Can NFTs combat fake news?

Karan Arora is a final year law student of the B.A, LL.B (Hons.) degree at Jindal Global Law School. His interest include Technology Laws and Policy, Competition Law and Labour Laws.

Harshil Agarwal is the co-founder of IRO and primarily focuses on building products for legal process automation.
- Wed Jun 30 2021


Non-fungible tokens (hereinafter, “NFTs”) are taking the world by storm. This technology framework of blockchain-enabled digital tokens, although started back in 2012-13, has been recently popularized by its adoption in various domains, ranging from sale of digital art, storage of art collectibles and event ticketing management to supply chain management in the food sector, and most noticeably, with the sale of digital artist Beeple’s art work at Christie’s for $69 million. As the adoption of NFTs continues to gain momentum, it may be useful to analyse their different potential use-cases. This article in particular, explores whether features of authentication and traceability, associated with implementing NFTs can be used for complying with the “originator” traceability requirement under the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rule, 2021 (hereinafter, IT Rules, 2021”) to tackle the menace of fake news.


Based on the nature of their exchangeability, crypto tokens can be divided into two subsets, fungible crypto tokens and non-fungible crypto tokens. Fungible crypto tokens are mutually interchangeable with other identical crypto tokens. They are built in such a way that each fractional unit of a crypto token is equivalent to the other fractional unit of the same crypto token.[1] Therefore, the total value held by the crypto token holder depends on the ‘number of crypto tokens’ in their ownership, similar to fiat currency like the Indian Rupee. Bitcoin is the prime example of a fungible crypto token, wherein one unit of a Bitcoin held by person ‘A’ has the same value as another single unit of a Bitcoin held by anyone else.

In contrast, NFTs are not directly interchangeable with other tokens (hence the name, ‘non-fungible’ tokens). These programmable crypto assets are recorded on a distributed ledger, with hash codes and metadata that cannot be replicated by other tokens. NFTs enable the tokenization of things like art, digital collectibles and even physical property. Each NFT has an owner and its ownership, both past and present, can be traced and authenticated on the blockchain ledger. 

Most commodified NFTs, like Beeple’s $69-million-worth digital art work, derive value from three distinctive characteristics, namely: (i) being digital yet original and authentic; (ii) being rare or scarcely available; and (iii) their ability to trace and verify ownership. These three distinctive characteristics also permit the deployment of non-commodified NFTs in a host of other use-cases that mandatorily require or benefit from authentication and tracing of the ownership of information.

Fake News and Digital Platforms
Fake news in India is now being considered a substantial problem, both domestically as well as internationally. ‘Fake news’ can be understood as any content or news stories that has been fabricated and has no verifiable facts, sources or quotes.[2] It tends to mimic the form of news media content without having the same organizational checks and balances in place.[3] It is often curated for spreading social or political propaganda, deriving economic incentives (ad-revenue)[4] or even for creating memes. However, its result is mostly the same, that it misleads people intentionally or unintentionally. 

While this phenomena is deep rooted in print media, its prevalence has become mainstream with the rise of social media platforms like Facebook and WhatsApp[5], and the emergence of a hyperconnected world.[6] A peculiar feature of fake news is that it not only makes people believe false things, but it also makes them less likely to consume or accept information that is true.[7] Therefore, it is not surprising that the prevalence of fake news can increase political polarization, decrease trust in public institutions and undermine democracy.[8] Back in 2019, Microsoft’s Third Digital Civility Index concluded that Indians were the most likely demographic to encounter fake news and internet hoaxes amongst the people of 22 different countries that were surveyed in the study. This can largely be attributed to the country's low digital literacy rates which make people, many of whom are relatively new to the internet, more susceptible to propaganda and disinformation.[9] Despite numerous campaigns against misinformation, and fact-checking organizations working round the clock, fake news continues to be a raging problem in the country due to its sheer volume. This is also largely due to the rapid technological developments and adoption in video and audio production, making it easier to create and disseminate highly-convincing fake news, increasing the threats posed by it. 

Traceability of originator

The enactment of IT Rules, 2021 was primarily in response to increasing concerns over the wide-spread impact of fake news on social media platforms in the country.[10] According to the IT Rules, 2021, any social media intermediary having fifty-lakh registered users in India will be deemed as a significant social media intermediary (hereinafter, “SSMI”) and will be required to “enable the identification of the first originator of the information on its computer resource”.[11] Therefore, SSMIs are required to assist the Central Government in tracing and identifying the originator of any information that has been shared through the service, if required by an order passed by either a court of competent jurisdiction or under section 69 of the IT Act by a competent authority.[12]

Many legal experts argue that such “originator” traceability requirement impinges on the users’ right to privacy, offers no transparency, lacks general guidance, and would have a chilling effect on free speech.[13] The ‘originator traceability’ provision, among other provisions of the rules, is currently being challenged in numerous petitions[14], including one by WhatsApp Inc. before the Delhi High Court.

NFTs as a potential solution

Assuming that the Indian courts hold the IT Rules, 2021 constitutional and uphold the ‘originator traceability’ provision, the implementation of the NFT framework could potentially be of assistance in tracing the provenance of any information shared on the servers of an SSMI. Media reports suggest that a ‘unique hash constant’ based solution has already been proposed by advisors to the government, and an NFT based solution could be one of the most effective means of implementing it due to its verifiable method of authentication. In fact, having recognized this potential, Italy’s LKS Foundation has already implemented an NFT-token based misinformation disincentivizing solution on the social-media platform

We propose that to trace the provenance of any communication shared on the servers of an SSMI such as WhatsApp, every individual communication, in text, audio or video format, shared by a unique user can be associated with an NFT. This will allow each distinct communication to be distinguished from other communications shared on the servers of an SSMI. Further, the NFT metadata (i.e., the data stored within the NFT) would contain information pertaining to the contents of the communication, identity of the sender, the identity of the receiver, and the time and date of dissemination etc. Additionally, due to an NFT’s blockchain based record of ownership, every ‘transfer’ (from origination to subsequent dissemination) of the underlying communication would be recorded on the NFT in an immutable and non-repudiable manner. Therefore, upon being presented with a valid order from a competent court or authority, the SSMIs would simply have to access the NFT associated with the underlying communication through its unique hash code and trace its origination through its ‘transfer’ history. 

We believe that the proposed NFT-based communication tracking solution can combine two processes that are essential for tracking the originators or creators of fake news. Firstly, it functions like a digital KYC system, which when combined with other relevant data inputs could assist authorities in determining and affirming the identity of the person who is carrying out the initial transmission of any piece of communication. Secondly, it provides time-based proof of the creation and subsequent ‘transfer’ of any communication on the servers of the SSMI. Both these processes are essential for tracing the first originator of any communication, especially when the same communication is copied and disseminated by multiple ‘originators’.

Possible hurdle

While ripe in potential, the proposed use case of NFTs is not a plug-and-play fix to the menace of fake news. 

Any solution that aims to curb fake news, comes at some cost to free speech. The absence of conceptual clarity on what classifies as ‘fake news’ and a lack of substantial agreement on what kind of ‘information’ is problematic results in certain legitimate communications being flagged as fake or untrue. Such flagging may in some cases be unintentional, but more worryingly, may often also be intentional. Governments around the world, including in India, have intentionally muzzled reportage that is critical of them under the guise of curbing ‘fake news’. This ambiguity of what qualifies as ‘fake news’, combined with a technology-based implementation of the ‘originator traceability’ provision would only further empower oppressive regimes to surveil, trace and clamp down on civil dissidents and minorities. 

While fundamentally this is an issue with the “traceability requirements” under the IT Rules, 2021 itself, the proposed technology framework possesses the ability to aggravate its impact. NFTs are part of a blockchain, which is characterized by immutability – the ability to maintain a permanent and unalterable history of all data stored on it. Without any safeguards, an NFT-based implementation of the ‘originator traceability’ provision would immutably store all communications that have been shared on the platform of an SSMI, permitting surveillance and clamp downs not only at the time being but also at any point in the future. This hurdle will have to be considered and assessed in detail before an NFT-based framework to tackle fake news is implemented in the real world.


Despite its challenges, we believe that the potential of NFTs to trace and disincentivize fake news cannot be denied. With the exploding popularity of NFTs, it might only be a matter of time before similar NFT-based communication traceability solutions are developed and deployed in the rest of the world. In the Indian context, the proposed use of NFTs to curb fake news is further strengthened by a legal framework that mandates originator traceability, as highlighted in this article. But this strength might also end up being its biggest weakness. If the courts find the originator traceability provision to be in violation of the citizens’ right to privacy, the legal-tech solution to fake news proposed in this article will never see the light of the day. With a potentially long and arduous legal battle over the legality of the originator traceability provision in-sight, legal and tech experts have ample time to discuss the viability of the proposed solution and potentially curb India’s fake news problem for good, without having to compromise on the freedom of speech and expression.


[1] Anshika Bhalla, ‘A Quick Guide to Fungible vs. Non-Fungible Tokens (Blockchain Council) <> Accessed 26 May 2021.

[2] Shevon Desai and others, ‘”Fake News,” Lies and Propaganda: How to Sort Fact from Fiction” (University of Michigan Library, 21 May 2021) <> accessed 18 May 2021. 

[3] David M.J, Lazer and others, ‘The science of fake news’ (2018) Vol. 359, Issue 6380 Science <> accessed 19 May 2021. 

[4] Shevon Desai and others, ‘”Fake News,” Lies and Propaganda: How to Sort Fact from Fiction” (University of Michigan Library, 21 May 2021) <> accessed 18 May 2021.

[5] Jacob Soll, ‘The Long and Brutal History of Fake News’ (Politico Magazine, 18 December 2016) <> accessed 1 June 2021. 

[6] Shevon Desai and others, ‘”Fake News,” Lies and Propaganda: How to Sort Fact from Fiction” (University of Michigan Library, 21 May 2021) <> accessed 18 May 2021.

[7] David A. Graham, ‘Some Real News About Fake News’ (The Atlantic, 7 June 2019) <> accessed 19 May 2021. 

[8] Jennifer Allen and others, ‘Evaluating the fake news problem at the scale of the information ecosystem’ (2018) Vol. 6 No. 14, Science Advances <> accessed 23 May 2021. 

[9] Akanksha Saxena, ‘India fake news problem fueled by digital illiteracy’, DW (2 March 2021) <> accessed 27 May 2021. 

[10] Rules framed to tackle fake news on social media’, The Hindu (9 October 2020) <> accessed 9 June 2021. 

[11] Rule 4(2), Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021.

[12] Rule 4(2), Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021.

[13]What is the “Originator or Traceability” provision in the Information Technology (Intermediary Guidelines and Digital Media Ethics Code), 2021’ (Software Freedom Law Center, 12 April 2021) <> accessed 18 May 2021. 

[14] Karan Tripathi, ‘Chilling Effect on Media: The Quint Challenges New IT Rules’, The Quint (19 March 2021) <> accessed 27 May 2021.