Non-fungible tokens (NFTs) have exploded worldwide, triggering a new way of owning physical and digital assets.
Unlike the alternative currencies issued by our government (where the value of each RM1 is the same and therefore interchangeable), NFT has a unique digital value that you can attach to assets. These assets can be in the form of digital artwork, song clips or even tweets, and then purchased with cryptocurrency.You can read more about what NFTs are and how they work in our explainer article here.
This trend is still relatively new in Asia, but more people join the trend every day. In the Wild Digital SEA 2021 panel discussion, we learned more about NFT from the speakers of the startups that are involved in building ecosystems today.
They also discussed some of the growth areas of NFT that current and future entrepreneurs can take advantage of.
Hosted by Kevin Lim, Temasek Blockchain Director, he joined:
- Yat Siu, Co-founder and Executive Chairman Animoca brand;
- Arif Khan, founder and CEO Alicia Artificial Intelligence;
- Keith Rumjahn, Co-founder and CEO Olive X.
NFT has many applications
One factor that drives the value of NFT is its usefulness as a currency, especially in games.
For example, Keith shared that OliveX has created an NFT, which can be obtained as tokens in the company’s games, Zombie, run! Essentially, to earn tokens and medals (i.e. NFT in the game), runners must reach certain milestones in their fitness journey in the app.
Although tokens can be used as in-game currency to purchase certain items, medals can be used as badges to showcase your achievements and overall identity in Metaverse.
did you know: Metaverse is a digital reality that combines various aspects of social media, online games, augmented reality (AR), virtual reality (VR), and cryptocurrency, allowing users to interact with each other virtually.
Due to the uniqueness of each asset, the other value that NFTs bring is their scarcity and their ability to give people certain property rights.
At Arif’s company, Alethea AI is building an intelligent meta-universe full of what they call Intelligent NFT (iNFT). iNFT can interact, talk and learn with humans (think of it as Google, but you can own it).
Arif believes that NFTs need not be limited to static images or static virtual assets, but can actually be interactive and dynamic consumer experiences that can be upgraded over time.
Meta-universe of opportunity
Considering the wide range of possibilities for NFTs, Kevin asked the panel members what opportunities they saw in the industry.
Arif and Yat Siu claim that NFT will allow huge composability. Here, every entrepreneur can create a small element, which can be combined to become a bigger thing, so as to achieve more creativity that was impossible before.
Yat Siu associates the composability of NFTs with the automotive industry.
“I may have built a car, but the baby seat was invented by someone else, another person owns the gas station, and the road was built by someone else,” Xiao Yi said. “The entire economy is built around it because it is completely composable.”
He said that this is the ability of NFT, which represents what can be done by peer-to-peer businesses in the physical world, which could not be done in the digital world before.
In addition, Xiao Yi believes that GameFi will become one of the most dynamic industries and will flourish because gamers have a strong sense of ownership and pride in their virtual goods.
Dictionary time: GameFi is a fusion of the two words “game” and “finance”, referring to the financialization of video games. This concept includes giving players financial incentives to play and make progress in the game.
But when he looks at the industry from a larger perspective, he believes that NFT is still in its infancy, and there are many unconsidered possibilities, Keith agrees.
Driving mass adoption brings some problems
Keith pointed out that the reason why games are an effective tool to promote the adoption of NFTs is because users play games just to make money.
Games easily encourage people to start earning NFTs because they create a value system that users want to work on, such as the aforementioned tokens or medals.
However, Xiao Yi warned that lowering the barriers to entry is dangerous, and that too low a threshold will often deprive the knowledge factor behind it. He associates it with financial planning, and knowledgeable people will know to invest their money in places that provide higher returns instead of lower savings accounts in the bank.
“If I made registration, playing games and acquiring assets so simple, then in the process, I have given up all my rights because I don’t even know what it is about,” he said for example.
You know, you don’t need 100% of the people in the world to vote for democracy to work, but you need at least a majority to continue to vote and understand why democracy is important so that the democratic system can remain alive. If we do not do this, then there will be a new king. This is what we must avoid in the digital world.
Xiao Yi, co-founder and executive chairman of Animoca Brands
A balanced behavior to supervise
Yat Siu cites, for example, that in the Philippines, there are more people who own crypto wallets than those who own credit cards, because the former are easier to obtain and the rewards are higher than their daily work. “There, you can use cryptocurrency to pay down payments for houses and cars, so if it is not managed well, the national currency will be threatened,” he said.
On the other hand, there will be opportunities, because in the final analysis, because NFT and cryptocurrency are a kind of foreign exchange. Filipinos who work as domestic workers in Hong Kong, Malaysia or Singapore can also get paid through these methods, which are estimated to be more valuable.
Therefore, supervision will be a balancing act for the government, and companies in the decentralized financial sector have the responsibility to advise them on the benefits and threats of NFTs.
- Read more articles about NFT, blockchain and encryptionhere.
- You can read more about what we wrote about Wild Digital SEAhere.
Featured image source: Animoca Brands Co-founder and Executive Chairman Yat Siu / Alethea AI Founder and CEO Arif Khan / OliveX Co-founder and CEO Keith Rumjahn / Temasek Blockchain Director Kevin Lim
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