NFTs: an opportunity for eCommerce? (1)
Miguel Nicolás
11/03/2021
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Everything is moving at breakneck speed, and for this reason it is worth asking whether NFTs are an anecdote or whether they really have potential in e-commerce.
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One of the characteristics online commerce stands out most from classic retail is, precisely, its almost infinite capacity for adaptation. There are things that simply seem crazy to consider offline, but that are more than viable digitally.Surely, one of the best examples that can be given today is that of NFTs (Non Fungible Tokens), mainly intangible products that have a real economic value.Have you heard of them? Do you want to know more? Just read on.
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What are NFTs?
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If you do not have some prior knowledge, neither the name nor the acronym may be very clear to you. They are exclusively digital assets or tokenized to be so, which can be traded or, to be more precise, their ownership can be offered for sale.
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As we said, one of the basic qualities of this type of asset is that they are not fungible or, which is the same thing, they are not spent or consumed. They are assets that do not differ in any way from other identical assets. It is important to bear this in mind for what we are going to discuss below.
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NFTs as resource
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The concept starts from the basis of the most classic collecting, such as numismatics or philately -in fact, they are also called "crypto collectibles"-, and is enriched by blockchain technology behind cryptocurrencies.How are two such different things linked?Let's start with collectibles. Coins or stamps have an intrinsic value and a more subjective one. The latter is actually the most interesting from a collector's point of view, and is acquired based on how unusual the object is, its design or any other particularity that makes it unique, even if it corresponds to a series.A 1921 American silver dollar is not worth one dollar, in fact it can be bought for 100 and its value continues to increase as time goes by. If, in addition, it is a unit corresponding to an issue with a minting error, its value multiplies exponentially.Now blockchain comes into play. Until relatively recently, producing digital goods had a zero cost, but with the emergence of Bitcoin and cryptocurrencies, all this suffered a turnaround with the incorporation of the concept of "digital scarcity".
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The problem with a digital good is that it is a content that can be replicated exponentially without limit, which implies that, since there is such abundance, its theoretical value tends to be zero.What happens when it is given a unique value and a property title? Well, that product recovers its value immediately. Even if it is copied and replicated, no one can deprive the owner of his right. As we said, it is non-fungible.
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Features of NFTs
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We have already insisted on their collectivity nature, their value and their lack of fungibility, but there are other important aspects that you should be aware of:
- They are verifiable: ownership over one of these assets can be easily demonstrated. There is a historical record that allows tracing from the authorship to the different owners.
- They are indestructible: advantages of decentralized technology and blockchains. If you buy an NFT it will be yours and no one will be able to remove it or alter the ownership of it.
- They are not "licenses": when you acquire one of these digital assets, you are buying it, it becomes your property. It is not the same as paying for a digital copy of a movie or a song, for example, since it is not a license or authorization of use.
- They are indivisible: each NFT is an infringing unit. It cannot be partially purchased, as is the case with cryptocurrencies, such as Bitcoins.
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Examples of use
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We have already said that they are considered collectibles, so there are two major areas in which they can be applied: gaming and art.In video game industry we see how certain elements that improve or enhance the experience can be converted into this type of resource. Vehicles, weapons, customizations... users are willing to pay for them (more and more).There are also games in which characters can be purchased at different prices depending on their exclusivity. For example, platforms like Cryptokitties, where you buy, power (almost like coin mining) and sell virtual kitties.Properties in virtual worlds such as Decentreland. Just as in non-digital reality, we can acquire ownership of a certain plot of land with which we can then trade by selling it, renting it or, why not, using it for advertising.
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We were also talking about works of art, since we can acquire ownership of a digital work or even tokenize a physical work so that we can buy it digitally with full rights over it.These are just a few cases, but more and more progress is being made. So there will be many possibilities for eCommerce around NFTs, new niches and more potential customers for products with lower production costs and no logistic expenses.
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Would you like to know how NFTs are and will be sold? Then stay tuned for our next post.
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Images | Unsplash.