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Non-fungible tokens (NFTs) are “one-of-a-kind” digital artifacts representing real-world assets. In their simplest form, they are a certificate of ownership. By definition, NFTs are non-interchangeable, non-divisible and unique. They 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, with early adopters following innovators into the world of blockchain. Arguably, NBA TopShot creator Dapper Labs drove global NFT awareness when making officially licensed highlights available as collectables.
And as that awareness grows and consumers become more comfortable with non-fungibles and the blockchain generally, NFTs have the chance to—and likely will—upend the events industry by turning the traditional ticketing process on its head.
Before going further, we must look at the history of Tim Berners-Lee’s World Wide Web to put the story of NFTs in context. Property ownership has been a concern since the very beginning of the internet. 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 the physical world, where the traditional ticketing industry has long been troubled by fraud. The difficulty of authenticating tickets and a lack of exchange protocols has given rise to a secondary underground economy run by unscrupulous touts the world over.
NFT-based event ticketing will improve the experience for both attendees and organizers. Consider a simple ticket purchase process: A consumer connects their crypto wallet, orders an NFT-based ticket, and pays a sum to the ticketing entity. After that, the smart-contract triggered token-minting process occurs (adding data to the blockchain), and delivery results. The wallet then stores the ticket.
The notable impact on the event marketing industry will be issuing tickets on a blockchain, where minting occurs quickly and cost-effectively. The blockchain will then become the 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 organizers to engage directly with their audience and, importantly, consumers' first-party data. Before Russia invaded Ukraine, FC Dynamo Kyiv explored an NFT ticketing strategy.
After this, NFT-based tickets will allow for ownership tracking to 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—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. However obvious, it is also worth pointing out that buyers own artwork that others 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, all that said, the technological advantages far outweigh the disadvantages. The underlying technology is here to stay, and there will be benefits for creators and event organizers alike.
Beyond the use cases mentioned here, there are practical applications in identity management that will prevent theft. In academia, with certificates, and in medical history tracking. As someone who has lived in numerous countries, seamless cross-border solutions are very appealing.
All the opinions of the author are expressed for information and entertainment purposes only.
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