Recap from OST LIVE with Christian Kameir, Managing Partner of Sustany Capital — The Potential of Non-Fungible Tokens

Christian Kameir, managing partner of Sustany Capital, joined us on Episode 44 of OST LIVE. Kameir is an official member of the Forbes Finance Council and a seasoned public speaker on topics ranging from high-tech investing to blockchain technologies. He discussed the capabilities of non-fungible tokens, the latest ERC-1155 standard, and tokenizing real-world assets.

Non-Fungible Tokens

Fungibility represents interchangeability. Any dollar note holds the equivalent value of any other dollar note of the same denomination; hence, fiat currencies are fungible. Even though notes are technically unique because they have serial numbers, the value that they represent is the same for all notes of the same denomination. BTC and ETH are examples of fungible cryptocurrencies. ERC-20 is the standard token contact for defining token quantity, token name, and issuance of fungible Ethereum tokens.

In contrary, non-fungibility represents non-interchangeability. For example, a piece of art is unique in nature. Art is therefore non-fungible. ERC-721 is an Ethereum standard for non-fungible tokens that represent single entries on the Ethereum mainnet. Non-fungible tokens are unique, non-interchangeable tokens. These tokens can hold ownership to crypto-collectibles such as unique virtual game items. They can be transferred in a peer-to-peer manner without intermediaries, allowing players to enjoy full ownership of their in-game virtual items. For example, Crypto Kitties are non-fungible digital assets because they are unique or limited in nature.

ERC-1155 is a limited item standard. It is part of the Ethereum mainnet but has not been officially adopted as a standard by the organizing body, though Kameir says it will be soon. The standard can be used to create in-game items that only a limited number of people are able to own, giving the items greater value. It can also be used for real world assets like wine bottles, in which a producer may make only 20,000 bottles of a particular vintage. Standard optimization and additional standard implementations can now be tested for in-game environments. This has been difficult to do on mainnet because developers have to go through an proposal process.

Real-World Implementation of NFTs

Ideally, individuals want to be able to track items along a supply chain. If those items are tracked on the blockchain, users can have an auditable trail of how the item has been treated and who owned it. The wine industry illustrates why this is important. Wine producers transfer merchandise to a wine custodian or a wholesaler. Buyers who are interested in particular bottles would like to track whether they have been handled correctly.

Let’s take the example of tracking the supply chain of a wine bottle.

1. Every wine bottle would be “born” on the blockchain.
2. A QR code is associated with an ERC-721 token. The code is then attached to a real-world bottle of wine. An NFC tag can be embedded onto the bottle so users can scan the bottle with a smartphone and see that particular entry on the blockchain. The user who owns the particular entry, can sell the entry and ownership of the bottle of wine by simply transferring the entry.
3. Ethereum lets users transfer ownership rights to a particular wine bottle on the blockchain using the Ethereum public ecosystem.
4. IOTA represents the tracking of treatment like bottle temperature when the bottle has been moved from the original manufacturer to a custodian in a warehouse.
5. Stellar represents a point-of-sale system for when the bottle is being sold.
6. EOS represents an app that the owner can use to track the history of the bottle’s supply chain. This may include age, ownership, and bottle handling.

This is a theoretical example that isn’t possible today, but it might be in the future. This process could add tremendous value to any supply chain. Another example would be the recent lettuce recall in California. It caused the sudden halt of lettuce sales because the growers and distributors were unable to determine if the recall was limited to a particular harvest. This is something than could be prevented with a granular NFT-based supply chain system like the one described above.

Coming Up Next on OST LIVE: Mick Hagen

Mick Hagen is the CEO of Mainframe, a new decentralized messaging protocol focused on productivity. He previously founded Zinch (acquired by Chegg), an ed-tech company connecting students globally with opportunities in higher education. Hagen will talk about building decentralized applications resistant to censorship, surveillance, and disruption. Subscribe to our YouTube channel or listen to the audio format on anywhere you listen to podcasts, including on iTunes, Stitcher, and Spotify. We’re also now available on Alexa! Simply add “OST LIVE” to your flash briefing.

About OST

OST blockchain infrastructure empowers new economies for mainstream businesses and emerging DApps. OST leads development of the OpenST Protocol, a framework for tokenizing businesses. In September 2018 OST introduced the OpenST Mosaic Protocol for running meta-blockchains to scale Ethereum applications to billions of users. OST KIT is a full-stack suite of developer tools, APIs, and SDKs for managing blockchain economies. OST partners reach more than 300 million users. OST has offices in Berlin, New York, Hong Kong, and Pune. OST is backed by leading institutional equity investors including Tencent, Greycroft, Vectr Ventures, and 500 Startups.