I attended a talk at DCentral presented by NFTPro CEO Christian Ferri. The talk was titled “Enterprise NFTs with NFTPro”, and the theme was that “Enterprises will drive NFT mass adoption”. I don’t disagree with this at all, but it does offer up a weird paradox with the grounding philosophy of decentralization.
I unfortunately didn’t get the chance to speak with Chrisitan after to ask if there were lines in the sand between NFTs as an asset and core decentralization. However they do go hand in hand to most and for the purpose of this article will by synonymous.
The current mood of the movement is that big business/centralization is bad. In fact, the password at DCentral was “F#ckBank$”. Willaim Quigley, Co-founder of WAX put it well in his presentation, “If you told me, in 1999, that in 21 years the Internet would be controlled by 10 companies – companies that regulate and monitor what you can post, what you can see, and what you can access – that would have seemed crazy! But here we are.”
We stand at an interesting crossroads of the NFT movement where large brands and businesses are starting to take the technology seriously. Before they would have thrown a few dollars into an innovation program to pilot a blockchain solution more for marketing than serious adoption. Now they are seeing the dollar signs and potential.
Is this bad? No. Is this unexpected? No.
To paraphrase Elon Musk in an interview that I can’t find, “The whole point of a company is to create more value than what goes in, if it doesn’t do that then why does it exist?” So is it crazy to think that once a viable revenue and profit channel opens up enterprises wouldn’t jump on it? Of course it is.
I fully agree that large businesses will drive mass adoption of NFTs, metaverse, and blockchain as a whole. I do not see this as a bad thing. I actually welcome it. What I do not support is hard headed early adopters who see enemies rather than allies. We are at a point in time where we should welcome the education of businesses and brands on how to interact, view, perceive, and engage with the metaverse. They are looking to the early adopters and asking, “how do we do this?” Giving them a “f*ck you” attitude isn’t going to help anyone.
In order to educate we first need to understand what enterprises care about. Christian lays it out well in his DCentral presentation. They care about 4 things:
So how do NFTs check these boxes?
- High-margin revenue
- Engaging with a younger demographic
- Cross-selling physical products
- Control/risk containment
Product companies on a good day will get around 30% profit margin on a physical good after OPEX and CAPEX spend to produce it. The margin to create for NFTs can be as high as 95%.
Engaging with a younger demographic
This one should be obvious. If you don’t target younger audiences your market will eventually die off. Literally. NFTs are seeing excellent adoption with younger generations. While young demographics are usually faster to adopt emerging technologies, this trend is accelerated by NFTs seeing strong adoption with collectibles, art, and gaming.
Cross-selling physical products
Being able to link a digital good to a physical one allows for value to be created in two markets simultaneously. Many brands are offering NFTs to tie-in with physical products or even offering physical rewards and experiences for NFT holders.
Brand control is everything. It’s hard to keep people from knocking off Nikes in the physical but pretty easy to do in the digital. As a business, being able to control your environment is always top of mind. This is why Nike recently acquired a virtual sneaker company.
As you can see, NFTs are a business’ ideal product. Now that there is a proven market the interest is there. What we, as the early creators of the space, can do now is show them the path. That’s not to say that we should lay down the banner of decentralization, but that corporate entities are coming, whether we like it or not. We can either choose to accept them and coach them in the right direction, or put up walls that will only lead to a more divided future and ultimately do nothing to stop the inevitable.