Visa created a new Twitter avatar in August. Although it wasn’t up long enough, the 8-bit-styled image of a woman with a stylish mohawk and a clearly unamused face still received a lot of attention. The $150,000 price tag was not the only thing that made it interesting. The mere fact that the financial titan bought a nonfungible token NFT (nonfungible token) to represent the image from CryptoPunks set off fireworks across the media. This was the most successful marketing investment Visa made all year. The ROI on news articles must have covered the cost of the purchase tenfold.
Yes, Visa “apes into” NFTs these day, to use an expression NFT collectors dropped a lot during the era when the wealthy poured millions into JPEGs apes. The technology’s evolution from memes and riches to digital art has made it a viable market, but I doubt this will be the case for mass-market.
Name my ape Drop your suggestions below @BoredApeYC #BAYC #BoredApeYachtClub #NFTs pic.twitter.com/pwFynGy9QJ
— jimmy Fallon (@jimmyfallon November 17, 2021
Everyone knows that NFTs bring uniqueness and scarcity to digital art. This feature is associated with traditional high-art. It can also be copied and pasted infinitely. As part of a transaction, a link to a particular picture, audio clip, or video is sent to blockchain. The file can be copied-pasted but only one wallet has the token. It becomes something special: Wearing an NFT avatar on Twitter is like wearing a Rolex watch that has your name on it. It is a status symbol that should be appreciated by the well-informed.
High art and luxury are, by definition, antonymous to mass markets. Their key selling points are their uniqueness and high price. A person who is bleeding money could buy a link for millions. However, this is because they may as well spend their money for pleasure and want to share their wealth with the world. It’s not easy to charge a regular Joe $150,000 for a link that takes you to a photo. NFTs are art, and this limits the potential of a promising technology to a small niche, even though it is arguably unique and posh.
This is a good thing. The big NFT digital art sales have been making headlines which is helping to make NFTs mainstream. This will not be the main use for NFTs in the future, but a new, expensive plaything for wealthy individuals and crypto-communities.
The real deal
NFTs have a mass market use case. CryptoKitties was a popular game back in the day. NFTs power a multitude of digital economies. From AxieInfinity to all the latest titles, they bring much more than just uniqueness to the table.
It’s great that your NFT sword is unique, with your name on it token. But what’s even better is that it can kill a dragon in one hit, which is unmatched by any other weapon. People are willing to pay for decapitated reptiles. Fortnite, a game that is free, made $5.1 billion in 2020 from in-game cosmetics sales. Gamers are already buying non-unique weapons and mounts in dozens more games. The next step is NFTs. NFT games are a viable source of income in some developing countries.
NFTs being used in corporate business processes looks equally promising. NFTs are unlikely to become the standard way of doing business in high-end areas. However, they will greatly benefit from the main feature of NFTs: The ability to verify the authenticity and origin of associated digital assets. It could be as simple as a hash of a financial record saved as an NFT on either a private or public blockchain to verify that it hasn’t been altered.
NFTs are expected to shine in software licensing and authentication, which is possible with interoperability. Individuals and corporations could both purchase licensed software on one platform, and lease it for as long or as they need. This would reduce costs and give chief information officers peace of mind knowing that all digital assets can be quickly and safely authenticated.
Related: Nonfungible Tokens: A new paradigm in intellectual property assets
Those of us as old as me will remember purchasing copies of Windows or Adobe CS3 and getting a sticker at the back with your serial number. The box was gone. These were replaced by SaaS logins that stored your serial number or platforms like Steam and Apple’s App Store which held your digital assets — except, of course if Apple decides it does not have the rights to “Goonies HD” in the store and removes your purchase. It was yours. Too bad. It could happen if the platform is shut down or if they decide you have violated their 2000-page terms and conditions that you signed without reading. Subscription-based SaaS is not your solution, even if it is installed on-premise.
This could be fixed by NFTs
Let’s suppose you are buying an asset. Any digital asset. Music, movies, software licenses, limited rights to photos, etc. The platform issues a token that points to the original file, or location of the downloaded file. This token is your proof of purchase. The asset is stored locally and can be accessed through an app. This would verify ownership or, if applicable, the expiration date.
If the system is designed correctly, it would allow for the transfer of ownership rights as long as they are legalized in the NFT. After you have enjoyed your “Goonies”, you can either gift it to someone else or resell it. A small royalty may be paid to the original seller or the owner of the rights to the movie. This addresses part of the problem that drove the shift to SaaS. Although companies don’t want to compete with their sales, secondary markets can be lucrative. However, with royalty payments built into NFTs, companies would own a share in any subsequent resale. This means that every movie is a gift that keeps giving.
Similar: We haven’t even started to tap into NFTs’ potential
The ownership aspect, however, needs to be improved, particularly on the legal side. These concepts have not been tested but it is important that they are. Technical and legal expertise are two different things. Many of us are familiar with the EOS token sales and the fact that the SEC had to hold the funds until they finished their investigation. It is not the same thing to talk about legality as to prove it in court.
Although the NFTs have their faults, it is best to dismiss them as a potentially dangerous and fraudulent technology early in their development. The field needs more regulation and more entrepreneurship. These days art and business go hand in hand. As NFTs mature, they will most likely follow a similar path to the corporate world.
This article is not intended to provide investment advice. Every trade and investment involves risk. Readers should do their research before making any decision.
These views, thoughts, and opinions are solely the author’s and do not necessarily reflect the views or opinions of Cointelegraph.
Liam Bussell is the head of corporate communications and investor relations at Banxa, an internationally-compliant fiat-crypto gateway. Liam was previously the chief marketing officer at Diginex, the chief marketing officer at BC Group and the head of marketing at World First, which was acquired by Alibaba. Liam has 18 years of experience as a marketing leader in the building of Fintech & Technology companies, from listing to bootstrapping.