The novelty introduced in this EIP is the proposal of smart Non-Fungible Tokens (NFTs), named as SmartNFTs, to represent smart assets such as IoT devices, which are physical smart assets. Smart assets can have a blockchain account (BCA) address to participate actively in the blockchain transactions, they are also identified as the utility of a user, they can establish secure communication channels with owners and users, and they operate dynamically with several operating modes associated with their token states. A SmartNFT is physically bound to a smart asset, for example an IoT device, because the device is the only one able to generate its BCA address from its private key. The physical asset is the only one in possesion of its private key. This can be ensured, for example, if the IoT device does not store the private key but uses a Physical Unclonable Function (PUF) that allows recovering its private key. SmartNFTs extend ERC-721 non-fungible tokens (which only allow representing assets by a unique identifier, as a possession of an owner).
A first version was presented in a paper of the Special Issue Security, Trust and Privacy in New Computing Environments) of Sensors journal of mdpi editorial. The paper, entitled Secure Combination of IoT and Blockchain by Physically Binding IoT Devices to Smart Non-Fungible Tokens Using PUFs. This paper is available: Sensors | Free Full-Text | Secure Combination of IoT and Blockchain by Physically Binding IoT Devices to Smart Non-Fungible Tokens Using PUFs