Visa landed a sleek new Twitter avatar in August, and while it didn’t stick around for long, the 8-bit image of a visibly unapologetic woman with a sleek mohawk still made dozens of headlines. It wasn’t just about the relatively high price of $ 150,000. The mere fact that the financial giant bought a non-fungible token (NFT) representing the image of the CryptoPunks collection set off fireworks in the media. It was the best marketing spend Visa made all year – ROI on news articles should only have paid ten times the purchase.
Yes, even Visa is “participating” in NFTs these days, to use an expression that NFT collectors use a lot in the age of the wealthy who invest millions in JPEG files of apes. But even though tech’s journey from meme to riches has taken her into the world of digital art, I don’t think this is her mass market use case.
– jimmy fallon (@jimmyfallon) November 17, 2021
By now, everyone knows that NFTs essentially bring uniqueness and scarcity, a characteristic associated with traditional high art, across all forms and forms of digital art, which is otherwise infinitely reproducible with good copy and paste. A link to a specific image, audio clip, or video is sent to the blockchain as part of a transaction, and there we are, although the file can still be copied and pasted, only one wallet owns its token. That’s where it gets fancy: donning an NFT image as a Twitter avatar is like wearing a Rolex watch with your name etched on it. It is a status symbol to be appreciated by those who know it.
Having said that, high art and luxury are by definition mass market antonyms, as high price and uniqueness are its key selling points. Someone who is losing money can buy a link for millions, but that is because they could also burn their money for fun and want to show their wealth to the world. However, good luck charging a regular Joe $ 150,000 for a link to an image. The focus on NFTs as art by definition limits a promising technology to a relatively small, yet undeniably elegant and eccentric niche.
The good thing here is that NFT’s big digital art sales are making headlines, which is helping bring NFTs into the mainstream. However, this will not be the main use of NFTs later on, but rather a new and expensive toy for the wealthy and some especially fervent crypto personalities and communities.
The royal agreement
First off, NFTs already have a mass market use case – they are very comfortable in gaming, with CryptoKitties racking up a ton of headlines back in the day. From Axie Infinity to all the newer titles, NFTs are powering a host of digital economies, and there, they bring more than pure uniqueness to the table.
Yes, it’s nice that your NFT sword is unique and has your name on its token, but the best thing is that it can decapitate a dragon in one hit, unlike any other non-unique weapon. And the decapitated reptiles are what people are willing to pay for. Free-to-play Fortnite brought its publisher $ 5.1 billion in 2020 in in-game cosmetic sales, and players are already paying for weapons, mounts, castles, and spaceships not unique in 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 valid source of income.
What looks equally promising is the idea of using NFT in the business world, as part of traditional business processes. The fields where NFTs are likely to take off in a big way, if not to become the new default way of doing things, are not as attractive 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 could be, for example, as simple as hashing a financial document saved as NFT on a private or public blockchain to check if it has been tampered with later.
Software licensing and authentication appear to be one of the areas in which NFTs will shine, given enough time, with the advantage of possible interoperability. Businesses and individuals alike can purchase licensed pieces of software on a single platform and rent them for as long as needed. This would reduce costs, while keeping CIOs peace of mind as they have an extra layer of security knowing that any digital asset can be authenticated safely and quickly.
Those of you as old as I am remember buying copies of Windows or Adobe CS3 and having a label on the back of the box with your serial number. You lost the box, and it was all. This was replaced by SaaS logins that stored your serial number, or platforms like Steam and Apple’s App Store, that contained your digital asset, except, of course, unless Apple decides that it does not have the rights to “Goonies HD “in the store and just delete your purchase. Did you buy it? What a pity. The same if the platform was shut down or if the company decides that it somehow violated its 2000 page terms of service that it agreed to without reading. The point is, with subscription-based SaaS, you don’t own anything, even if the solution is deployed on premises.
NFTs can fix this
Let’s say you’re buying an asset, any digital asset: music, a movie, a license for the software, limited use rights for a photo, whatever. At the time of purchase, the platform mints a non-fungible token that points to the original file or download location. The token acts as proof of purchase. You store the asset locally, probably by accessing it through an app that would use your token to verify ownership (or, for example, if the license period hasn’t ended) every time you try to interact with it, which would avoid copying and paste distribution and other intellectual property infringements.
With the correct design, such a system would even allow the transfer of property rights, provided they are legally embedded in the NFTs. In this way, After enjoying your copy of the “Goonies,” you can gift it to a friend or resell it, potentially with a small royalty paid to whoever owns the rights to the movie or to the original seller. The latter, by the way, partially addresses the issue that drove the move to SaaS in the first place. The companies don’t want a secondary market because it competes with their sales, but with royalties built into the NFTs, they would have a share in each subsequent resale. In other words, every copy of a movie sold becomes a gift that keeps on giving.
Okay, however, the property part is what needs the most work, especially on the legal front. Neither of these concepts have been proven, but they must be, whether by an artist or a collector, just to set the precedent and begin laying out a playbook for this terra incognita. Technical experience and business or legal experience are not the same. Some of us remember the EOS token sale and the amount of funds raised that had to be withheld until the SEC completed its investigation. The projects that speak of its legality and prove its 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 its 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 walk hand in hand these days and as NFTs mature, their journey from memes to riches will likely take them similarly to the corporate world.
Let’s say you’re buying an asset, any digital asset – music, a movie, a license for the software, limited use rights to a photo, whatever. At the moment of purchase, the platform mints a non-fungible token pointing to the original file or download location. The token acts as your proof of purchase. You store the asset locally, most likely accessing it through an app that would use your token to verify ownership (or, for example, if the license period hasn’t ended) whenever you try to interact with it, which would prevent copy-paste distribution and other IP infringements.
This article does not contain investment advice or recommendations. Every trade and investment move involves risk, and readers should do their own research when making a decision.
The views, thoughts and opinions expressed here belong solely to the author 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-crypto gateway that meets international standards. Prior to joining Banxa, Liam served as Diginex’s chief marketing officer, BC Group’s chief marketing officer, and World First’s chief marketing officer (acquired by Alibaba). Liam is a marketing leader with 18 years of experience building technology and fintech companies, from startup to listing.