• According to ConsenSys founder Joe Lubin, NFTs are the next step for enterprise Ethereum

  • Nonfungible tokens, or NFTs, are digital assets that represent real-world objects such as art, music, and fashion, among others. However, while the majority of the world is enamored by the high selling prices of NFTs launched by celebrities, athletes, and other famous individuals, nonfungible tokens are beginning to pique the interest of corporations for business use cases.

    The adoption of NFTs by enterprises was discussed at the Enterprise Ethereum Alliance, or EEA, anniversary event, which took place virtually on July 29, 2021. During a keynote session titled “The Future of Ethereum and Web3,” Joe Lubin, CEO and founder of ConsenSys — a blockchain software company — stated that “NFTs are doing a fantastic job of getting enterprises excited.”

    Lubin told us after the EEA event that, in a broader sense, NFTs have become a revolution that will change how software is built and delivered:

    “We are now entering a world where we have these nonfungible software objects with unique identities that can accept money, pay money, and participate in governance, either in decentralized autonomous organizations or potentially other types of governments that can govern themselves.”

    As a result, Lubin believes that nonfungible tokens will eventually evolve into entire businesses with their own rights, rather than just encapsulating content through digital artwork or music.

    The future of NFTs in enterprise applications

    Although Lubin recognizes that self-governing NFTs will be a significant change, he claims that artists and content creators who have launched nonfungible tokens have already demonstrated that this technology is capable of solving common business problems:

    “NFTs enable artists and content owners to recognize that their intellectual property can have varying rights and rates if they so desire. These can then be monetized and sold to various people in a very flexible and programmatic manner. It is really about the artist not having to sell their soul to make a living, which is very exciting from a business standpoint.”

    Lubin specifically stated that every media company in the world is considering or is already in the process of launching its own NFT platform. To illustrate Lubin’s point, Media Publishers, the publisher of Vogue, Esquire, and other major magazines, announced earlier this year a partnership with decentralized ad network Vidy to launch and develop an NFT platform for fashion, art, and music industries.

    The nonfungible platform from Media Publishers is expected to launch in the third quarter of 2021, enabling a virtual environment to showcase digital art, fashion, music, and design. Through a tokenized system, the platform will also support the minting, trading, and auctioning of NFTs.

    However, NFTs are poised to disrupt more than just the media industry. Nonfungible tokens will also be used in traditional financial service sectors that are shifting toward decentralized finance (DeFi) concepts, according to Lubin. According to Lubin, NFTs will play an important role in DeFi in the future because the traditional financial world is made up of fungible token shares, deeds, and other financial instruments that are uniquely associated with an asset.

    As a result, Lubin believes that a “nonfungible financial world” represents a massive opportunity that will most likely revolve around automated market makers, stable coin systems, and lending/borrowing protocols: “These will resemble fungible tokens, but they will need to be built somewhat differently to accommodate nonfungible tokens.”

    Based on this, enterprises that leverage a nonfungible financial world will, in turn, solve a major business problem: ensuring that invoices are paid. According to Dan Burnett, executive director of the Enterprise Ethereum Alliance, just as computers and the internet have helped businesses reduce costs and increase speed, Ethereum and blockchain technology are enabling trust in how people will be compensated:

    “The entire point of blockchain technology is that we no longer require a trusted human for business processes. Organizations can now plan not only for how people will be paid now but also for how they will be paid in the future.”

    Transitioning from corporations to communities

    Lubin added that as businesses begin to apply nonfungible concepts to traditional business models, it demonstrates a shift from a corporate to a community era: “DeFi protocols are about sharing governance.” We intend to decentralize and autonomously organize all of our business activities in the future.”

    Lubin pointed out that the billion-dollar gaming industry is already demonstrating how NFTs can have an impact on real-world economies. Lubin, for example, mentioned the Ethereum-enabled blockchain project Axie Infinity, which enables players to earn money using nonfungible tokens. Axie Infinity has had a particular impact in the Philippines, a region hard hit by the COVID-19 pandemic.

    Several Filipinos have already earned NFTs and cryptocurrencies through the play-to-earn blockchain-based video game by breeding, battling, and trading digital pets known as Axies. Lubin elaborated:

    “Many of the 350,000 to 400,000 people who play the game live in the Philippines. They are earning five times what they would be earning at minimum wage. They’ve created a real economy and are constructing a property-based metaverse. This is an interesting phenomenon to keep an eye on.”

    According to Axie World data, the Axie Infinity virtual environments will have a total revenue of close to $120 million in July 2021, a significant increase from the $1.92 million seen at the start of the year.

    Although impressive, Burnett noted that proper regulations are still required for nonfungible systems for enterprises to come to fruition: “One of our goals at the EEA is to work with regulators to ensure proper engagement.” This isn’t about shutting down the technology or the community, but about accepting that the world has changed.”

    While regulations are still in the works, Lubin expressed optimism that “the enterprise herd is already coming to the Ethereum mainnet.”

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