Is it time to give up on NFTs?

managing director at Launch.vc – Ray Walia is a serial entrepreneur with over 25 years of experience in both the entertainment and technology sectors.

Over the past two years I have participated in over 100 NFT projects. I started with NBA Topshot for sports, Stoner Cats (an animated series developed in part by celebrity Mila Kunis’ production company), colorful characters known as Doodles, and an artistic metaverse called LVCIDIA. I have also researched popular NFTs like RTFKT/NIKE for digital fashion and real fashion and Royal to buy shares of music royalty payments. As a technology entrepreneur and investor, I jumped into this sector partly because I wanted to collect art and share experiences with my friends, but mainly because these NFT purchases were part of my ongoing research and development in the technology sector. I wanted a front row seat to see how artists and technologists were using NFT and blockchain technologies to drive new experiences and innovations.

Breaking down the term “Non-fungible token”

The term NFT accurately describes the nature of the digital content in question as non-fungible tokens (ie unique and not interchangeable with other tokens or digital assets). But the average consumer probably doesn’t care if something has “fungibility”, which makes it hard for many people to relate to NFTs and the hype surrounding them. As such, NFTs can continue to be misunderstood and brushed off as a fad. I think we need to shift the focus away from the technical jargon and towards the development of various forms of digital assets and digital content. I am not alone in this thinking.

Using NFTs to mask (and enhance) traditional user experiences

In early September 2022, Starbucks announced that the Starbucks Odyssey program will launch towards the end of the year. The program will allow customers and employees to collect “digital stamps” as rewards and unlock access to merchandise and private events. These “digital stamps” are a new form of digital content, i.e. NFTs. By normalizing digital assets, companies can be able to appeal to a wider audience while sticking to an already successful format like loyalty programs. Little do many know that by using the blockchain and smart contract technologies behind NFTs, companies can offer a completely new experience to customers or users that was just not possible with older technology layers. Companies should find ways to leverage NFTs and blockchain technologies to drive the experience rather than being the experience itself.

The desire to innovate

To better illustrate how this new layer of technology can begin to evolve digital content in ways we can’t imagine, I wanted to highlight two other important layers of technology. Payment processing and video streaming helped shape the internet and our world as we know it today. While it’s hard to imagine a world where these technologies didn’t exist, they had their challenges with wider adoption and industry acceptance when they were first introduced. The development of these technologies would not have been possible without the desire to innovate and the risk tolerance of some early adopters willing to put their businesses and capital on the line.

One industry that adopted new forms of payment technology was online poker sites. Those website owners who were willing to take the risk and experiment with the new technology were forced to test their business models. They also had to trust that customers would use the technology. For those of you old enough to remember, back in the late 1990s, many in the general public were very reluctant to use their credit cards online to make a payment. Lucky for these sites, there were early adopters willing to use credit cards online. I remember many people asking questions of the payment providers and expressing fear of money laundering and criminal activity. There were many years of gray areas and dubious activities, but eventually the technology and the uses for the technology developed into what we are familiar with today.

Video streaming technology faced similar challenges. Adult entertainment sites were some of the first sites willing to invest capital in the implementation of streaming technology. Again, a non-mainstream industry was willing to take the risk and innovate before so many others.

Both payment processing and video streaming are critical layers of the internet as we know it today, but the end consumer generally doesn’t care much about the video compression algorithms or security layers the payment processor uses; they only care that their YouTube video streams without lag and that their toilet paper arrives on time from Amazon.

Today, I have seen a similar desire to innovate with today’s new category of digital content. The early adopters in this case are the arts and entertainment industries. Although they are not perceived as ethically dubious like online gambling or adult entertainment, there are still many gray areas, questionable activities and bad actors. But I also think major innovations will lead to amazing new applications of utility for this new category of programmable digital content.

In my opinion, innovators and startups should focus on three things in this new category of digital content. They should work towards solutions such as:

1. Identify the authenticity and origin of digital content.

2. Provide proof of ownership, contribution, chain of title and information about who is continuously involved in the life and usefulness of the digital content.

3. Provide programmable monetization and participation in secondary sales – not only for the creator, but also for all other stakeholders according to the programming (smart contract) related to the digital content.

The future of NFTs

So is it time to give up on NFTs? As for the name “NFT”, my answer is yes. However, pay attention to the technology and innovation in the sector, as I think both are poised to help digital content evolve in ways most people don’t expect.

In my upcoming posts, I will dive into some of the projects I see innovative and leverage digital assets and content and share my thoughts on digital innovation we can expect to see in various other industries, such as fashion, sports, music, real estate, insurance and more .

The Forbes Business Council is the premier growth and networking organization for business owners and leaders. Am I eligible?