Visa got a new trendy avatar on Twitter in August of this year, and while it’s short-lived, the 8-bit photo of an unhappy looking woman in a sleek Mohawk still made headlines. It’s not just the relatively high $150,000 price tag. The fact that the financial giant purchased a non-financial token (NFT), an image from the CryptoPunks group, set off fireworks in the media. This was Visa’s best marketing expense of the year – the return on news articles alone should have been tenfold.
Yes, even Visa “monkeys” these days use NFT, to use an expression, and NFT collectors are holding back hard at a time when the rich are dumping their millions in JPEGs of monkeys. But even though technology’s journey from memes to riches has brought it into the world of digital art, I don’t think this would be its usual use case.
Everyone knows by now that NFTs actually bring the uniqueness and rarity of traditional fine art to all forms of digital art that can be reproduced infinitely with good old copy and glue. A link to a specific image, audio or video is sent to the blockchain as part of the transaction, and here we are – although the file can still be copied, its token belongs to only one wallet. This is where it gets neat: using an NFT image as a Twitter avatar is like wearing a Rolex watch with your name on it. It is a status symbol that knowledgeable people will appreciate.
At the same time, high art and luxury are unknown to the mass market, since the high price and exclusivity are their main arguments. A person who spends money can buy a link for millions, but this is because he may burn his money for fun and want to show off his fortune to the world. Good luck, but Regular Joe charges $150,000 for a photo link. Focusing on NFT as art by definition limits the promising technology to a relatively small, albeit decidedly elegant and eccentric niche.
The good news here is that the big sales of NFT digital arts are making headlines and helping propel NFT into the mainstream. However, from now on, this will not be the main use of NFT, but rather a new and expensive game for the wealthy, certain personalities and especially crypto-communities.
First, NFTs already have widespread use in the market – they are very good at gaming, and CryptoKitties have amassed a lot of headlines for their time. From Axie Infinity to all the modern games, NFTs are the driving force behind many digital economies, and in that they have more than just exclusivity.
Yes, it’s nice that the NFT sword is unique and your name is written on the token, but what’s even more beautiful is that it can decapitate the dragon in one hit, unlike any other non-unique weapon. And people are willing to pay the price for decapitated reptiles. Free-to-play Fortnite generated $5.1 billion in 2020 in in-game cosmetics for the publisher, and players are already paying for weapons, vehicles, castles, and spaceships that aren’t unique to dozens of other games. NFT is just the next step in that direction. And believe it or not, NFT games have already become a strong source of revenue in some developing countries.
The idea of using NFT in the corporate world as part of traditional business operations looks no less promising. Areas where NFTs are likely to be successful if the new standard way of doing business does not become as attractive as luxury. However, they will benefit greatly from the main advantage that NFTs bring to the spreadsheet: the ability to authenticate a connected digital asset. For example, this could be as simple as hashing a financial document stored like an NFT on a private or public blockchain to check if it has been tampered with later.
Software licensing and certification appears to be an area in which NFTs shine if given enough time, with the advantage of possible compatibility. Businesses and individuals can purchase and rent software products licensed on a single platform for as long as necessary. This will reduce costs and also ensure that IT managers are secure because they have an extra layer of security in knowing that any digital asset can be authenticated securely and quickly.
On the topic: Irreplaceable Tokens: A New Paradigm for Intangible Assets?
Those of you, as far as I remember, bought copies of Windows or Adobe CS3 and had a sticker on the back of the serial number box. Check the box and that’s it.