Non-fungible tokens (NFTs) are exploding around the world, ushering in a new way of owning physical and digital assets.
Unlike our government issued currency which is fungible (where each RM1 is the same value and therefore interchangeable), NFTs have a unique numeric value that you can attach to assets. These assets can take the form of a digital artwork, song snippet, or even a Tweet, which are then purchased with cryptocurrency. You can read more about what NFTs are and how they work in our how-to piece here.
The trend is still relatively new in Asia, but more and more people are hitting the bandwagon every day. In a Wild Digital SEA 2021 panel, we were able to learn more about NFTs from stakeholders involved in the startups that are building the ecosystem today.
They also discussed some areas of growth for NFTs that current and future entrepreneurs can tap into.
Hosted by Kevin Lim, Blockchain Director at Temasek, he was joined by:
- Yat Siu, co-founder and executive chairman 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 determines the value of an NFT is its usefulness where it can be used as currency, especially in games.
For example, Keith shared that OliveX has created NFTs that can be earned as tokens in the company’s game, Zombies, Run! Essentially, to earn tokens and medals (which are the game’s NFTs), runners must complete certain stages of their fitness journey within the app.
While tokens can be used as in-game currency to purchase certain items, medals can be used as a badge, to showcase your achievements and overall identity within the metaverse.
Did you know: The metaverse 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.
Due to the uniqueness of each asset, other values posed by NFTs are their scarcity and the ability they give people to own certain property rights.
At Arif’s business, Alethea AI is building an intelligent metaverse filled with what they call intelligent NFTs (iNFTs). INFTs can interact, speak, and learn from humans (think of it like Google, but you can own it).
Arif believes that NFTs don’t necessarily have to be limited to static images or static virtual assets, but can in fact be interactive and dynamic consumer experiences that can be upgraded over time.
A metaverse of opportunities
Looking at the vast possibilities of NFTs, Kevin asked the panelists a question about the opportunities they see in this industry.
Arif and Yat Siu claimed that NFTs will allow enormous composability. This is where every entrepreneur can create a small piece that can be tied together as something bigger, allowing for more creativity that was not possible before.
Yat Siu linked the composability of NFT to the automotive industry.
“I might have made a car, but someone else invented the baby seat, and another person owns the gas stations, while someone else built the roads,” illustrated Yat Siu. “The whole economy was built around it because it was entirely composable. “
He said this is what NFTs are capable of, and it represents what can be done with peer-to-peer businesses in the physical world that the digital world never could have done before.
Additionally, Yat Siu believes that GameFi will be one of the fastest growing industries that thrives, as gamers have strong ownership and pride in their virtual goods.
Dictionary time: GameFi is a fusion of the words “game” and “finance”, and refers to the financialization of video games. This concept is all about giving players financial incentives to play and progress in games.
Okex / Coin mechanism
But when he looks at the industry as a whole, he thinks NFTs are still in their infancy with a plethora of possibilities yet to be thought about, which Keith agrees with.
Promoting mass adoption raises some issues
Keith pointed out that the reason gambling has been such an effective tool in driving adoption of NFTs is because users would gamble just to make money.
The games easily encourage people to start earning NFTs because they have created a value system that users want to work towards, like the tokens or medals mentioned earlier.
However, Yat Siu cautioned against the danger of lowering the barriers to entry, as too low a bar tends to remove the knowledge factor behind it. He linked it to financial planning, where a knowledgeable person would know how to invest their money somewhere with higher returns, as opposed to a bank’s savings account which is weaker.
“If I make it easy where I can just sign up, play a game, and earn assets, in that process I’ve given up all of my rights because I don’t even know what it is,” he illustrated.
You know, you don’t need 100% of the world to vote for democracy to work, but you need at least a majority that will keep voting and understand why democracy is important for the democratic system to stay in place. life. If we don’t, then there will be a new king. And that’s what we need to avoid in the digital world.
Yat Siu, co-founder and executive chairman of Animoca Brands
A balancing act to regulate
Yat Siu illustrated that in the Philippines, more people have a crypto wallet than a credit card, because the former is just more accessible while earning them more than their daily work. “There you can use the crypto for down payments on a house and a car, so there will be threats to the country’s currency if it is not well managed,” he said.
On the other hand, there will also be opportunities because at the end of the day, NFTs and cryptos being a kind of exchange. Filipinos who work as domestic servants in Hong Kong, Malaysia or Singapore can also be paid through these methods, possibly with a higher value.
Therefore, regulation will be a balancing act 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 of what we wrote about NFTs, blockchain, and crypto here.
- You can read more about what we wrote about Wild Digital SEA here.
Image Credit Featured: 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
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