The roads I take...

As mentioned in a previous post, I've been working with the Capacity Blockchain Solutions team on the Crypto stamp project, the first physical postage stamp with a unique digital twin, issued by the Austrian Postal Service (Österreichische Post AG). After a successful release of Crypto stamp 1, one of our core ideas for a second edition was to represent stamp albums (or stamp collections) in the digital world as well - and not just the stamps themselves.

We set off to find existing standards on Ethereum contracts for grouping NFTs (ERC-721 and potentially ERC-1155 tokens) together and we found that there are a few possibilities (like EIP-998) but those ares getting complicated very fast. We wanted a collection (a stamp album) to actually be the owner of those NFTs or "assets" but at the same time being owned by an Ethereum account and able to be transferred (or traded) as an NFT by itself. So, for the former (being the owner of assets), it needs to be an Ethereum account (in this case, a contract) and for the latter (being owned and traded) be a single ERC-721 NFT as well. The Ethereum account should not be shared with other collections so ownership of an asset is as transparent as people and (distributed) apps expect. Also, we wanted to be able to give names to collections (via ENS) so it would be easier to work with them for normal users - and that also requires every collection to have a distinct Ethereum account address (which the before-mentioned EIP-998 is unable to do, for example). That said, to be NFTs themselves, the collections need to be "indexed" by what we could call a "registry of Collections".

To achieve all that, we came up with a system that we think could be a model for future similar project as well and would ideally form the basis of a future standard itself.

At its core, a common "Collections" ERC-721 contract acts as the "registry" for all Crypto stamp collections, every individual collection is represented as an NFT in this "registry". Additionally, every time a new NFT for a collection is created, this core contract acts a "factory" and creates a new separate contract for the collection itself, connecting this new "Collection" contract with the newly created NFT. On that new contract, we set the requested ENS name for easier addressing of the Collection.
Now this Collection contract is the account that receives ERC-721 and ERC-1155 assets, and becomes their owner. It also does some bookkeeping so it can actually be queried for assets and has functionality so the owner of the Collection's own NFT (the actual owner of the Collection itself) and full control over those assets, including functions to safely transfer those away again or even call functions on other contracts in the name of the Collection (similar to what you would see on e.g. multisig wallets).
As the owner of the Collection's NFT in the "registry" contract ("Collections") is the one that has power over all functionality of this Collection contract (and therefore the assets it owns), just transferring ownership of that NFT via a normal ERC-721 transfer can give a different person control, and therefore a single trade can move a whole collection of assets to a new owner, just like handing a full album of stamps physically to a different person.

To go into more details, you can look up the code of our Collections contract on Etherscan. You'll find that it exposes an ERC-721 name of "Crypto stamp Collections" with a symbol of "CSC" for the NFTs. The collections are registered as NFTs in this contract, so there's also an Etherscan Token Tracker for it, and as of writing this post, over 1600 collections are listed there. The contract lets anyone create new collections, and optionally hand over a "notification contract" address and data for registering an ENS name. When doing that, a new Collection contract is deployed and an NFT minted - but the contract deployment is done with a twist: As deploying a lot of full contracts with a larger set of code is costly, an EIP-1167 minimal proxy contract is deployed instead, which is able to hold all the data for the specific collection while calling all its code via proxying to - in this case - our Collection Prototype contract. This makes creating a new Collection contract as cheap as possible in terms of gas cost while still giving the user a good amount of functionality. Thankfully, Etherscan for example has knowledge of those minimal proxy contracts and even can show you their "read/write contract" UI with the actually available functionality - and additionally they know ENS names as well, so you can go to e.g. etherscan.io/address/kairo.c.cryptostamp.eth and read the code and data of my own collection contract. For connecting that Collection contract with its own NFT, the Collections (CSC) contract could have a translation table between token IDs and contract addresses, but we even went a step further and just set the token ID to the integer value of the address itself - as an Ethereum address is a 40-byte hexadecimal value, this results in large integer numbers (like 675946817706768216998960957837194760936536071597 for mine) but as Ethereum uses 256-bit values by default anyhow, it works perfectly well and no translation table between IDs and addresses is needed. We still do have explicit functions on the main Collections (CSC) contract to get from token IDs to addresses and vice versa, though, even if in our case, it can be calculated directly in both ways.
Both the proxy contract pattern and the address-to-token-ID conversion scheme are optimizations we are using but if we were to standardize collections, those would not be in the core standard but instead to be recommended implementation practices instead.

Of course, users do not need to care about those details at all - they just go to crypto.post.at, click "Collections" and create their own collection for there (when logged in via MetaMask or a similar Ethereum browser module), and they also go the the website to look at its contents (e.g. crypto.post.at/collection/kairo). Ideally, they'll also be able to view and trade them on platforms like OpenSea - but the viewing needs specific support (which probably would need standardization to at least be in good progress), and the trading only works well if the platform can deal with NFTs that can change value while they are on auction or the trade market (and then any bids made before need to be invalidated or re-confirmed in some fashion). Because the latter needs a way to detect those value changes and OpenSea doesn't have that, they had to suspend trade for collections for now after someone exploited that missing support by transferring assets out of the collection while it was on auction. That said, there are ideas on how to get this back again the right way but it will need work on both the NFT creator side (us in the specific case of collections) and platforms that support trade, like OpenSea. Most importantly, the meta data of the NFT needs to contain some kind of "fingerprint" value that changes when any property changes that influences the value, and the trading platform needs to check for that and react properly to changes of that "fingerprint" so bids are only automatically processed as long as it doesn't change.

For showing contents or calculating such a "fingerprint", there needs to be a way to find out, which assets the collection actually owns. There are three ways to do that in theory: 1) Have a list of all assets you care about, and look up if the collection address is listed as their owner, 2) look at the complete event log on the blockchain since creation of the collection and filter all NFT Transfer events for ones going to the collection address or away from it, or 3) have some way of so the collection itself can record what assets it owns and allow enumeration of that. Option 1 is working well as long as your use case only covers a small amount of different NFT contracts, as e.g. the Crypto stamp website is doing right now. Option 2 gives general results and is actually pretty feasible with the functionality existing in the Ethereum tool set, but it requires a full node and is somewhat slow.
So, for allowing general usage with decent performance, we actually implemented everything needed for option 3 in the collections contract. Any "safe transfer" of ERC-721 or ERC-1155 tokens (e.g. via a call to the safeTransferFrom() function) - which is the normal way that those are transferred between owners - does actually test if the new owner is a simple account or a contract, and if it actually is a contract, it "asks" if that contract can receive tokens via a contract function call. The collection contract does use that function call to register any such transfer into the collection and puts such received assets into a list. As for transferring away an asset, you need to make a function call on the collection contract anyhow, removing from that list can be done there. So, this list can be made available for querying and will always be accurate - as long as "safe" transfers are used. Unfortunately, ERC-721 allows "unsafe" transfers via transferFrom() even though it warns that NFTs "MAY BE PERMANENTLY LOST" when that function is used. This was probably added into the standard mostly for compatibility with CryptoKitties, which predate this standard and only supported "unsafe" transfers. To deal with that, the collections contract has a function to "sync" ownership, which is given a contract address and token ID, and it adjusts it assets list accordingly by either adding or removing it from there. Note that there is a theoretical possibility to also lose an assets without being able to track it there, that's why both directions are supported there. (Note: OpenSea has used "unsafe" transfers in their "gift" functionality at least in the past, but that hopefully has been fixed by now.)
So, when using "safe" transfers or - when "unsafe" ones are used - "syncing" afterwards, we can query the collection for its owned assets and list those in a generic way, no matter which ERC-721 or ERC-1155 assets are sent to it. As usual, any additional data and meta data of those assets can then be retrieved via their NFT contracts and their meta data URLs.

I mentioned a "notification contract" before which can be specified at creation of a collection. When adding or removing an assets from the internal list in the collection, it also calls to that notification contract (if one is set) as a notification of this asset list change. Using that feature, it was possible to award achievements directly on the blockchain for e.g. collecting a certain number of NFTs of a specific type or one of each motif of Crypto stamps. Unfortunately, this additional contract call costs even more gas on Ethereum, as does tracking and awarding of achievements themselves, so rising gas costs forced us to remove that functionality and not set a notification contract for new collections as well as offer an "optimization" feature that would remove it from collections already created with one. This removal made transaction costs for using collections more bearable again for users, though I still believe that on-chain achievements were a great idea and probably a feature that was ahead of its time. We may come back to that idea when it can be done with an acceptably small impact on transaction cost.

One thing I also mentioned before is that the owner of a Collection can actually call functions in other contracts in the name of the Collection, similar to functionality that multisig wallets provide. This is done via an externalCall() function, to which the caller needs to hand over a contract address to call and an encoded payload (which can relatively easily be generated e.g. via the web3.js library). The result is that the Collection can e.g. call the function for Crypto stamps sold via the OnChain shop to have their physical versions sent to a postage address, which is a function that only the owner of a Crypto stamp can call - as the Collection is that owner and its own owner can call this "external" function, things like this can still be achieved.

To conclude, with Crypto stamp Collections we have created a simple but feature-rich solution to bring the experience of physical stamp albums to the digital world, and we see a good possibility to use the same concept generally for collecting NFTs and enabling a whole such collection of NFTs to be transferred or traded easily as one unit. And after all, NFT collectors would probably expect a collection of NFTs or a "stamp album" to have its own NFT, right? I hope we can push this concept to larger adoption in the future!

Last year, I worked with the Capacity team on the Crypto stamp project, the first physical postage stamp with a unique digital twin, issued by the Austrian Postal Service (Österreichische Post AG). Those stamps are mainly intended as collectibles, but their physical "half" can be used as valid postage on packages or letters, and a QR code on that physical stamp links to a website presenting the digital collectible. Our job (at Capacity Blockchain Solutions) was to build that digital collectible, the website at crypto.post.at, and the back-end service delivering both public meta data and the back end for the website. I specifically did most of the work on the Ethereum Smart Contract for the digital collectible, a "non-fungible token" (NFT) using the ERC-721 standard (publicly visible), as well as the back-end REST service, which I implemented in Python (based on Flask and Web3.py). The coding for the website was done by colleagues, of course using JavaScript for the dynamic elements.

One feature we have in this project is that people can purchase Crypto stamps directly from the blockchain, with the website guiding those with an Ethreum-enabled browser (e.g. with the MetaMask add-on) through that. By sending Ether cryptocurrency to the right address (the OnChainShop contract), they will directly receive the digital NFT - but then, every Crypto stamp consists of both a digital and physical item, so what about the physical part?
Of course, we cannot send a physical item to an Ethereum address (which is just a mostly-random number) so we needed a way for the owner of the NFT to give us (or actually Post AG) a postal address to send the physical stamp to. For this, we added a form to allow them to enter the postal address for stamps that were bought via the OnChain shop - but then the issue arose of how would we would verify that the sender was the actual owner of the NFT. Additionally, we had to figure out how do we do this without requiring a separate database or authentication in the back end, as we also did not need those features for anything else, since authentication for purchases are already done via signed transactions on the blockchain, and any data that needs to be stored is either static or on the blockchain.

We can easily verify the ownership if we send the information to a Smart Contract function on the blockchain, given that the owner has proven to be able to do such calls by purchasing via the OnChain shop already, and anyone sending transactions there has to sign those. To not need to store the whole postage address in the blockchain state database, which is expensive, we just emit an event and therefore put it in the event log, which is much cheaper and can still be read by our back end service and forwarded to Post AG. But then, anything sent to the public Ethereum blockchain (no matter if we put it into state or logs afterwards) is also visible to everyone else, and postal address are private data, so we need to ensure others reading the message cannot actually read that data.
So, our basic idea sounded simple: We generate a public/private key pair, use the public key to encrypt the postage address on the website, call a Smart Contract function with that data, signed by the user, emit an event with the data, and decrypt the information on the back-end service when receiving the event, before forwarding it to the actual shipping department in a nice format. As someone who has heard a lot about encryption but not actually coded encryption usage, I was surprised how many issues we ran into when actually writing the code.

So, first thing I did was seeing what techniques there are for sending encrypted messages, and pretty soon I found ECIES and was enthusiastic that sending encrypted messages was standardized, there are libraries for this in many languages and we just need to use implementations of that standard on both sides and it's all solved! Yay!
So I looked for ECIES libraries, both for JavaScript to be used in the browser and for Python, making sure they are still maintained. After some looking, I settled for eccrypto (JS) and eciespy, which both sounded pretty decent in usage and being kept up to date. I created a private/public key pair, trying to encrypt back and forth via eccrypto worked, so I went for trying to decrypt via eciespy, with great hope - only to see that eccrypto.encrypt() results in an object with 4 member strings while eciespy expects a string as input. Hmm.

With some digging, I found out that ECIES is not the same as ECIES. Sigh. It's a standard in terms of providing a standard framework for encrypting messages but there are multiple variants for the steps in the standardized mechanism, and both sides (encryption and decryption) need to agree on using the same to make it work correctly. Now, both eccrypto and eciespy implement exactly one variant, and of course two different ones, of course. Things would have been too easy if the implementations would be compatible, right?

So, I had to unpack what ECIES does to understand better what happens there. For one thing, ECIES basically does an ECDH exchange with the receiver's public key and a random "ephemeral" private key to derive a shared secret, which is then used as the key for AES-encrypting the message. The message is sent over to the recipient along with the AES parameters (IV, MAC) and the "ephemeral" public key. The recipient can use that public key along with their private key in ECDH, get the same shared secret, and do another round of AES with the given parameters to decrypt (as AES is symmetric, i.e. encryption and decryption are the same operation).

While both libraries use the secp256k1 curve (which incidentally is also used by Ethereum and Bitcoin) for ECDH, and both use AES-256, the main difference there, as I figured, is the AES cipher block mode - eccrypto uses CBC while eciespy uses GCM. Both modes are fine for what we are doing here, but we need to make sure we use the same on both sides. And additional difference is that eccrypto gives us the IV, MAC, ciphertext, and ephemeral public key as separate values while eciespy expects them packed into a single string - but that would be easier to cope with.

In any case, I would need to change one of the two sides and not use the simple-to-use libraries. Given that I was writing the Python code while my collegues working on the website were already busy enough with other feature work needed there, I decided that the JavaScript-side code would stay with eccrypto and I'd figure out the decoding part on the Python side, taking apart and adapting the steps that ecies would have done.
We'd convert the 4 values returned from eccrypto.encrypt() to hex strings, stick them into a JSON and stringify that to hand it over to the blockchain function - using code very similar to this:

var data = JSON.stringify(addressfields);
var eccrypto = require("eccrypto");
eccrypto.encrypt(pubkey, Buffer(data))
.then((encrypted) => {
  var sendData = {
    iv: encrypted.iv.toString("hex"),
    ephemPublicKey: encrypted.ephemPublicKey.toString("hex"),
    ciphertext: encrypted.ciphertext.toString("hex"),
    mac: encrypted.mac.toString("hex"),
  };
  var finalString = JSON.stringify(sendData);
  // Call the token shipping function with that final string.
  OnChainShopContract.methods.shipToMe(finalString, tokenId)
  .send({from: web3.eth.defaultAccount}).then(...)...
};

So, on the Python side, I went and took the ECDH bits from eciespy, and by looking at eccrypto code as an example and the relevant Python libraries, implemented code to make AES-CBC work with the data we get from our blockchain event listener. And then I found out that it still did not work, as I got garbage out instead of the expected result. Ouch. Adding more debug messages, I realized that the key used for AES was already wrong, so ECDH resulted in the wrong shared secret. Now I was really confused: Same elliptic curve, right public and private keys used, but the much-proven ECDH algorithm gives me a wrong result? How can that be? I was fully of disbelief and despair, wondering if this could be solved at all.
But I went for web searches trying to find out why in the world ECDH could give different results on different libraries that all use the secp256k1 curve. And I found documents of that same issue. And it comes down to this: While standard ECDH returns the x coordinate of the resulting point, the libsecp256k1 developers (I believe that's a part of the Bitcoin community) found it would be more secure to instead return the SHA256 hash of both coordinates of that point. This may be a good idea when everyone uses the same library, but eccrypto uses a standard library while eciespy uses libsecp256k1 - and so they disagree on the shared secret, which is pretty unhelpful in our case.

In the end, I also replaced the ECDH pieces from eciespy with equivalent code using a standard library - and suddenly things worked! \o/
I was fully of joy, and we had code we could use for Crypto stamp - and since the release in June 2019, this mechanism has been used successfully for over a hundred shipments of stamps to postal addresses (note that we had a limited amount available in the OnChainShop).

So, here's the Python code used for decrypting (we pip install eciespy cryptography in our virtualenv - not sure if eciespy is still needed but it may for dependencies we end up using):

from Crypto.Cipher import AES
import hashlib
import hmac
from cryptography.hazmat.primitives.asymmetric import ec
from cryptography.hazmat.backends import default_backend

def ecies_decrypt(privkey, message_parts):
    # Do ECDH via the cryptography module to get the non-libsecp256k1 version.
    sender_public_key_obj = ec.EllipticCurvePublicNumbers.from_encoded_point(ec.SECP256K1(), message_parts["ephemPublicKey"]).public_key(default_backend())
    private_key_obj = ec.derive_private_key(Web3.toInt(hexstr=privkey),ec.SECP256K1(), default_backend())
    aes_shared_key = private_key_obj.exchange(ec.ECDH(), sender_public_key_obj)
    # Now let's do AES-CBC with this, including the hmac matching (modeled after eccrypto code).
    aes_keyhash = hashlib.sha512(aes_shared_key).digest()
    hmac_key = aes_keyhash[32:]
    test_hmac = hmac.new(hmac_key, message_parts["iv"] + message_parts["ephemPublicKey"] + message_parts["ciphertext"], hashlib.sha256).digest()
    if test_hmac != message_parts["mac"]:
        logger.error("Mac doesn't match: %s vs. %s", test_hmac, message_parts["mac"])
        return False
    aes_key = aes_keyhash[:32]
    # Actual decrypt is modeled after ecies.utils.aes_decrypt() - but with CBC mode to match eccrypto.
    aes_cipher = AES.new(aes_key, AES.MODE_CBC, iv=message_parts["iv"])
    try:
        decrypted_bytes = aes_cipher.decrypt(message_parts["ciphertext"])
        # Padding characters (unprintable) may be at the end to fit AES block size, so strip them.
        unprintable_chars = bytes(''.join(map(chr, range(0,32))).join(map(chr, range(127,160))), 'utf-8')
        decrypted_string = decrypted_bytes.rstrip(unprintable_chars).decode("utf-8")
        return decrypted_string
    except:
        logger.error("Could not decode ciphertext: %s", sys.exc_info()[0])
        return False

So, this mechanism has caused me quite a bit of work and you probably don't want to know the word I shouted at my computer at times while trying to figure this all out, but the results works great, and if you are ever in need of something like this, I hope I could shed some light on how to achieve it!
For further illustration, here's a flow graph of how the data gets from the user to Post AG in the end - the ECIES code samples are highlighted with light blue, all encryption-related things are blue in general, red is unencrypted data, while green is encrypted data:

Thanks to Post AG and Capacity for letting me work on interesting projects like that - and keep checking crypto.post.at for news about the next iteration of Crypto stamp!