Austria leads European tech innovation with NFT stamp art, crypto winter notwithstanding

By: Christos Makridis

Despite the decline in NFT sales and prices in 2022, NFTs have debuted in Europe in what might be an unassuming use case: postage stamps. After pioneering a new application of Crypto Stamp Art first in Austria with the Austrian Post in 2019, VariusSystems – a leader in digital identification and NFTs – just announced an expansion with the Netherlands and the United Arab Emirates (UAE) which will continue in the coming years. All three countries have NFT stamps in their medium and long-term strategic plan. Many countries around Europe, Africa and Asia are now actively exploring crypto stamps as well.

Crypto Stamp Art and Real-world Utility

NFTs have been an incredible tool for authenticating digital art and music, helping to make NFT the Collins Dictionary’s “Word of the Year” in 2021: Beeples’ Weekdays sold for $69.3 million, Beeple’s Human One for $28.9 million, and CryptoPunk 4156 sold for $10.2 million in 2021, just to name a few. But NFT art is only one of many applications.

The real utility of NFTs is in their ability to authenticate ownership of an asset on a distributed and immutable digital ledger. This ability can help prevent fraud over specific physical objects, which has led to the term “phygital” to describe physical and digital asset links found on the blockchain.

“NFTs are really fun for collectability and art, but they’re a small part of the consumer blockchain … Eventually, we’ll all interact with NFTs because they’ll be our airline tickets, membership cards and more,” said Gary Vaynerchuk, chairman of VaynerX and CEO of VaynerMedia.

Crypto-stamp art has emerged as an application area for NFTs due to the need to guarantee the provenance of physical mail. “Cryptostamp is the first use case for Austrian Post, which dips its toes in the water and uses blockchain technology. It was originally intended to be a simple and familiar product where we could explore new fields, learn to ask the right questions and acquire new knowledge before we promotes more sophisticated products. The areas of implementation are unlimited; to be successful and to remain market leaders are our goals,” said Patricia Liebermann, Head of Philately for the Austrian Post.

For example, the United States Postal Service reported a 161% increase in mail fraud complaints between March 2020 and February 2021. Furthermore, the incidence of stolen checks increased 400% between 2019 and the projected end of the year, according to research by George State Professor David Maimon.

Moreover, mail fraud is often a leading cause of tax fraud – which is approximately 16% across Europe – because individuals are able to project distinct identities in different locations.

Blockchain-based NFT crypto-stamps with a physical digital twin were first introduced by the Austrian Post in 2019. They added new artwork and recreated the “vermillion mercury” – the most valuable vintage stamp in Austria that started in 1856 – and became one of the most successful NFT projects in the world with almost 1 million crypto stamps sold.

Buyers not only receive a limited edition physical stamp, but also a digital mystery box containing four additional NFTs of varying rarity. The physical stamps are connected using near field communication (NFC) implanted in the final product. “Products that are securely connected to an NFT via NFC chips, for example, can be easily verified on the blockchain, allowing users to check whether the product is genuine,” said Michael Dorner, CEO of VariusSystems and President of International. The Card Manufacturers’ Association.

While the crypto stamps in their current form do not prevent mail fraud since the actual stamp does not have NFC in it, by design for collectors it is the first step towards pioneering NFTs for physical mail. Placement of NFC in the stamp itself comes down to design and consumer demand.

The use cases do not stop with stamps; NFCs can be used on all physical products. “Cars of the future will have their mileage written and stored in the blockchain, making it impossible for fraudsters to sell a car with altered odometers … the entire service intervals and repairs will be stored on the chain so that no one can sell a broken car – or even with a watch, luxury bag or any product for that matter… this will happen behind the scenes, out of sight of the end user,” Dorner continued.

Where is Germany?

Crypto stamps are surprising the world, especially after the success of Austria since 2019 and the Netherlands earlier this year in selling over 800 pieces. “Having met with several executives of postal companies around the world at the Universal Postal Union from the UN summit in Frankfurt earlier this week, we felt a huge interest not only in the NFT stamps, but in blockchain technology as such. Countries from all over the world, from Iceland to Togo, from Portugal to Singapore, are interested in how this digital revolution of decentralized blockchains can help their businesses grow and stay ahead of the curve, Dorner said.

Given the importance of Germany and France in the EU, many wonder if they will also explore the use of crypto stamps, among other NFT applications. Value creation in the German manufacturing sector, as a share of gross domestic product, is almost 20% as of 2021, so NFTs have a large potential impact on reducing physical goods fraud.

“Going from web2 to web3 and adopting blockchain technology is as important for Germany as the transition from driving horse-drawn carriages to driving cars. We love engineering in our cars, and we are world leaders in it. If we fail to adapt or use blockchain, we will fall behind as a technology leader to the last in line… and we all know what happened to the horse-drawn carriage – they ended up in the museums, said Torsten Albig, former Minister-President of Schleswig -Holstein and CEO of the Association of German Postal Service Providers.

With the widespread support for digital modernization in Europe, there is a unique opportunity to take the lead with blockchain technologies, starting with even the most basic goods and services, such as physical mail and the post office. Collectable crypto stamps are just one of many uses in the web3 ecosystem, and point to the utility NFTs can provide.