Tokenizing Unique Digital Goods
An introduction to non-fungible tokens
While cryptocurrencies and altcoins hold the attention of most in the blockchain space, there is a quiet (and enormous) opportunity building right in front of our eyes: non-fungible tokens that enable the tokenization of unique digital goods.
Sounds boring, right?
Tell that to owners of CryptoKitties, the collectible cat game where each cat is represented by a unique crypto-token. While CryptoKitties may appear to be little more than a fun game, it has resulted in more than $25 million in transactions, and it has proved an important concept: non-fungible token (NFT) technology works, and we can use NFTs to represent things like licenses, collectibles, or any information that requires uniqueness.
That’s a big deal.
NFTs are a meaningful step forward for a few reasons.
There is provable scarcity. Each asset is provably unique so you know if that “one of a kind” collectible is actually one of a kind. Counterfeit digital goods are a huge problem — especially with items like event tickets — but issuing over an NFT addresses those issues.
Ownership is verifiable. End-users truly own a digital good. It cannot be charged back or taken away, and it is no longer dependent on a central business, government, or authority. This means a service or product that issued the asset does not need to exist for the asset to live on. Further, all aspects of ownership are visible. Who created, possessed, transferred, and owns each asset are out there for everyone to see.
They’re programmable. The asset itself holds code identifying all unique information about the asset, and since this code is available to the public, other applications can incorporate the goods. We don’t know what opportunities this affords yet.
Liqudity. The ever-present opportunity to exchange a digital asset is meaningful — you don’t have to rely on StubHub to find a buyer for your digital event ticket, for example. Irreversible transactions offer protections (both buyer and seller-side) not found in many commerce channels.
Conclusions
There’s no way around it: despite wide exposure to terms like “Bitcoin” and “crypto,” many users can’t figure out how to interact with cryptocurrency products or digital assets (outside of Coinbase).
The best opportunity for mass adoption in the near-term: non-fungible tokens. A well-placed NFT could offer a tangible improvement over digital goods based in centralized databases — are you listening, StubHub?
Andrew J. Chapin is the Co-Founder & CEO of Benja, head of the benjaCoin token project, and author of Art of the Initial Coin Offering. This November, Andrew is running the New York City marathon for Athletes to End Alzheimer’s.
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