Nearly two-thirds of America’s population tuned in to the 2022 Super Bowl – a Super Bowl that featured multiple ads from crypto-exchanges. Clearly, blockchain-enabled technologies are no longer fringe. And the transformation to the mainstream will occur thanks to NFTs. Why does this matter? By 2032, the commercialization of NFTs will lead to mass adoption of digital ownership. Everything from digital self-expression and identity to the deed to one’s home.
NFTs provide the critical on-ramp for widespread consumer adoption. Consider that both Bud Light and Aston Martin have already dropped NFTs. Decade-old brands with loyal communities that are then pulled on chain post-drop. As commercial brands adopt NFTs, so too will consumers. Consumers will need to download digital wallets to engage with their favorite communities. And, should their NFTs provide valuable enough, then exchange their NFTs for crypto-currencies. As consumers foray into (for them) new technologies, they will become more comfortable, and network effects will take hold. Consumers will leverage NFTs to represent themselves in the digital world, with NFTs providing identity, community, legitimacy and status. Additionally, in experiencing the transparency of the blockchain with a clear history of ownership and provenance, consumers will want to make more transactions on the blockchain. A virtuous cycle, beginning with community involvement driven by commercialization and ending with mass utilization.
Of course, there are alternative outcomes by which NFTs are not the proverbial “answer to our prayers.” In consideration, as with most new technologies, there is a spectrum on which the outcomes of NFTs lie:
- NFTs are just a fad, the bubble will burst in the next 18 months, and people will move on.
- NFTs are something of a fad, but there remains adoption of the underlying technology.
- As discussed above.
- NFTs are adopted globally, contributing to building out a robust Metaverse where digital assets hold more value than physical assets.
These varied outcomes rely on a multitude of factors; from commercialization efforts to individuals’ psychology to regulatory decisions in individual governing entities. Specifically:
Commercialization efforts
First and foremost, as many others have argued, NFTs will need to provide utility. Should they continue to be speculative investment vehicle only, commercialization may lead to the devaluing of all NFTs and a bubble burst. Akin to what we saw in the late 1990’s with Beanie Babies.
Additionally, and perhaps quite simply, the user experience (UX) for both NFT trading platforms and wallets will need to develop to match consumers’ expectations from Web 2. Without this, you may not see innovation curve adoption from late majority and laggards.
And lastly, the choices of companies to lean (or not) into trust and decentralization will impact adoption. It’ll be crucial to retain new users and keep them secure (unlike the still-fragile nature of many on-chain applications) to ensure continued investment and engagement on a mass level. Alternatively, if brands make NFTs too accessible and find work arounds for people to hold NFTs without wallets or interacting with crypto, there will not be widespread adoption for the underlying technologies. The balance and ultimate outcome is delicate.
Psychology
In order for mass adoption to occur, individual consumers will need to be comfortable understanding NFTs as a multitude of things. It is not merely a Cryptopunk that you can use as your Twitter profile picture to show you knew before others. Fine art does not equal loyalty program, does not equal concert tickets. An inability to recognize the varied utility will silo NFTs to specificity versus widespread technology.
Regulation
The question of whether or not NFTs are securities, in the United States, for example, is top of mind for regulators. How governments choose to regulate NFTs will impact how the technology continues to develop.
NFTs are here. Money is being poured into the underlying technology as well as application specifically in digital imagery. The question of how impactful they will be for our society-at-large depends on, of course, a multitude of factors, but as we consider the next ten years, we see a significant and ever-increasing digital draw from consumers and companies alike that will lead to further adoption and thereby a transformation of digital ownership.
Brett Andersen spent the last five years building brands and launching products as the first employee of Bullish, a NY-based early stage consumer VC-fund and design agency, where she will return as Head of Ops in August. She probably spends more time on TikTok than you and thinks you should check out MSCHF since it is one of her favorite brands.
Julia Stotler spent her career prior to HBS helping large media platforms make money by selling their users’ attention to advertisers. She plans to continue to explore how blockchain technologies can help companies build better business models where everyone is better off, not just the VCs and CEOs.
0 Comments