Visa got hold of a chic new Twitter avatar in August, and while it didn’t stay long, the 8-bit style image of a visibly unamused woman with a sleek mohawk still made dozens of big hits. securities. It wasn’t just the relatively high price tag of $ 150,000. The mere fact that the financial giant purchased a non-fungible token (NFT) depicting the image of the CryptoPunks collection sparked fireworks in the media. It was the best marketing spend Visa made all year – the ROI of the news articles alone must have increased the purchase tenfold.
Yes, even Visa “monkey” on NFTs these days, to use a phrase, NFT collectors are declining a lot in the age of the rich pouring millions into JPEGs of monkeys. But even though the tech journey from memes to wealth has taken her into the digital art world, I don’t think it will be her mass market use case.
– Jimmy Fallon (@jimmyfallon) November 17, 2021
By now, everyone knows that NFTs essentially bring uniqueness and rarity, a characteristic associated with great traditional art, in all forms and forms of digital art, which is otherwise endlessly repeatable with the good old. copy paste. A link to a specific image, audio clip, or video is sent to the blockchain as part of a transaction, and we’re there – even though the file can still be copy-pasted, only one wallet has its token. This is where it gets a fancy thing: wearing an NFT image as a Twitter avatar is like wearing a Rolex watch with your name engraved on it. It is a status symbol to be appreciated by those in the know.
However, high art and luxury are by definition antonyms of the mass market, as the high price and uniqueness are their main selling points. Someone bleeding money can buy a bond for millions, but that’s because he might as well burn his money for fun, and he wants to show his wealth to the world. Good luck charging a Regular Joe $ 150,000 for a link to an image, however. The emphasis on NFTs as an art by definition limits promising technology to a relatively small, albeit unmistakably chic and eccentric, niche.
The good thing here is that the big NFT digital art sales are making headlines, which helps bring NFTs into the mainstream. However, it won’t be the main use of NFTs later on, but rather an expensive new toy for the wealthy and some particularly devout crypto-personalities and communities.
The real deal
First of all, NFTs already have a use case in the mass market – they’re very much at home in gaming, with CryptoKitties pulling together a ton of headlines at the time. From Axie Infinity to all the latest titles, NFTs are fueling a plethora of digital economies, and there they bring more than just uniqueness to the table.
Yes, it’s great that your NFT sword is unique and has your name on its token, but what’s nicer is that it can behead a dragon in one hit, unlike any other non-unique weapon. And the decapitated reptiles are what people are willing to pay for. Fortnite, a free-to-play game, earned its publisher $ 5.1 billion in 2020 in in-game cosmetics sales, and players are already paying for non-unique weapons, mounts, castles, and spaceships in the game. dozens of other games. NFTs are just the next step in this direction. And believe it or not, in some developing countries, NFT games have already become a valuable source of income.
What also looks promising is the idea of using NFTs in the corporate world, as part of traditional business processes. The areas where NFTs are likely to take off in a big way, if not become the new way to go by default, are not as sexy as high-end luxury. However, they will greatly benefit from the key feature that NFTs bring: the ability to confirm the authenticity of the associated digital asset. This can be, for example, as simple as hashing a financial document saved as an NFT on a private or public blockchain to check if it has subsequently been tampered with.
Software licensing and authentication seems to be one of the areas where NFTs will shine, with sufficient time, with the added bonus of possible interoperability. Businesses and individuals could purchase licensed software on a single platform, renting it out for as long as needed. This would reduce costs, while keeping CIOs peace of mind because they have an added layer of security, knowing that any digital asset can be authenticated securely and quickly.
Related: Non-fungible tokens: a new paradigm for intellectual property assets?
Those of you as old as I can remember buying copies of Windows or Adobe CS3 and having a sticker on the back of the box with your serial number on it. Lose the box, and that’s it. This was replaced by SaaS connections that stored your serial number, or platforms like Steam and Apple’s App Store, which held your digital asset – except, of course, unless Apple decides that. ‘it does not have the rights to “Goonies HD” in the store and simply deletes your purchase. You bought it? Pity. Ditto if the platform has been shut down or the company decides you’ve somehow violated their 2,000-page terms of service that you accepted without reading them. The point is, with subscription-based SaaS, you don’t own anything, even if the solution is deployed on-premises.
NFTs could solve this problem
Let’s say you buy an asset, any digital asset – music, movie, software license, limited use rights on a photo, whatever. Upon purchase, the platform creates a non-fungible token pointing to the original file or download location. The token serves as proof of purchase. You store the asset locally, most likely accessing it through an app that would use your token to verify ownership (or, say, if the license term hasn’t ended) every time you try to interact with it , which would prevent copy-paste distribution and other intellectual property infringements.
With the right design, such a system would even allow the transfer of property rights, provided they are legally incorporated into the NFT. This way, after enjoying your copy of the “Goonies”, you can gift it to a friend or resell it, potentially with a small royalty payable either to whoever owns the rights to the film or to the original seller. . The latter, by the way, partially resolves the problem that fueled the move to SaaS in the first place. Companies don’t want a secondary market because it competes with their sales, but with the royalties built into NFTs, they would have an interest in every subsequent resale. In other words, every copy of a movie sold becomes a gift that keeps on giving.
Related: We haven’t even started to harness the potential of NFTs
Certainly the property part is what requires more work, especially in legal terms. None of these concepts have been tested, but they need to be, whether by an artist or a collector, just to set a precedent and begin to plot a playbook for this terra incognita. Technical expertise and commercial or legal expertise are not the same thing. Some of us remember the sale of EOS tokens and the amount of funds raised that had to be kept until the SEC completes its investigation. Projects that talk about their legality and prove their legality in court are two different things.
While NFTs are not without flaws, dismissing them as an inherently toxic and fraudulent technology so early in their development is rushed at best. Instead, what the field needs is more regulation on the one hand and more entrepreneurship on the other. Art and business go hand in hand these days, and as NFTs mature, their journey from memes to wealth will most likely lead them into the corporate world the same way.
This article does not contain any investment advice or recommendations. Every investment and trading move involves risk, and readers should do their own research before making a decision.
The views, thoughts and opinions expressed here are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Liam Bussell is the Head of Corporate Communications and Investor Relations at Banxa, a fiat-to-crypto gateway compliant with international standards. Prior to joining Banxa, Liam worked as Marketing Director at Diginex, Marketing Director at BC Group and Marketing Director at World First (acquired by Alibaba). Liam is a Marketing Leader with 18 years of experience building FinTech & Technology businesses, from seed to listing.