NFTs must be more user friendly for mass adoption
Their popularity is skyrocketing, now they need to be more accessible to the general public
Non-Fungible Tokens, or NFTs, are a new development from the cryptography world.
Before we get into why they need to be more accessible for the crypto savvy as well as for the non-tech savvy, we need to understand what NFTs are.
NFTs are a type of cryptographic token that can represent ownership of a digitally scarce good. Some examples are pieces of digital art, collectibles, and could be more complex financial concepts.
Fungible assets on the other hand are goods or commodities where each unit is interchangeable and indistinguishable from each other. A common example of a fungible asset is FIAT money. A $10 banknote is the same, in value, like any other $10 banknote.
The properties that give NFTs their importance is that they have unique properties that are stored in the token’s metadata. Their scarcity is provable by verifying the number of tokens on the blockchain. They are also indivisible which means it is impossible to buy a fraction of an NFT. Additionally, like any other token, fungible or non-fungible, there is guarantee ownership, they are easily transferrable and thanks to the way the blockchain works they are fraud-proof.
Due to all these properties, NFTs have a lot of intrinsic value and a world of possibilities. Right now they are mostly known for digital pieces, or the popular digital cats from Cryptokittens — a game that allows the collection and breeding of virtual kittens — and domain names, there is a whole world of opportunities with them.
In the Decentralized Finance (DeFi) world a huge impact that NFTs could help make is in the lending protocols. Right now, fungible assets collateralize them. But since they are mostly crypto fungible tokens, they still vary too much in value and are not the best collateral to have. NFTs open the possibility of having them as collaterals. However, they too are very volatile at the moment, but in a peer-to-peer market each borrower can offer a specific NFT as collateral and it opens the possibility to the lender to choose which NFTs are valuable for them as enough collateral for the loan.
The way all of these transactions will be made secure for both parties will be through escrow contracts on the blockchain that only release the NFT once the loan and interests have been paid. Additionally, thanks to smart contracts NFTs can represent more than just digital assets, they could also represent pieces of land, for example. Increasing the lending power in the crypto world.
The NFT scene is one of the fastest-growing niches of the crypto universe and it has a huge potential raging from virtual kittens to several complex financial products such as bonds and insurance. They are growing in market share with some being sold at sky-high prices, like the ‘exchange.eth’ domain, which is worth $500K, or the digital piece of art that recently sold at $69.3million.
Now with all of this potential and sea of possibility, what is missing? They need to be more accessible; not only to those inside the crypto world but also to those outside of it.
Ali Ahsan wrote in a blog post on the global Fintech firm Circle:
“Amazon has set the bar for the standard online checkout experience. It’s what consumers expect to see across the web now whenever purchasing anything. And for good reason, it’s simple to use and effective in increasing online purchases. NFT marketplaces need to offer a consumer experience that matches their experience buying something on Amazon or eBay where they click the checkout button and enter in their credit card information. In not doing so, they’re essentially adding friction to the customer experience.”
Some of the main problems are that the idea of digital non-fungible assets is still very alien for most people. However, that’s only part of the problem. At the moment, buying any NFT requires people to understand how the crypto universe works. Not only this, but it also requires people to be able to pay with cryptocurrency alienating a vast majority of the public.
If, as Ali Ahsan says, more NFT marketplaces should “make buying and selling NFTs simple: offering both crypto and fiat payment options with a variety of rails including credit cards, wires, and ACH.”
This will help tap into this relatively untapped market share that only seems to keep on growing. Of course, the popularity it has gained is from the impressive headlines of, for example, a digital cat being sold for $170K (600 ETH in 2017). However, much more can be done with them and this only increases the need of making them much more accessible to the public.
