Smart Heritage: A Blockchain and NFT Framework for Secure Authentication and Fractional Investment in Sri Lankan Handicrafts

Abstract

The Sri Lankan handicraft sector possesses significant cultural and economic value; however, counterfeit production, limited ownership traceability, and the absence of resale royalty mechanisms restrict its global scalability. Traditional systems fail to provide reliable provenance verification and sustainable financial benefits for artisans and previous owners. This paper proposes a blockchain-enabled ecosystem integrating Non-Fungible Tokens (NFTs), NFC-based authentication, fractional ownership, and a smart security box to enhance authenticity, transparency, and value creation. Each handicraft is linked to a unique NFT and a cryptographically secured NFC tag, creating a tamper-resistant connection between the physical artifact and its digital identity. Smart contracts enable transparent ownership tracking and automated lifetime royalty distribution, ensuring artisans receive royalties from every future resale without intermediaries. The proposed framework also introduces a fractional ownership model for culturally significant, non-commercial heritage artifacts, enabling collective digital ownership with tiered access to exclusive cultural content while distributing cascading royalties to previous shareholders upon resale. A smart security box with NFC further protects high-value physical artifacts. Prototype evaluation on an Ethereum-compatible test network achieved a 100% success rate across 24 smart contract unit tests, 100% NFC authentication accuracy for 12 handicraft items with average response times of 380-450 ms, and consistent royalty and Proof-of-Residency distribution across nine simulated resale transactions. The key contributions of this work are: (1) a cryptographic NFC-NFT binding mechanism resistant to tag cloning, (2) a smart contract-based lifetime royalty engine with previous-owner redistribution, and (3) a fractional community ownership model that supports global participation in preserving non-commercial cultural heritage. The proposed architecture demonstrates the potential of blockchain technology to preserve cultural heritage while creating a sustainable economic ecosystem for artisans and investors.