The NFT movement was a culmination of two trends: cryptocurrency and blockchain reaching wider audiences, and culture’s hunger for new media to create, collect, and build a sense of identity in an increasingly digital world. One person’s JPEG is another person’s artwork, yet this movement has blossomed into a huge market and technology boon: In Q3 2021, multi-blockchain NFT sales volume surpassed $10.7 billion, a jump from Q1 $.3 billion in the second quarter.
At Bessemer, we sat down with three developers in this popular corner of web3 – Brian O’Hagan, growth leader at Sorare, the global fantasy soccer game; John S. Lee, Head of Blockchain Programs at Shopify; and Dannie Chu, CEO and co-founder of MakersPlace, the marketplace for discovering, collecting and investing in truly rare and authentic digital works of art. Together, these three experts gave us an introduction to why millions of people are fascinated by non-fungible tokens and digital collectibles, how this market could evolve in the coming year, and what it takes for true mainstream adoption.
Brian O’Hagan: An NFT stands for Non-Fungible Token. For me, an NFT is really about unlocking the act of collecting from a digital perspective.
John S Lee: NFTs are like a cryptographic file wrapper that can permanently track and manage both ownership and transactions.
Danny Chu: I think I’m comparing NFTs to the iPhone for creative industries. It’s a new platform. It’s in a way a new form factor that allows creatives to finally express themselves and create things they’ve always wanted but had no sustainable way to continue creating and supporting. And I think that’s probably the biggest, the biggest change, the biggest movement that NFT technology is enabling right now.
Danny Chu: I think there’s a lot happening, but if I’m going to break it down into three distinct areas: First, the technology around creating NFTs, buying NFTs, storing and displaying, that’s evolved significantly. If you kind of look back, it was very difficult to do those things. And that’s a big unlock.
The second thing is about creativity. There is a tremendous amount of creators that have entered the NFT space and with that you can see that many of these creators are pushing the boundaries in areas like arts, music, entertainment and communities. And with that creativity, it really creates a lot of excitement. With each of these creators coming along, they drive a significant amount of community activity, which then creates these opportunities for people to engage with NFTs in unique ways.
And then all of these things come together in a sort of flywheel, when a particular NFT from a known creator is highly sought after, sometimes you see these massive auctions. One thing I’m particularly familiar with that we saw earlier this year was this Beeple sale that took place for $69 million at Christie’s auction house and in partnership with MakersPlace, and things like that happen a lot.
John S Lee: The NBA started NBA Top Shots with Dapper Labs early last year or late last year. And that has piqued the interest of many NBA teams looking to start NFTs. So we had a direct introduction to the bulls we are interested in in this introduction where their legacy of having the number of championship rings they have to actually giving fans the opportunity to own a version of the championship ring and buy as a digital good.
The majority of the Chicago Bulls audience are not crypto people. They’re the general public looking for ease of access and all the things they expect from a general ecommerce transaction. Shopify is really good at doing ecommerce. So, among others, we worked with a company that builds on the Flow blockchain built by Dapper Labs to allow a Mint event to occur without the merchant having to provide a smart contract themselves.
“Every NFT sold out in less than a minute.”
So we’ve obscured the need for blockchain knowledge to deploy a smart contract and mint an NFT, leveraging the expertise of our third-party vendor to do so, while allowing the merchant, in this case the Bulls, to market directly with existing marketing – and sales channels that they need to align with their target audience. I mean it was a huge success. Every day except day one, every NFT sold out in less than a minute. And it was a huge success. Since then, they’ve launched a secondary marketplace that allows people to trade things peer-to-peer. Our approach was right for the Bulls and the Bulls audience as no one involved in that particular e-commerce transaction needed to learn cryptocurrency or blockchain technology to achieve their intended goal.
Brian O’Hagan: If you look at NFTs, there are currently two pillars. There is the art aspect and the collector aspect. And to be totally honest, I really love art and I really love artists, but I don’t really get it in terms of rating and how to rate that. So for me it’s a bit more esoteric. But I find that very exciting, especially for artists and creative people. On the other hand, however, is the gaming aspect. And I think it’s just revolutionary technology for games, especially for gamers.
And that’s why I’m really optimistic, because I really believe that all AAA gaming studios will be releasing games with NFTs within those games in the next two to three years. And games where the NFT will be playable not just in one of their games, but in several of their games. So if you look at Ubisoft, they have Assassin’s Creed, they have other AAA games, and imagine you own an NFT that you won in Assassin’s Creed that you could use in one of their games. I firmly believe that we will work towards this. And that’s going to unlock a lot of value for gamers, for game studios, for indie game studios, to create new economic opportunities for the internet in general.
Danny Chu: I can’t tell you how many times an artist contacts us on MakersPlace and says, “Hey, I’ve been able to quit my job and be a 100% digital artist thanks to NFTs. Thanks to NFTs, I’ve been able to pay off my house.” And this is a real movement happening where finally the innovators and the creatives who are going to push the boundaries are able to do it full-time. And that’s why I’m super optimistic. That’s because the people who will change the world finally have a sustainable future, and NFTs make that possible. This is why you will see so many innovations over the next few years.
Brian O’Hagan: Education, I still think a lot of people see NFTs as memes. As something funny, as something weird, and they don’t get it, because it’s weird to imagine that a picture of a soccer player or a picture of a piece of art could be worth $100,000. So I think a lot of people need to be educated about NFTs.
NFTs are more than a meme.
John S Lee: I think the next 12 months will be crucial in that, let’s be honest, not all NFT launches in space have been successful. There were some NFT launches that didn’t do very well. And that’s what some would call failures when items don’t sell out and items stagnate in people’s stores. And the reality is that there has to be a push for an expansion of the overall audience that wants to participate in the NFT space. And I think one way to do that is to really focus on mass adoption and give people a way to get into the NFT space without having to spend a lot of money either, which is a lot of NFTs right now concerns The prices are really oversized in terms of physical, good comparisons and also have a very easy way for someone to create a wallet and put an NFT type in that wallet that they created.
Brian O’Hagan: The favorite NFT I own is my Diego Maradona card. Why? Because NFTs are your digital identity. And in the case of Sorare, NFTs are the digital identity of your sport and your football. So imagine someone checks my account, they see that I have a Diego Maradona card and that card is actually of no use because he is dead. And so he is not playable in the fantasy game but he is a legend of the game. He is one of the best footballers who have ever played in the world. And yes, he would present something to any football fan who loves South American football. So I bought his card and it has emotional value for me.
Danny Chu: Obviously I’m a bit biased, I’m a big fan of digital art in the form of NFTs and hence my favorite NFT is in the form of digital art. I think ultimately I’m a big fan of artworks that move me and give me a different perspective, a new perspective, and there’s one from Frenetik Void. The reason I’m a huge fan of this particular piece is because Frenetik is someone who really pushes the boundaries by challenging how you think about things. And I think a lot of the digital artwork that I collect falls more into that kind of category that resonates with me and has that deeper meaning.
John S Lee: My favorite is still my first. And I have to say that I really appreciate what the Dapper Lab team did in Axiom Zen when they launched CryptoKitties in 2017. And it’s still the foundation upon which all other NFTs were built. CryptoPunks was first and I won’t disagree, but I think the ability to merge into a standard that became ERC721 is really my personal need for standardization and some level of conformance within a whole space that I Let’s say CryptoKitties are definitely some of my favorite NFTs that I own.
More reading material on the topic:
— Sorare builds the best NFT gaming platform for global soccer fans
— Premier NFT Market MakersPlace raises $30 million from former Sotheby’s CEO, Eminem And Bessemer
— Bessemer Venture Partners invests in NYDIG to become the trusted institutional custodian and wealth manager for Bitcoin and other digital assets.
— TRM supports financial institutions in the safe transition to a new financial system for the digital age
More from our team:
– How Mega Platform Shifts in Consumer Tech Captivate NFT Audiences
— Consumerization of private markets