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PFPs, ups and downs, millions of dollars for a virtual rock, freedom for artists, SEC going after them…

The NFTs bingo card keeps being filled. And today we’ll add a few more “X’s” to it.

LFG!

Duality:
The Perception of NFTs in 2024

Even though NFTs have been on the news since 2020-2021, they continue to be a (often) controversial topic as we move through 2024.

On one hand, they have opened new possibilities across various industries, such as digital art, gaming, and even real estate. Multiple businesses and brands have successfully leveraged NFTs for enhanced customer engagement, brand loyalty, and new revenue streams.

These success stories showcase NFTs' potential to revolutionize traditional business models and open new avenues for digital ownership and authenticity.

(And many of these use cases were shared and discussed in previous editions)

However, this potential is often “overshadowed” by the negative perceptions that still surround NFTs.

Some of the early iterations of NFT projects were linked to bad actors - which sometimes resulted in significant losses for many participants.
These issues have created a lasting stigma, associating NFTs with scams in the minds of the broader public.
This reputation has been difficult to shake, despite the legitimate and valuable uses that have emerged over time.

The skepticism surrounding NFTs has made it challenging for the technology to gain widespread acceptance, particularly among those who view it as a “passing fad” rather than a durable innovation.
The result is a divided space where NFTs are simultaneously seen as both revolutionary and risky.

Despite these challenges, the NFT space is maturing, with more focus on utility, security, and long-term value rather than (just) quick profits.
Projects that emphasize transparency, ethical practices, and real-world applications are beginning to shift the narrative, and this maturation process is essential for NFTs to be recognized as legitimate assets in the digital economy.

As we move further, it’s clear in my mind that NFTs are here to stay. However, the success of this technology will depend on the industry’s ability to evolve and address the concerns that have held it back.

And one of the best options to help create a more positive view of NFTs is by showcasing use cases - possibilities that go beyond the purely speculative factor.

NFTs for Identity Verification:
A simple yet interesting solution

#7 - NFTs as collateral of Real-World Assets

#12 - 👠 Web3 Fashion: The new runway for brands & #25 - Luxury redesigned

#24 - Leveraging NFTs in Retail

#31 - Creative industry in Web3

#32 - Web3 Gaming

#34 - Web3 in Travel & Hospitality

#35 - Web3 and the Art Industry

These are only some of the editions in which we explored different possibilities for NFTs.

As you can see, it’s possible to leverage them in multiple industries, in various ways.

However, there’s something we haven’t talked about that much: NFTs as a solution for Authentication.

When applied to authentication, NFTs can serve as digital passports or credentials, offering a secure and tamper-proof method for verifying identity and access rights.

Unlike traditional methods (name, e-mail, etc.), which often rely on centralized databases that can be vulnerable to hacks, NFT-based authentication leverages the decentralized nature of blockchain, making it significantly more secure.

But what are the advantages of using NFTs for authentication? For one, credentials are unique and cannot be duplicated or forged.
This makes them ideal for applications where security is paramount, such as accessing sensitive information or secure locations/spaces/sites.

On top of that, each NFT’s “uniqueness” is transparent/verifiable via blockchain, a decentralized ledger that logs every transaction involving the NFT, from its creation to any subsequent sales or transfers.

Businesses and brands can leverage NFT-based authentication in various ways. For instance, they can use NFTs to manage access to exclusive content, events, or services, ensuring that only verified individuals gain entry.

In other words, instead of asking for an e-mail a brand can only allow that NFT holder(s) to enter a given experience/event/page/draw.

This can enhance customer loyalty by offering a more personalized and secure experience. Moreover, if we move to more day-to-day examples, NFT-based authentication can streamline operations by reducing the need for physical documents or complex verification processes (think businesses, offices, governments, etc.).
In industries such as finance, healthcare, and education, where identity verification is critical, NFTs offer a scalable and efficient solution.

From what I have witnessed so far, we can expect to see even more innovative applications of NFTs in authentication. From digital passports to professional certifications, NFTs have the potential to revolutionize how we verify identity and access in the digital world.

Interoperability and Flexibility

One of the key strengths of NFTs in authentication is their interoperability and flexibility across various platforms and ecosystems.

This means that an NFT used to authenticate a product or identity can be recognized and verified across different digital environments, whether within a single brand's ecosystem or across multiple platforms.

For businesses, this offers the ability to create seamless, integrated experiences for users, where an NFT can unlock features, services, or content across various channels, enhancing the user experience and brand engagement.

Still on users: this flexibility translates into a more fluid digital identity, where the same NFT can be used for multiple purposes - whether verifying ownership of a digital asset, accessing exclusive content, or even participating in decentralized finance (DeFi) activities.

The future of NFT-based authentication is likely to see even greater levels of integration, with advancements in smart contracts and IoT devices enabling more sophisticated and secure authentication processes.

This evolution can further solidify NFTs' role as a new reality for digital trust, providing businesses and users alike with a reliable, decentralized method for verifying authenticity in an increasingly interconnected world.

(Let me know if “NFTs for Authentication” is something that you are interested in, so I can expand on that topic in a future edition)

“Web3 doesn't have to be complicated”

Back in January, I shared my views on a report called “A simple technical guide to NFTs” (click here to see the whole thing).

In short, the report breaks down the most important aspects when it comes to really understanding what an NFT is, and how to “use” it, and also helps people navigate through terms like “minting” and “Royalties”.

But why are you bringing it back so many months later?

Well, I know most of you reading this are familiar with NFTs and have certainly minted your fair share of tokens.

However, it doesn’t hurt to (re)visit the fundamentals every once in a while, right?

And since we keep talking about “onboarding the masses” and “mainstream adoption”, education is certainly a key factor - and the report does a great job helping break some of the barriers.

SEC’s warning to OpenSea:
What it means for NFTs

The recent notice from the SEC to OpenSea, classifying (some) NFTs as unregistered securities, is a significant development but not entirely surprising.

(I’m pretty sure you have seen this all over the news, so I won’t go too deep into the technicalities of the process here)

When you’re the biggest name in the game, you’re going to be targeted first. OpenSea, as the top NFT marketplace (despite all its huge flaws), has become a convenient symbol for regulators to test their theories.

The SEC seems to be trying to figure out how to apply existing securities laws to NFTs, but I see this as just another obstacle in Web3’s journey toward broader adoption.

From my perspective, this is more of a speed bump than a roadblock. Web3 has faced challenges before - regulatory uncertainty, market volatility, you name it. Each time, the space has evolved, adapted, and continued to grow.
This SEC action feels like another chapter in that saga. It’s part of the process of innovation but not the endgame.

That said, this move by the SEC does create some uncertainty for NFT projects and platforms. Will this lead to more scrutiny of smaller NFT marketplaces?
Maybe. But I see this as a growing pain rather than a catastrophe. Much like when the internet first emerged and regulators struggled to catch up, the same is happening now with NFTs. These regulatory actions will eventually force clearer guidelines, which is something the space needs anyway.

Ultimately, OpenSea is being targeted because it is/was the leader in the NFT space.
I’m confident that Web3, including OpenSea, will adapt and evolve just as it has with every other challenge. NFTs are here to stay, and while this moment might seem daunting, it’s just another hurdle that will eventually be overcome.

See you soon.

#LFGrow
Diego Borgo