Non-fungible tokens are “one-of-a-kind” digital artefacts representing real-world assets. In their simplest form, they are as a certificate of ownership. By definition, non-fungible tokens, more commonly referred to as NFTs, are non-interchangeable, non-divisible, and unique.
NFTs go a step further than interchangeable cryptocurrencies, which are examples of fungible assets and are divisible into sub-units.
As you have no doubt observed, NFTs are a trending digital asset class that has gripped the media in recent months while captivating people worldwide, as early adopters have followed the innovators into the world of blockchain. Arguably, the NBA TopShot creator Dapper Labs was behind the NFT drive in awareness when making officially licensed highlights available as collectables.
Before going any further, we must take a look at the history of Tim Berners-Lee’s internet to put the story of the NFT in context. Property ownership has remained a concern since the very beginning. Content creators have faced a challenge where the infinite production and global distribution of digital assets, with minimal cost, has devalued creative works and threatened livelihoods. NFTs seek to address this issue and should be considered building blocks of the future internet.
We can also extend this same argument to include the physical world, where the traditional ticketing industry has long been troubled by fraud. The difficulty of authenticating tickets and a lack of ticket exchange protocols gives rise to a secondary underground economy run by unscrupulous touts the world over.
NFT-based event ticketing will improve the experience for both event attendees and organisers in the coming months and years ahead. Let’s consider a simple ticket purchase process. A consumer orders an NFT-based ticket and pays a sum (crypto or fiat currency) to the ticketing entity. After that, the smart contract triggered token minting process occurs (adding data to the blockchain), and ticket delivery results. A crypto wallet then stores the ticket.
The first notable impact on the event marketing industry will be issuing tickets on the blockchain, where event organisers will mint tickets quickly and cost-effectively. The blockchain will become a single, immutable source of truth.
Converting a tangible asset to a digital asset will streamline business operations. A reduced role for agents, go-betweens or brokers will result, thus enabling organisers to engage directly with their audience and, importantly, their first-party data. To some degree, this is already underway in the events world.
After this, NFT-based tickets will allow for the tracking of ownership and prevent scalping and fraud. The recorded transfer of NFTs from initial sale to resale is one possible new business model, with or without a maximum price; alternatively, a non-transferrable smart contract setting is another model.
With the former option, the potential for perpetual revenue streams results from programmable money. Downstream profit-sharing for artists is a big incentive, while transparent royalty splits solve age-old rights issues.
The technology also supports creating a memorabilia industry with the resale as collectables in years to come—sports memorabilia is big business. If you have grown up with the internet, it will all be intuitive.
Add together the proliferation of NFTs and the resulting new level of customer trust to the impact of the pandemic in the live events industry, and you have a recipe for disruption.
NFT ticketing presents new revenue opportunities that will turn the heads of even the most cynical and will likely change how ticketing works in an increasingly innovative and technology-driven industry.
The counterargument is that NFTs have echoes of other technology fads, and it is reasonable to conclude that a speculative bubble, defined as a spike in asset values, is forming. One need only look at the crazy prices paid for NFTs this year. However obvious, it is also worth pointing out that buyers do not own artwork that they alone can enjoy.
There are also environmental concerns around minting; however, the adoption of more energy-efficient processes and the increasing use of renewable energy sources will address these soon. Lastly, it is reasonable to expect that blockchain and software rules-based protocols will not be without operational hiccups.
Still, the above said, we believe that the technological advantages far outweigh the disadvantages. The underlying technology is here to stay, and there will be benefits for creators and event organisers alike.
Beyond the use cases mentioned here, there are practical applications in identity management that will prevent theft. In academia, with certificates, and also in medical history tracking. As someone who has lived in numerous countries, seamless cross-border solutions are very appealing.
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Lastly, nothing in the post above constitutes financial advice.