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Let’s begin with what are NFTs. For all you who don’t know, NFTs or Non-Fungible Tokens are strands of computer code embedded into an image, video, sound, etc. That is an incredibly oversimplification of NFTs but for the sake of time, let's run with it. If you want a more in-depth understanding of what an NFT is and how NFTs will operate in the digital realm I will be writing an article in the near future. Lets continue on, NFTs are important because they make art unique, again an oversimplification but they allow art, specifically digital art to become unique. Think about the Mona Lisa, one of the most coveted art pieces in the world. But how do you know that the Mona Lisa sitting in the Louvre is truly the real Mona Lisa painted by Leonardo Da Vinci? The best way to distinguish authentic art from a fake is by the stroke and materials used to make the art. Da Vinci like all artist have a unique signature in their work, their strokes are different and almost impossible to recreate. NFTs do the same thing for digital assets, they embed "strokes" into the digital asset to make it unique. So if one were to check the authenticity of the work, they can see that in the code it would show to who the NFT truly belongs.
Now what does this have to do with corporations? Pokemon was a global sensation in the late 1990's to the early 2000's, kids would play Pokemon on their Nintendo DS, watch the TV shows, and even play the card game that was made Pokemon popular in the early 1990s. Pokemon has hundreds of unique creatures, Pokemon, for people to "capture." However, these creatures are not unique to each individual user, anyone can capture a Pokemon, there is an "unlimited" supply of Pokemon in each of the Pokemon games. Yet what if you were to make that supply finite. What if Pokemon came out with a game or universe in which their was a limited supply of each Pokemon. The price of each individual Pokemon would be massive, Niantic the owners of the Pokemon franchise would have the capability to make millions of dollars off of the finite supply of Pokemon. Let’s say Niantic followed through with my idea and created 6,000 unique NFT versions of Pikachu. Each Pikachu at a starting price of 1 ETH, roughly $5,000 per Pikachu. Pikachu would sell out in less than a minute; Niantic would make more profit in a minute than they have made in the last fiscal quarter. But here is where it gets interesting, Niantic could attach a residual fee to each NFT minted. Once a Pikachu is traded or sold, Niantic would get a residual fee bringing in a profit past their initial offering. Pokemon has hundreds of Pokemon they can mint each with a unique supply, price, residual fee, and / or stylization (think of the Pikachu in Pokemon Go that have a Santa hat) of the Pokemon. If you look at Pokemon Go, Niantic mobile companion app created to allow users to “catch them all” on a mobile phone. Pokemon Go was a worldwide sensation for almost a year and half in which Niantic saw a dramatic increase in support of Pokemon with that increase in sales. The sales of Pokemon Go would not even compare to the amount of profit Niantic could make by creating NFT Pokemon. Niantic could use the same concept of Pokemon Go in which some of the Pokemon would become unique due to the addiction of hat, beanie, or clothes and combine it with their DS games in a metaverse setting. Niantic is not the only company that could take advantage of the explosion of NFTs. However, I believe Niantic have the easiest path to capitalize on the NFT boom due to the brands popularity. People want to catch them all, but what if you can’t, that in itself would incentive people to buy Pokemon. I am waiting for the day Niantic realizes this, because once they do, NFTs would solidify themselves as a future means of security for digital art.
Looking at companies outside Pokemon, companies that have unique creatures or characters like Pokemon can easily take advantage of NFTs. Yu-Gi-Yo, another card game that had similarity popularity and development (TV show, DS games) would do very well by digitizing their creatures, as well other games such as Magic the Gathering. I never played Magic, yet I know they have a strong following like Pokemon. These companies need to take advantage of this amazing opportunity, card games are dying, and NFTs are the future. Do you want to be Blockbuster who stayed in the past or do you want to become Netflix and reinvent yourself that is the question they need to ask?
Moving outside of card games, I think almost every company can take advantage of NFTs, it just becomes harder without unique assets like creatures or characters. Nike has already filled a digital patent in preparation for the “Metaverse.” When I say Metaverse I am not referring to insane move that Facebook made to rebrand itself as Metaverse. I understand what Mark Zuckerberg is doing, but such a dramatic shift now does not seem like a great idea. Metaverse (Facebook) will not become the "future" for the sole reason that their will be too much centralization in Mark Zuckerberg's Metaverse. A competitor will come out in a year or two that is decentralized and will attract a larger audience than the Metaverse. This is not to say that Metaverse (Facebook) will fail, quite the opposite. In fact, I see it doing very well for a select population. Yet their will be another population will want to work with a decentralized platform, lets call it the Oasis for the sake of this article. That population that likes Oasis decentralized set up will pour money into the world because their will not be a central group running the "world." The original basis of why Bitcoin did so well was that there was no centralization. That idea still holds value and Mark Zuckerberg knows he is going to lose on that front. Nike like most other fortune 500 companies have already taken that fact into account. Think about Oasis (Again my word for a decentralized Metaverse) and Metaverse as the dark web and the web respectively. Except Oasis will be more open than the dark web and will demand a younger audience whereas the Metaverse will serve an older audience who does not trust a decentralized platform. Nike will live on the Metaverse but will be traded in both worlds. Nike can easily NFT hundreds of their shoes almost doubling their sales overnight by creating digital version of their shoes.
How I envision Nike’s future is in a year we will see Nike drop the new Jordan 12 Breds with a total physical circulation of 60,000 pairs and a digital circulation of 60,000, the exact same circulation but one is physical and the other is digital. This concept could almost double Nike’s sales in theory. However I find it unlikely that even sneakerheads like myself would want to buy a digital and physical version of the same shoe. I think a better option would be with every physical pair purchased you can get a digital version; this would increase Nike’s sales and keep their loyal following satisfied. Now what does Nike do with previously released pairs. That becomes a harder question to answer, I would love to instantly transform my physical pair of Jordan 1 Top 3s into a NFT but that seems years away. I could see Nike rereleasing digital pairs of already released shoes, yet I am not inclined to spend money on a digital shoe if own the physical version of the shoe. My best idea is to find a way to allow users to digitize their physical pairs but keeping the sane supply as the original physical release. This would mean if you wanted, for example the Jordan 1 Top 3s that had a total physical supply of roughly 80,000, you can either buy a physical pair and digitize it or you can buy a digital pair if supply would allow. So once 80,000 Jordan 1 Top 3s are minted that’s it, doesn’t matter if you have a physical pair or not, 80,000 that’s it. I think that would make shoe enthusiasts like myself very happy. I think Adidas, Reebok, Puma, New Balance, etc. can all follow a similar model.
NBA Top Shot is a great example of how businesses are already taking advantage of NFTs. NBA Top Shot is the NFT version of NBA card collecting. Instead collecting individual player cards, you collect moments. For example, Damian Lillard’s legendary shot over Paul George now goes for thousands of dollars and is considered one of the rarest “moments.” People now have a chance to own a piece of NBA history through NBA Top Shot. Top Shot has made millions of dollars for the NBA; the MLB, NHL, and NFL will all be following suit shortly. The financial incentive for NFTs is too much to pass, large corporations will now have the ability to capitalize on images, videos, and their athletes like never before. Now I am not saying any of this is a good idea, but do I think this the future, without question. When it comes to digital assets, you need to look them as another way for corporations to make profit. You can find the future where profits can be made. I had an economics professor tell me the only reason we have money is to benefit the transactions, that it is.
Cryptocurrencies are not different from paper money, they benefit society by easing the means of transactions. So, in that sense cryptocurrencies like Bitcoin and Ethereum are here to stay but what about the rest of the cryptocurrencies. The one’s that are not used for monetary transactions. Let’s take Resource Finance for example. Resource Finance is a protocol for mutual credit network. It aims to eliminate the need for a credit score by taking collateral in terms of labor or storage. Truly any economists dream, allowing another to maximize the use and space of another’s capital and labor. In terms of simple economics, cryptocurrencies ease the use of… well anything and everything. Cryptocurrencies are here to stay; businesses need to recognize this (I am almost 90% confident most have) and you the investor need to recognize this as well. You plan for the future by understanding the past, if a technology makes our lives easier than that technology will continue to last.
