Non-expendable tokens (NFTs) are exploding around the world, generating a new way to own physical and digital assets.
Unlike our government-issued currency which is expendable (where each RM1 has the same value and is therefore interchangeable), NFTs have a unique digital value that you can attach to assets. These assets can take the form of a piece of digital art, a snippet of a song, or even a tweet, which are then purchased with cryptocurrency. You can read more about what NFTs are and how they work in our explanatory piece here.
The trend is still relatively new in Asia, but every day more and more people are getting on the bandwagon. In a Wild Digital SEA 2021 panel, we were able to learn more about the NFTs of the speakers involved in the startups that build the ecosystem today.
They also discussed some areas of NFT growth that current and future entrepreneurs can take advantage of.
Moderated by Kevin Lim, director of Blockchain at Temasek, they were joined by:
- 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.
NFTs have a variety of applications
One factor that drives the value of an NFT is its usefulness where it can be used as coins, especially in games.
For example, Keith shared that OliveX has created NFTs that can be earned as tokens within the company game, Zombies, run! Basically, to win tokens and medals (which are the NFTs in the game), runners must achieve certain milestones in their fitness journey within the app.
While tokens can be used as game currency to purchase certain items, medals can be used as a badge to show your achievements and your overall identity within the metaverse.
Did you know: Metavers is a digital reality that combines aspects of social media, online gaming, augmented reality (AR), virtual reality (VR), and cryptocurrencies to allow users to interact virtually.
Because of the uniqueness of each asset, the other values posed by NFTs are their scarcity and the ability they give people to own certain property rights.
At Arif’s company, Alethea AI is building a smart metavers full of what they call smart NFTs (iNFTs). INFTs can interact, talk, and learn from humans (think of it as Google, but you can own it).
Arif believes that NFTs should not be limited to just static images or static virtual assets, but can be interactive and dynamic consumer experiences that can be updated over time.
A metavers of opportunities
Looking at the wide possibilities of NFTs, Kevin asked panelists what opportunities they see within this industry.
Arif and Yat Siu stated that NFTs will allow for great composition. It is where every entrepreneur can create a small element that can be put together as something bigger, allowing for more creativity than was previously possible.
Yat Siu related the composition of NFT to the automotive industry.
“Maybe I made a car, but someone else invented the baby seat and someone else owns gas stations, while someone else built the roads,” Yat Siu illustrated. “The whole economy is built around it because it was completely composable.”
He stated that this is what NFTs are capable of and that it represents what can be done with peer-to-peer companies in the physical world that the digital world could never do before.
In addition, Yat Siu believes that GameFi will be one of the most vibrant sectors that will thrive, as players have strong ownership and pride in their virtual assets.
Dictionary time: GameFi is a fusion of the words “game” and “funding,” and refers to the financing of video games. This concept involves giving players financial incentives to play and progress through the games.
But when he sees the industry as a bigger picture, he believes NFTs are still in a nascent stage with a lot of possibilities yet to be thought of, with which Keith agreed.
Promoting mass adoption poses some problems
Keith noted that the reason games have been an efficient tool to drive NFT adoption is because users would simply be playing to win.
Games are an easy encouragement for people to start earning NFT because they have created a system of values that users want to work with, such as the tokens or medals mentioned above.
However, Yat Siu warned of the danger of lowering entry barriers, so having the bar too low tends to eliminate the knowledge factor behind it. He related it to financial planning, where someone with knowledge would know how to invest their money somewhere that offers higher returns, as opposed to a bank’s savings account which is lower.
“If I make it so easy where I can only register, play and earn assets, in the process I have ceded all my rights because I don’t even know what it’s about,” he exemplified.
You know, you don’t have to have 100% of the world vote to make democracy work, but you need at least a majority to keep voting and understand why democracy is important for the democratic system to stay alive. If we don’t, there will be a new king. And this is what we must avoid in the digital world.
Yat Siu, co-founder and CEO of Animoca Brands
An act of balance to regulate
Yat Siu exemplified that in the Philippines, more people own a cryptocurrency wallet than a credit card, as the former is more accessible while earning them higher returns than their daily jobs. “There, you can use cryptography for the down payments of a house and a car, so there will be some threats to the country’s currency if they are not managed well,” he said.
On the other hand, there will also be opportunities for it after all, as NFTs and crypto are a kind of currency. Filipinos working as domestic workers in Hong Kong, Malaysia or Singapore can also be paid through these methods, presumably with a higher value.
Therefore, regulations will be an act of balance for governments, and it is up to companies in the decentralized financial space to advise them on both the benefits and threats of NFTs.
- Read more about what we’ve written about NFT, blockchain and cryptohere.
- You can read more about what we wrote 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, director of Blockchain at Temasek