At first glance, the new world of non-fungible tokens (NFTs) may seem more like an experimental playground for collectors than a new avenue for high-tech digital commerce.
Price is what you pay, after all, and value is what you get – and the prospect of owning something that is singular (and can only have one owner at a time) has sparked price tags. breathtaking.
You may have had some experience with collectibles yourself, with baseball cards or comics or Beanie Babies hidden somewhere in the house.
But NFTs seem to be collectibles on steroids. Earlier this year, in just one example, a digital collage titled “Everydays: The First 5000 Days” by an artist known as “Beeple” grossed nearly $ 70 million.
Read more: The ânext chapterâ in the history of art? A digital-only work sells for nearly $ 70 million
But as Visa Vice President and Chief Crypto Cuy Sheffield told Karen Webster, using NFTs to buy, sell and own digital goods will pave the way for new ways to collect, yes – and trade on social media, retail and entertainment channels.
Unique tokens (NFTs), he said, provide a way to ensure that what we buy is genuine, that ownership is unchallengeable, and that the rarity value (for those unique offers) is actually awarded. appropriately.
Visa, he noted, has long been an artifact collector – think paper credit cards (yes, really) and finger puzzles (those old card fingerprint readers).
And on Monday (August 23), in an example of a money bet, the payment network announced that it had purchased CryptoPunk 7610, a pixel art image – in this case, a young woman with a mohawk.
With this agreement, Visa became the first global brand to launch an NFT collection.
âIt’s easier and more convenient to interact with digital collectibles than with physical items,â Sheffield said.
The punks, as they might be referred to informally, are part of the digital art market, and there are 10,000 of them. Sheffield said the company paid $ 150,000 for the NFT in a deal he made. described as where “culture meets commerce”.
It’s a deal that Sheffield says will help the company learn, first-hand, what is needed to successfully buy, store and eventually sell an NFT; this level of first-hand knowledge will in turn help Visa assist its client partners in carrying out these activities. Additionally, he said the transaction represents a commitment to Visa’s key role as a trade enabler – leading small businesses to new digital opportunities online as they produce digital goods.
In other words, the days of beanie babies rotting in attics are over.
$ 1 billion in a month
Signs that NFTs are growing in popularity are showing up in the data, primarily in the volume of payments. Sheffield recounted that this month (which is of course not over) $ 1 billion was spent on NFT, compared to $ 100 million spent in the last year.
Deepening the acquisition of CryptoPunk itself, he said that Visa paid for digital art with the crypto known as Ether through its custodian Anchorage (49.5 Ether, to be exact ). The actual transaction was made in dollars. Sheffield told Webster that the market momentum itself is evident in the fact that the cheapest CryptoPunk, immediately after Visa’s purchase, was $ 155,000.
âWe got a pretty good deal for our $ 150,000,â he said.
But despite the quick profits, Visa’s intention is not to sell or trade this NFT.
âWe have added CryptoPunk to our collection of artifacts as a way to map and celebrate the past, present and future of commerce,â he said. “We plan to continue adding additional NFTs to our collection and want to support many different artists and designers in the space.”
But Visa is looking to learn by doing, and Sheffield noted that there has been “significant interest” from merchants, brands and content platforms looking to participate in NFT commerce – but knowing where to start can. be intimidating. These stakeholders will eventually create NFT ecosystems that offer digital products at lower prices (like album art, for example, or digital sports cards). The simple act of collecting and displaying ownership of an item gives rise to online communities where NFTS are the âdoorsâ and digital portfolios are âgalleriesâ with virtual reality (VR) âscreensâ.
But Sheffield said the new use cases would use ticket-linked NFTs for physical events and other use cases (Sheffield detailed other use cases and their thoughts on the NFT market in a Visa blog post which debuted Monday).
The global communities that take shape will allow a crypto address to be as important as its mailing address, he said.
At the root of it all is blockchain and new user interfaces – with smart contracts guaranteeing authenticity – that allow developers to enter and create NFT-related products and experiences. This will open the door for merchants and brands to experiment with and take advantage of NFTs in ways yet to be discovered, in a parallel that mirrors the rise of e-commerce itself over the past decades.
âNFTs can give individual creators or small businesses the ability to mine a blockchain and produce digital goods, which can then be instantly delivered to a crypto wallet,â he said.
To achieve this, the infrastructure must be built and the acceptance of payments must be expanded (the infrastructure is complex and buyers and sellers need private crypto keys).
We’re at least halfway there, as Sheffield noted that there are online tools available that make it relatively easy to create an NFT and sell it in an online marketplace (Sheffield itself hit an NFT of his dog).
In the future, as DFTs increasingly become a tool for commerce, there will be waves of mass experimentation.
“There will be incredible successes, and there will be failures,” he told Webster, adding that “buying an NFT should be as easy as buying anything else. online … and with NFTs, it [are] things that you couldn’t do before and can do now in terms of actually being able to own a piece of digital media online and being able to access the community because of that ownership.