücksspielindustrie“ behandelt.
Article
This article analyzes specific characteristics of value created through digital scarcity and blockchain-proven ownership in cryptogames. Our object of study is CryptoKitties, the first instance of a blockchain-based game that has garnered media recognition and financial interest. The objective of this article is to demonstrate the limits of scarcity in value construction for owners of CryptoKitties tokens, manifested as breedable virtual cats. Our work extends the trends set out by earlier cryptocurrency studies from the perspective of cultural studies. For the purpose of this article, we rely on open blockchain analytics such as DappRadar and Etherscan, as well as player-created analytics, backed by a one-year-long participant observation period in the said game for research material. Combining theoretical cryptocurrency and Bitcoin studies, open data analysis, and virtual ethnography enables a grounded discussion on blockchain-based game design and play.
Die Jagd auf den Sarotti-Mohr
  • V Ilgen
  • D Schindelbeck
Ilgen, V., Schindelbeck, D. (1979) Die Jagd auf den Sarotti-Mohr, Fischer Taschenbuch Verlag, Frankfurt, 1997
Sammeln : Im Spannungsfeld zwischen Leidenschaft und Kapitalanlage
  • J Kleine
  • M Jolmes
Kleine, J., Jolmes, M. (2014) Sammeln : Im Spannungsfeld zwischen Leidenschaft und Kapitalanlage, Steinbeis Research Center for Financial Services, München
Eine Phänomenologie des Sammelns und des Sammlers
  • M Sommer
Sommer, M. (2011) Eine Phänomenologie des Sammelns und des Sammlers, in: Kunstforum international, Band 211, Ruppichteroth
Die ungebrochene Faszination von Sammelbildern in einer digitalen Welt
  • S Werner
  • Krems Donau-Universität
  • D Wilde
Werner, S. (2018) Die ungebrochene Faszination von Sammelbildern in einer digitalen Welt, Donau-Universität, Krems Wilde, D. (2015) Dinge sammeln, Annäherungen an eine Kulturtechnik, transcript Verlag, Bielefeld