A year ago, very few corporate executives — who typically spend their days worrying about things like cash flow analysis or the weighted average cost of capital — knew WTF an NFT was.
But as all those digits to the right of the dollar sign and to the left of the decimal place have started to swell, so engagement, unsurprisingly, is growing.
Yet in the same way that Bitcoin suffered in its early days from a perception (and reality) that its loudest advocates were drug dealers and pornographers, so it is that critics still scoff at the notion that people buying weird, digital art for tens of thousands of dollars is somehow the basis for a new economy.
The smart money, however, is already moving.
Digital Nation Australia spoke to thought leaders in the space to better understand NFTs and how organisations with boards, shareholders and mission statements can start to take advantage of technology still typically associated with fields such as digital art or gaming.
NFT or non-fungible tokens are unique tokens on the blockchain that can be bought, sold and traded. Because NFTs are on the blockchain it means they can be tracked and traced with complete accuracy. People can see who owns the NFT and can check the authenticity of the token.
Travis Wright, a futurist who hosts the Bad Crypto podcast, and a former marketing technology specialist told Digital Nation Australia NFTs represent the true potential for digital and crypto convergence.
"A lot of people go oh, it's a JPG? No, it's the utility behind it," he said.
According to Wright who has been working with NFTs since 2017, "NFTs represent true ownership of digital items. You can take them from one place to another.
"NFTs can be video, images, text audios, links, 360, AR, VR. They can be geo proximity-based where they can unlock based on a venue or where you're located, they can unlock experiences they can let you access things."
Wright is launching his own NFT series shortly called Sol Shamans which he describes as putting ancient wisdom on the blockchain.
"I got a seven-year roadmap, it's not just a buy-my-NFT [scheme]. We're going to create a directory of all these holistic healers around the world, all the top metaphysical stores in the world, all the top shamans and alternative healers."
While Wright's plans may seem another world away from the pinstriped priorities of Mahogany Row, effectively they demonstrate many of the key capabilities — and interdependencies — in Web3.
"We're going be able to take these shamans and their spellbook, and then be able to mint NFT's every day that are inspirational for their mindset. We're going to be able to then create other aspects where these shamans unlock other things."
He envisages the creation of 3D virtual worlds people can walk around in.
"Their ownership and half of the proceeds of this are going into a decentralised autonomous organisation (DAO). Fifty percent of the proceeds are going there into a vault, the vault will grow in value over the seven years," Wright explained.
"And we're gonna take the vault, put it into DeFi (Distributed finance) and get yield back from the DeFi contracts that we do, stake NFTs in it and hopefully grow the vault to 50 to 100 million dollars. Then we have two tokens that are tied to the value of the vault."
Wright said, "We're going to use gamification. We're going to use DeFi we're going to use a DAO. We're using crypto, we're using NFTs. We're staking so many different things within the Web3 model creating and cultivating a metaphysically minded tribe of people to help discuss and talk about spiritual technologies and ancient wisdom."
Provenance and Immutability
Anything digital can be an NFT like a piece of artwork or a weapon in a video game, even William Shatner’s Star Trek memorabilia.
Abhishek Maran, Investment Analyst, Folklore Ventures, who created APAC's first Web3 community, Dao Under said with NFTs you can see who owns that particular token, who has owned it in the past and its authenticity.
He uses the example of handbags, “Bags can be faked or counterfeited, you don't know [they’re fake] unless you know intricate details about it. Whereas with NFTs, you can tell very easily if they're faked just by tracing background history.”
As Web3 continues to grow and develop, the need for a digital identity and wallet becomes more apparent. This means NFTs will be key in proving a digital item’s authenticity. Maran said it tracks anything that can be digitally represented.
As to the dismissal by critics that say “I can just screenshot the NFT, so it seems pretty useless”. Maran explained it is similar to owning a print of the Mona Lisa. Sure you have the picture but you don’t own the artwork. Plus, NFTs also serve as membership cards to these exclusive online communities.
“If you right click and save the NFT, you wouldn't have access to that community, you wouldn't have access to a lot of privileges,” he said.
In the same vein, NFTs can also be traded for physical goods. For example, Maran said Adidas had an NFT that consumers could buy and then trade that in for the brand's products.
NFTs and business
So, how do NFTs fit into the corporate world? Maran said B2C executives can take advantage of this community element and use NFTs as a membership card, using them for instance to unlock loyalty benefits.
NFTs can be used for contract negotiations, intellectual property, medical records, identity verification and academic credentials, Maran said.
“Any contract can be uploaded to the blockchain, be held as an NFT and verifiable for its authenticity. People are currently selling NFT's that effectively have the right to use the intellectual property of a laboratory, for example,” Maran explained.
“Any data that can be legally represented can be stored into an NFT, it can be transferred and be digitally represented.”
Jordan Momtazi, co-founder of Block Earner said NFT’s are changing the concept of ownership and digitising many forms of data and or value — this will create ripple effects across many industries.
“For instance, current forms of value or data that exist inside walled gardens will be replaced by open protocols which give users more control. You could think of any platform such as Facebook, Tencent or Activision Blizzard as having platform-specific value which is very much user-based,” he said.
Momtazi added, “User control and value retention will be key drivers of behaviour change towards more open and decentralised options, and if large companies don't find ways to engage with these protocols, they will cede market share more rapidly than those who find ways to play within this space.”
Sports clubs NFT-ing off
Doug Campbell, General Manager at blockchain consultancy business Convergence.Tech, is currently working on a project with a large European football club creating NFTs that will digitise their memorable moments throughout history.
He told Digital Nation Australia that through championship wins and key moments in matches for the football club, Convergence.tech has minted 400,000 moments.
Campbell said some can be bought in packs or individually and they all vary in rarity and exclusivity.
“We’re setting up a marketplace for them, similar to the playground when you had physical trading cards, you'd go ahead and maybe swap some or trade-up, the concept is the same,” he said.
Campbell wanted to make sure the club’s fans could purchase the digital moments, regardless of how well they understood NFTs.
“It is more about the user experience, as a fan you want to consume the content. You do not necessarily want to understand the complexity of the chain and cryptocurrencies," Campbell said.
"We're making them available through traditional payment methods and this hides the complexity of the NFT architecture to the fan because realistically, they're not interested in that.”
The future of NFTs
Matthew Pearson, co-founder at global blockchain talent bench StudioBloc.io said the adoption of NFTs changes daily and it's evolving rapidly.
“There is an exponential learning curve at the moment. What I thought was good last week has now been superseded by something else this week, so it's evolving apace,” he said.
Pearson said c-suite executives need to care about NFTs as eventually in the future, as the metaverse will play a huge role in our lives.
“Rather than entering onto an e-commerce shop will be in the ‘decentraland’ in the metaverse and we will each have our own avatar. We will engage and go into shops in that way,” he said.
NFTs will also play a role in showing sustainability within supply chains, Pearson said. As an example, he could buy a shirt that came with an NFT showing the full supply chain, giving peace of mind knowing it wasn’t made unethically.
For those who want to start their NFT journey, Pearson offers this advice: “Build your knowledge and start the journey.”
He said while you might feel late to the party, there is no need to panic and rush into the technology.
“It's still in its nascency as an opportunity and it's evolving a pace. Build your knowledge and accept that at some point, it will happen."
“Unfortunately, where it is at the moment is almost like a case by case with each business as to you know, should I be replacing my loyalty program? How do I engage a new community? Do I want to have a wallet connection within my community because I need it for brands that are thinking about it,” he added.