Could eBay NFTs transform the market?
The arrival of non-fungible tokens (NFTs) in the midst of the cryptocurrency phenomenon was always bound to attract a wide range of responses, ranging from those who see the whole business as a sham and a scam to others who regard this as the future of currency and commodity trading.
Part of that may arise from a lack of full understanding of NFTs, or alternatively a simple uncertainty at this early stage about what role NFTs will evolve to have in the wider economy or simply niche parts of it.
To read some people would be to fall under the misapprehension that the NFT marketplace is already starting to crumble as an emperor with no clothes on is exposed.
For example, CNBC TV recently delivered a gloomy report that the number of NFTs being traded has dropped by nearly 50 per cent, quoting data from Chainalysis. It also said that the value of sales fell from US$94.9 to US$24.9 billion in 2021.
While this might be interpreted by some as a sign that NFTs are a short-lived phenomenon that is not long for this world, others might suggest the initial surge in investment might have come from those seeking to get a piece of the action in case they did enjoy a meteoric rise, subsequently slowing down when the emphasis switched to the long-term benefits of having unique assets.
The idea that NFTs are a short-lived phenomenon, however, is not an interpretation that would sit easily with the latest big development. No less a prominent player in the digital economy than eBay has now got involved, joining with the OneOf platform to offer its own first collection of NFTs. Considering eBay knows a thing or two about trading stuff, this is big news.
OneOf is a platform that mainly attracts fans of music and sports, so it is no surprise that NFTs focused on these themes should take centre stage. A series of 13 NFTs, titled ‘Genesis’ is being created, but this doesn’t feature either the first book of the Bible or Phil Collins; it is actually a series of sporting images.
One of the most notable of these is a choice of three 3D renderings of Canadian ice hockey superstar Wayne Gretsky pulling off one of his famous moves on the rink. Gretsky’s image, like the others, will not be totally unique, as they are drawn from the covers of Sports Illustrated. It is not yet clear whether eBay or OneOf has secured the rights to these.
Speaking in a press release about the move, eBay's vice president of collectibles, electronics and home, Dawn Block said: "NFTs and blockchain technology are revolutionizing the collectibles space, and are increasingly viewed as an investment opportunity for enthusiasts."
She added that the partnership will make “coveted NFTs more accessible to a new generation ofcollectors everywhere,” concluding: “This builds upon our commitment to deliver high passion and high-value items to the eBay community of buyers and sellers."
Mr Gretsky was also quoted, saying how honoured he was to be on the first eBay NFT token, 40 years after his image appeared on the cover of Sports Illustrated.
While the choice of Gretsky may spur plenty of enthusiasm from fans and the other 12 sporting images could do likewise, the biggest impact may come from the fact that NFTs are being backed by so big a player in e-commerce as eBay, with its 142 million buyers and sellers. As votes of confidence go, this is arguably almost as big as it gets.
At the same time, some may argue this makes perfect sense. After all, a lot of the items traded on eBay are collectibles, items of rare or even unique qualities. If limited edition records, clothes, sports goods or signed items can be sold on the platform, then why not NFTs, which draw their value from their sheer scarcity?
The announcement by eBay has not come as a shock, of course. It has previously talked of adopting NFTs and is considering accepting cryptocurrency as payment. But this is the vote of confidence that could dampen pessimism such as that seen in the CNBC report.
Ultimately, this could change the whole conversation about NFTs, but the future prospects for them will not hinge just on what eBay does. Others see a positive future for NFTs in the form of assets that actually have a utility value rather than simply being an item with no attributes other than scarcity and collectability.
As NDTV reports, there are moves to make NFTs multifunctional in just this way. Starbucks, for example, is planning to launch its own range of NFTs that it says will make each of them a "programmable, brandable digital asset, that also doubles as an access pass."
This would act as a means of creating a community and rewarding customer loyalty, thus turning NFTs into a kind of digital loyalty card, social network and unit of cryptocurrency all at the same time.
It is not even just commercial firms doing this, the report noted, observing that the tiny state of San Marino had launched a Covid vaccine passport in July that used NFT technology. The design was intended to make the passport applicable everywhere, without needing a specific mobile application as was needed for the EU digital Covid certificate used in neighbouring Italy and across the bloc.
Of course, one feature of NFTs with dedicated uses like this is that they would not be so tradeable. After all, one cannot buy and sell a Covid vaccine passport as this would mean the system being abused by the unvaccinated.
The Starbucks situation may be a little more complex. Obviously, a personal loyalty and community development element of a Starbucks NFT would not work if that could be shifted to another person. On the other hand, if the NFT carried with it the benefits of loyalty, such as the equivalent of points on a loyalty card, then the purchaser could inherit these and turn it into in-store rewards.
Whether it will make sense to mix NFTs with the kind of provisions an existing loyalty card or social media page would already offer is another matter, but the idea shows that there is some innovative thinking taking place that may render many current predictions about the future of NFTs moribund.