Bryan Ritchie, Chief Executive Officer, SIMBA Chain
When NFTs first entered the market, they were regarded as the sports trading cards of the future, with NBA Top Shot dominating headlines. Soon thereafter, traditional and digital artists caught on, and suddenly, NFTs began to infiltrate the world of fine art, and the walls of Christie’s Auction House. As NFTs evolved further, they filtered into mainstream culture, and are now used to represent exclusive fan experiences afforded by digital collectibles and tokenized fan clubs. Recently, we’ve even seen NFTs enter the gaming space, where they are being leveraged to push forward the concept of play-to-earn, allowing video gaming and asset collection to be regarded as a full-time job.
While these use cases showcase momentous success for the broader blockchain industry as sports fans, moviegoers, and art fanatics alike buy into the cryptocurrency ecosystem, there is a large community of interested participants who deem the NFT space to be inaccessible to outsiders.
With this in mind, a variety of marketplaces, aggregators, software platforms, and creators are calling for increased NFT accessibility. Without altering the heart and soul of the NFT ecosystem that has driven the adoption of crypto among so many new communities, these game-changers are opening access to NFTs through heightened attention on buying and selling processes, creation and minting structures, and above all, privacy and security enhancements.
The Growth of Fiat Purchasing
One of the largest barriers of entry into the NFT market is the need to buy into the cryptocurrency ecosystem. Although the headlines may read, “digital artist Beeple sold an NFT, titled ‘Everydays,’ for $69 million,” more often than not, these famed NFTs are purchased with common cryptocurrencies, such as ETH, rather than fiat currency.
The process of crypto on-ramping can be quite cumbersome, especially for those with little to no technical or crypto know-how, often denoted as “outsiders.” Which wallet do I use? What is MetaMask? How do I purchase tokens?
Marketplaces, such as Nifty Gateway, are tackling this challenge through the implementation of fiat purchasing, meaning that NFTs can be purchased with fiat currencies, such as the US dollar, eliminating the need to engage with cryptocurrencies. Additionally, Coinbase and Mastercard recently announced a partnership that will allow purchasers to utilize their Mastercard debit and credit cards when buying NFTs on Coinbase’s upcoming marketplace.
Such moves from marketplace leaders showcase the industry’s attention to simplifying the NFT buying and selling process, granting access to an entire digital ecosystem previously gate-kept by crypto experts.
Adjusting the Creation of NFTs
While fiat purchasing may create a simpler process for NFT buyers and collectors, there is still widespread concern over the user-friendliness of creating and minting NFTs on some of the industry’s leading platforms.
When choosing to mint an NFT, issuers must first choose which blockchain they intend to build on, and then, which marketplace they’d like to utilize as their “location” for selling. Although these decisions may seem rudimentary for those familiar with the broader crypto ecosystem, for those who are not crypto-knowledgeable, these decisions can lead to rabbit holes of complex information, deterring an interested individual or entity from moving forward.
In order to combat this, an increasing number of blockchain and Web3 companies are developing what are known as “white-label custom NFT solutions.” Specifically aimed toward businesses and brands who are looking to mint their own NFTs, these white-label solutions are custom made to fit the needs of an NFT issuer, taking into consideration their budget, technical know-how, and most importantly, branding and business needs. By tackling these typical barriers of entry alongside an educated and experienced partner, businesses and brands are able not only to issue their own NFTs, but also to increase their crypto knowledge in a low-risk environment.
Beyond simplifying the complexities of NFT minting, crypto companies are also seeking to lower the costs associated with the curation of NFTs. OpenSea, for example, famously offers a free minting tool, ultimately eliminating the upfront gas cost that NFT issuers are expected to pay. In order to stay competitive, marketplaces are continually lowering their gas fees, knowing they may eliminate pathways to entry for those looking to invest a smaller amount of upfront capital into the digital collectibles market.
Increased Privacy of Digital Assets
As a caveat , some free tools and competitive fees have recently experienced privacy concerns and fraudulent claims.
In January of this year, OpenSea disclosed that “more than 80% of NFTs created for free on OpenSea are fraud or spam.” And in February, an NFT collector was tricked into giving a group of hackers control of their digital art, which led to the liquidation of their collection for more than half a million dollars.
While companies have made strides in reevaluating the simplicity of purchasing and creating NFTs, there is not yet a definitive solution for enhancing the authenticity, storage, and privacy of NFTs.
Integrations with privacy-centric partners have allowed some NFT participants to initiate more secure and robust methods of NFT data accessing, essentially permitting sensitive NFT data to be searched and accumulated without compromising the privacy of the information. By doing so, companies are able to confidently store NFTs on these platforms, knowing the NFT data can be searched by third parties, but not replicated.
Although these partnerships have proven successful, they have not yet made it into the mainstream, and therefore, NFT privacy is still a major barrier to widespread accessibility.
What The Future Can Hold
So, who are the outsiders?
In most cases, these “outsiders” are individuals seeking to collect digital assets in the form of an NFT. Additionally, “outsiders” can take the form of a company or brand looking to capitalize on the growing NFT market. Yet, some of the most important “outsiders” are the various industries that have not fully embraced the wide variety of use cases afforded by NFTs.
Within more traditional industries, NFTs are greatly misunderstood and are generally regarded as confusing and risky. Healthcare, government agencies, and supply chain are only some of the sectors in which NFTs are not widely utilized and yet have considerable opportunity for application.
For example, health data can be minted as NFTs so that patients can track where their data goes, how it is used, and especially, if it is accessed without their permission. Patients, through the utilization of NFTs, could potentially monetize their data and create an ancillary income stream.
Government agencies can leverage NFTs to track the global movement of goods, services, and even funds across internal and external departments, ultimately increasing the attention on privacy and security, and in some cases, eliminating the need for local fiat currency exchanges.
NFTs also have the potential to disrupt the traditional supply chain process that is currently utilized by a wide variety of companies ranging across a slew of industries. For example, tokenizing automotive parts and tracking them on the blockchain can allow for increased visibility into the production to secondary sales pipeline. Furthermore, these tokenized assets can provide transparency on potential recalls and damages that can prevent future losses and crises.
Bringing more insights and intelligence into the NFT market, aided by the addition of widespread digital asset adoption among new sectors, will propel the continuous feedback loop of growth and innovation necessary for the NFT ecosystem to succeed.
Accessibility, driven through increased simplicity and privacy, will undoubtedly expand the application opportunities for digital assets.
About SIMBA Chain, Inc.
SIMBA Chain, is the chain-agnostic Application Programming Interface (API) development platform providing pathways to Web3 for cloud-based Web2 and native Web3 companies. NFT platforms, enterprise organizations, governments, universities, and individual programmers can quickly develop and deploy Web3 distributed applications (dApps) utilizing SIMBA’s simple, accessible, and flexible Blocks (™) product and solutions suite. SIMBA was founded in 2017 through a DARPA grant awarded to the University of Notre Dame and ITAMCO, and has received multiple awards, including a 2020 U.S. Small Business Administration Tibbetts Award, TechPoint's 2019 Mira Award for New Product of the Year, and 1st Source Bank's 2019 Commercialization Award. SIMBA Chain’s eco-friendly, energy efficient platform supports Avalanche, Ethereum, Consensys Quorum, Binance Smart Chain, RSK, Stellar, Hyperledger, among other blockchain protocols. To learn more, visit simbachain.com.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.