NFTs Are Giving Web3 a Bad Name. Here's What They Both Can Really Do Web3 is far more than apes, dogs, cats and punks. It has use cases that are set to transform industries.
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Apes, dogs, cats, punks...pixelated art with suspect owner copyrights, all being bid up to the stratosphere by a seemingly endless stream of crypto enthusiasts in a greater-fool-theory "investment" premise. And now, it crashed.
The good news is, none of those things are "Web3".
Yet the die was cast, and now many people think of NFTs as just a mechanism for tokenizing and selling their digital intellectual property, with little regard for real value or utility. Many people have been utterly derailed by the "get rich quick" ethos of the v1.0 version of NFTs and thus miss the core of the opportunity and value that Web3 brings.
Before we know how to leverage it to drive connectivity, increase revenue or reduce fraud, we must understand the technology we're talking about.
The "Web" is simply shorthand for the interconnected society and economy:
- Web1 was availability of information.
- Web2 was the advent of social networks, blogging platforms, video tools and other forms of writing, creating and engagement.
- Web3 leverages blockchain technology to enable direct ownership, portability, accessibility and provenance of everything electronic.
One of the greatest byproducts of Web3 technology is the ability to tokenize digital assets, often called "nonfungible tokens" or NFTs. Fungible and non-fungible tokens are going to utterly transform the world. Businesses, content creators and individuals will do incredible things with them. But it's still early and many infrastructure problems must be solved before it can take flight.
While there have been some modest financial success stories, the early movers in music, sports, influencers, corporate brands, etc., have risked their intellectual property and damaged their brands by jumping into things too quickly out of v1.0 greed without thinking about the consequences of poor infrastructure vendor selections and lack of engaging content or purposeful utility.
- NFTs are for so much more than creating some digital art (or trading card, or music track, or whatever) and selling it to a minimal audience.
- NFTs are for direct audience engagement & relationships.
- NFTs are for portability of ownership and provenance of the thing(s) the NFT represents.
- ...and so much more.
What Web3 can do
While early in the game (I'd suggest that only the very first pitch has been thrown in the first inning), and though a lot of critical infrastructures haven't yet been deployed to enable broad adoption, we are seeing some cool use cases start to emerge that point us toward what the technology can do. These include:
Sports — Autograph has nailed the value prop with Tom Brady's NFTs. These aren't just some trading cards or short video clips. No, these are "Season Tickets" that provide ongoing updates, offers, event invitations, and special access to the tokengated website The Huddle.
Automotive — Delorean is gearing up to make cars again and now taking deposits. People get NFTs representing their rights to a car, specifically where they are in the delivery queue (the # of the NFT being their place on the assembly line). They will continuously add manufacturing updates, brochures, invitations to special events and other things (data) to the NFTs that the future owners hold (note that this is not in the form of new NFTs sent to owners, but, instead, simply new data added to the vault that the existing NFT unlocks).
Furthermore, given the portability of the NFTs, if a holder wants to sell their rights and place in line to someone else, they can go to a secondary marketplace like eBay or Autotrader and easily do so. It feels appropriate that the "Back to the Future" icon would be leading the charge regarding Web3.
Medical Devices — Globus Medical, a multi-billion dollar biomechanical manufacturer, is minting an NFT to every cervical cage, every disc, and every spinal screw a surgeon places in a body. This addresses the problem they have with people who set up garage-shop lathes, establishes the provenance of their devices and components, thwarts counterfeiting and limits patient liability.
Music — Royal.io isn't just selling song tracks and albums. They are enabling fans to participate in the upside of their favorite artists by becoming (partial) owners of those songs and albums and receiving part of the royalty streams. NFT owners will also get "giveaways, surprises and priority access to tickets, merch and events."
Everything that's come before these use cases — all the dogs, cats, apes and punks — have set the stage for the transformative impact that Web3 will have on the interconnected world. We should appreciate those early formative iterations of the industry (ICOs and NFTs) even as we put them in the rear-view mirror.
The task now is to educate businesses and content creators on the incredible things they can do with Web3... and for my team at Fortress to build the infrastructure that secures the data, enables new generations of utility and engagement, and makes it accessible for every person on the planet.