Bitcoin creator Dr. Craig S. Wright has described what he calls “the unrealized potential of NFTs” in an online tutorial. He sees the current situation, where NFT (non-fungible token) art pieces are sold and traded as tokens of value, as worthless—describing why this is “misuse” and how NFT technology could find better use cases in the business world.
Speaking in his capacity as nChain chief scientist, Dr. Wright pulls no punches when it comes to NFT art marketplaces as they exist today, both on BSV and other blockchains. Showing a popular NFT art market website, he says:
They’re totally screwed up. Just to give you an example, this is current NFT world. This is something ridiculous—it’s crappy pseudo-art that is being sold for a lot of money, mainly money-laundering.
He pointed to an example of an art NFT that sold for $500 million, suggesting its seller and buyer were the same party and that behavior like this was creating pump-and-dump scams.
“Owning” an art NFT (as they exist today) grants no rights or any real ownership. Anyone can copy or save the image and post it anywhere. This happens often on the internet, and any complaints from an NFT’s “owners” over their ownership rights are usually met with derision or laughter.
So what are NFTs, and how does Dr. Wright think they should be used properly?
For starters, you need something that’s truly ownable. It should work cross-platform and not lock you into a specific service. An NFT is a unique token so it can represent something that’s actually meaningful. Its owner can trade it, sell or rent it, grant temporary rights to another party, or keep it for their own purposes. No one else should be able to replicate them and use their copy in the exact same way as the owner.
High-value goods and proof of ownership
He gives the example of high-end luxury market goods: some manufacturers are known to over-run production on these items, selling extra items of a supposedly limited series that are indistinguishable from the “genuine” item (which gets much of its value from limited availability). An identifier in the physical product, such as an RFID tag, could connect to an app and verify its authenticity via an accompanying NFT as part of the official production run. Presumably the “unofficial” items wouldn’t have the NFT, since these would be issued separately.
A unique NFT identifier could also help in the case of lost or stolen goods, supporting an insurance claim or enabling law enforcement to return stolen property to its owner even years later. A stolen item without its corresponding NFT proof would have lower value if a thief wanted to re-sell it. This continues a practice that has been widespread for decades, using laser-engraved serials and UV-visible ink to add unique information to physical goods. These two methods both have obvious disadvantages compared to NFT identifiers.
If the item is a vehicle or device, you can use NFTs to temporarily transfer control to another party—e.g., a renter or service technician. Permissions can be altered remotely by the owner, or even automated. The same can be done with houses, offices, and other physical venues. NFTs also allow full logging of control/ownership, which are on the blockchain and can’t be deleted.
“Think of the size of the economy I’m talking about,” Dr. Wright says.
Tickets, vouchers and retail promotions
Some have already begun to look at NFT technology for event ticketing. A ticket may give its owner different permissions that can’t be sold or transferred, solving the scalping problem. The ticket issuer can set their own rules according to what they want the ticket to do.
Negotiable instruments and supply chain
This topic is one of Dr. Wright’s favorites: NFTs can be used to track items along their entire supply chain. Shipping documents might seem “boring” but it’s a multi-billion-dollar industry that’s stuck in the 1950s, he says.
NFTs can also be used for passports, digital identity, health and other personal records. The technology can also be used for voting. Dr. Wright admits those issues have their own baggage, though, and suggests smaller-scale trials take place to identify potential problems, before any large organization rushes to implement NFT identity/records on a large scale.
“NFTs are not about silly little images. They should be about building something that actually changes the world.”
NFT “art” markets have grabbed much of the attention lately, but the above two examples provide more useful back-end solutions that improve business. Dr. Wright notes that Bitcoin’s rules all work within existing digital document legal frameworks, meaning there’s no need for additional legislation to cover NFT rights properly.
Questions from the audience included a few that were apparently seeking the more “get rich quick” side of breaking into the lucrative token-selling market. Dr. Wright advises them to go out and build a bus or theater ticketing system instead.
Build a real business. Don’t aim as NFTs as the outcome. NFTs are just a technology that enables something else.
Bitcoin and blockchain technology need to work in tandem with human laws as well. Dr. Wright reiterates a point he’s made many times in the past—that any system you build should improve existing systems, but not attempt to circumvent them. The latter types will only lead to trouble for their creators.
The current NFT-as-product markets are likely a temporary trend that will wane as people get tired of them, or they’re shut down. Perhaps they demonstrate the public’s current level of understanding of NFT technology, but that will expand as talented developers begin to explore its true potential.
Watch: CoinGeek New York panel, The New World of NFTs
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