NFT is an experience, not a product.
Written by: Ian Lee, Chairman of IDEO CoLab Ventures Compiler: Leo Young
The popularity of NFT (non-fungible tokens/non-fungible tokens) is back. Yes, almost.
The attention of the crypto asset community is shifting from DeFi, various fork imitation disks and $UNI to NFT projects such as $SOCKS, $MEME, $FAME, and $NEUE. Of course, there are also Rarible, Mintbase, OpenSea, Zora, NFT trading platform such as Foundation.
The concept of NFT has been around for more than two years, and when DeFi is attracting attention, the popularity of NFT hit again.
In the end what happened?
Just after Uniswap distributed 1,000 $UNI tokens to each Unisock NFT ($SOCKS) holder, the attention of NFT skyrocketed. I think this is not a coincidence. After that, the demand and prices of tokens such as $MEME, $FAME, $NEUE, and $TAPE also surged.
Some people say that NFT is the next big event in the crypto asset industry. Some people don’t know why. What about NFT?
Need to look beyond digital collections
Since the launch of Cryptokitties and ERC-721 two years ago, many people have intuitively believed that NFTs are tokenized art, collectibles, products and objects.
Compared with the size of the art market (US$64 billion) and the sporting goods market (US$5 billion), the NFT market is niche. Sales have grown exponentially in the past few months, and everything is technically possible (such as shared ownership).
Everything in the real world can be turned into NFT on the blockchain.
But is it necessary?
This leads to more important questions, such as what is the ultimate goal of NFT for the human world? What kind of NFT is worth developing on an open decentralized network ? Where will NFT appear? What impact will it have on human life in the next five to ten years?
These questions help us understand the potential of NFT, what kind of value it can create, and what NFT applications should be built.
NFT is an experience, not a product
IDEO is very optimistic about artworks , products and crafts . Therefore, our crypto asset investment team has explored various people-oriented NFT applications from the very beginning. We helped formulate the ERC-721 standard in early 2018, and built a variety of NFT prototypes in 2018 and 2019 to better understand the development direction of this field.
After years of exploration, I personally concluded that NFTs are just products (such as tokenized artworks, collections, or objects) that are not very attractive. And the design is built as a more advanced user experience , it is infinitely attractive.
For example, limited-edition virtual NFT badges can be sold in the market, and holders can use them to enter Telegram private groups, allowing artists and participants to connect with each other, allowing the community to grow and develop. In contrast, selling only NFT digital art and collections is much less attractive.
Compared with buying and trading NFT physical products, buyers can build personal identities based on the products they buy and hold, and use identities to form new social networks and communities . Members can explore, interact, and communicate with each other in new ways. The experience is more meaningful.
Treating NFT as an experience rather than a product will completely reshape the NFT design and open up the realm. I believe this is important for NFT to release all its value and get out of the limitations of tokenized art collections. Therefore, we can discover and build value applications of new technical standards.
Here are some thoughts.
Identity and reputation
How can users build new digital identities and reputations by buying, holding, and trading NFTs? How can I share and discover the identity and reputation related to NFT transaction history, and connect with others, other organizations and brands? How can new users and consumers get an experience they don’t have now?
For example, if I buy all limited edition sneakers NFT, what does it mean to me? Especially if I bought Nike and Common Project NFT, would you know more about my personal preferences and personality? If I quickly dumped Nike NFT and kept holding the Common Project NFT , how would this make you judge me or someone like me? What can you do with this information?
NFT can create new identity, reputation and self-expression for users. When NFT no longer as a separate product but an integrated experience (aggregated experience), the picture will bring new users and communities – they like it or not, preferences, desires, expectations, etc. can be verified through the presence of a chain.
On the current Internet, such information is controlled by companies such as Amazon, Google, and Facebook. The information is not public and cannot be used by outsiders. And NFT and encrypted assets make this kind of information disclosure possible.
Community member
How can users who buy and hold NFT prove that they belong to a certain community or community member? How does the community divide members according to NFT purchase date, scarcity or level? Can NFT allow the community to not only prove that members can also form an organizational structure?
For example, IDEO CoLab Ventures issued an NFT to distribute to all of our portfolio company founders, LPs, partners and friends. With the NFT we sent, you can enter the Discord private group (using Abridged’s Collab.Land) to contact each other and help each other .
We can also issue different NFTs to portfolio company founders, LPs, partners and friends, each with different rights and privileges. IDEO can use these NFTs (such as cooperating projects with us), or mortgage I DEO CoLab tokens in exchange for NFTs, making NFTs more scarce and special, and get advanced design support, office hours, access to our advanced plan and other privileges.
NFT will create a new type of community membership and a new organizational form. The current experiment is to use personal and community tokens, and NFT will lead to the next stage.
Collective experience
How do users receive NFT when participating in activities, meetings, games, courses, meetings, and plans? How can these experiences be shared across national borders in a new way as NFT on the Internet? How can these experiences be used to recommend or discover new experiences and become part of the community?
For example, every encrypted asset industry conference, event, hackathon, accelerator, leisure event can issue NFTs (such as POAP tokens) to participants. These tokens can be brought together to become a new type of social network , where members can search for, contact and help each other. Speakers, project promoters, and hackathon winners can all receive special tokens, allowing everyone to subdivide the community and get a more intimate shared shared experience.
NFT will allow everyone to build on- chain experience historical data , which can be more granular for searching and connecting with others. There are many scenarios for this application: work, school, social activities, travel, hobbies, politics, close relationship groups, retail, entertainment, and so on.
Combinable product derivatives
How do consumers use and interact with NFTs representing retail products ? How do companies use NFTs that represent industry products ? How to use product rights (essentially derivatives) to improve consumer or enterprise end-user experience? Can the NFT design mechanism enable consumers or enterprises to obtain better, faster, and cheaper products? Can NFTs representing two different products be integrated to customize and upgrade the original product? Due to the non-speculative nature of these types of NFTs and their value to the consumers or enterprises that obtain the products, can they promote the popularization of encrypted asset applications?
For example, I bought the NFT of a high-end T-shirt , but due to the large number of people who bought it, and the bulk order increased before the NFT was exchanged for the physical T-shirt, the unit price dropped. After that, I took an NFT and merged it with the NFT of a digital artist, and printed his artwork on a T-shirt to form a new NFT (representing a T-shirt printed with a digital artist’s work), which can be exchanged for physical objects or on the open market Sales .
NFT will give birth to new types of businesses and supply chains as derivatives of composable products. Saint Fame DAO , Zora and Foundation are early examples of this trend. In the future, we will see models that focus on consumers and B2B products and supply chains , such as in customized clothing, games, media, entertainment, aviation, food and other industries.
Moreover, these NFTs are less likely to form speculative activities and can be accepted and acquired by more consumers . Therefore, it will help encrypted assets to spread to more people faster.
The new era and model of NFT
We treat NFT as an experience rather than a product, and a new model of end-to-end experience design emerges. NFT identity and reputation allow everyone to connect with each other and form membership relationships. Then promote the community to create new experiences and products to strengthen user identity.
74% of Americans (especially millennials and Zoomer) value experience more than products . Once an experience-focused NFT emerges, it will release new value, pushing crypto assets to the mainstream in an unprecedented way.
We just need to start paying attention and diversify the design of NFT.
