Non-fungible tokens (NFTs) are exploding around the world, sparking a new way of being both physically and digitally active.
Unlike a fungible currency issued by our government (where each RM1 is of the same value and therefore exchangeable), NFTs have a unique digital value that can be added to assets. These assets can be a piece of digital art, a part of a song, or a tweet, which is then purchased in cryptocurrency. You can read more about what NFTs are and how they work in our explanatory article here.
The trend is still relatively new in Asia, but more and more people are jumping from day to day. In a Wild Digital SEA 2021 panel, we learned more about the NFTs of speakers involved in startups that build the ecosystem.
They also discussed some of the growth areas of NFTs that current and future entrepreneurs can take advantage of.
Kevin Lim, moderated by Temasek’s Blockchain director, had the following:
- Yat Siu, co-founder and executive chairman Animoca Markak;
- Arif Khan, founder and CEO Alethea AI;
- Keith Rumjahn, co-founder and CEO OlibaX.
NFTs have many applications
One factor that drives the value of an NFT is its usability, where it can be used as a currency, especially in games.
For example, Keith shared that OliveX has created NFTs that can be earned as tokens within the company’s game, Zombies, run! Basically, to win tokens and medals (which are in-game NFTs), runners must achieve some milestones in their fitness journey within the app.
Although tokens can be used as game currency to purchase certain items, medals can be used as badges to show off your achievements and overall personality in the metaverse.
You know: Metaberse is a digital reality that combines social media, online gaming, augmented reality (AR), virtual reality (VR), and cryptocurrencies to allow users to interact virtually.
How unique each asset is, the other values posed by NFTs are their scarcity and their ability to give people ownership of certain property rights.
At Arif’s company, Alethea AI is building a smart metaverse full of what they call smart NFTs (iNFTs). iNFT can interact, talk, and learn from humans (think like Google, but you can own it).
Arif believes that NFTs should not be limited to static images or static virtual assets, but can be interactive and dynamic consumer experiences that can be updated over time.
A metaverse of opportunity
Looking at NFT’s wide range of options, Kevin asked the board a question about what opportunities they see in this industry.
Arif and Yat Siuk said the NFT will allow for high composability. There, each entrepreneur can create a small element that can be linked as something bigger, allowing for more creativity that was not possible at first.
Yat Siuk related the composability of NFT to the car industry.
“I may have made a car, but someone else invented the children’s seat, and another person owns the gas station while someone else built the roads,” Yat Siuk said. “The whole economy is built around that because it was completely composable.”
He pointed out that this is what NFTs are capable of, and that it represents what can be done with peer-to-peer business in the physical world, something that the digital world could never do.
In addition, Yat Siu believes that GameFi will be one of the most vibrant sectors to move forward, as players have a great deal of ownership and pride in their virtual assets.
Dictionary time: GameFi is a fusion of the words “game” and “finance,” and refers to the financing of video games. This concept involves providing players with financial incentives to play and progress through games.
But when he sees the industry as a bigger picture, he thinks the NFTs are still in their infancy with plenty of options yet to be thought of, and he agreed with Keith.
Encouraging mass adoption brings some problems
Keith points out that the reason that games have been an effective tool in encouraging the adoption of NFT is simply because users are playing to win.
Games are easy for people to start earning NFTs because they have created a value system that users want to work with, such as the aforementioned tokens or medals.
However, Yat Siu warned of the danger of lowering the entrance fences, and as a result, having the bar too low removes the knowledge factor behind it. He related it to financial planning, where someone who is an expert would know how to invest their money somewhere by giving higher returns, unlike with a bank’s lower savings account.
“If I make it so easy where I can register, play and earn assets, I’ve given up all my rights in this process because I don’t even know what it’s about,” he noted.
You know, for democracy to work you don’t need 100% of the world to vote, but you need at least a majority that will continue to vote and understand why democracy is important for the democratic system to survive. If we don’t, there will be a new king. And that’s what we need to avoid in the digital world.
Yat Siu, co-founder and CEO of Animoca Brands
Regulatory balance action
Yat Siu noted that in the Philippines, more people have a cryptographic wallet than a credit card, as the former is more accessible while earning higher returns than their daily work. “There, you can use cryptography to make payments at home and in the car, so there will be some threats if you don’t manage the national currency well,” he noted.
On the other hand, there will also be options at the end of the day, as NFTs and cryptocurrencies are a kind of exchange. Filipinos who work as domestic workers in Hong Kong, Malaysia or Singapore can also be paid through these methods, probably with higher value.
Therefore, the regulation will be a balancing act for governments, and it is up to companies in the decentralized financial space to advise on the benefits and threats of NFTs.
- Read more about what we’ve written about NFT, blockchain, and cryptographyhere.
- You can read more about what we’ve written about Wild Digital SEAhere.
Featured Image Credit: Yat Siu, co-founder and CEO of Animoca Brands / Arif Khan, founder and CEO of Alethea AI / Keith Rumjahn, co-founder and CEO of OliveX / Kevin Lim, CEO of Temasek Blockchain