(AF) Headline-grabbing news such as musician Grimes making $6 million for non-fungible tokens – NFTs – through to the founder of Twitter, Jack Dorsey, selling his first tweet for $3 million, has seen blockchain burst onto the world stage as a clear enabler of trust.
Jack Dorsey’s tweet is immutably recorded on the blockchain so there is no way anyone can copy or forge it or indeed steal it; we can trust that it is the genuine article.
Blockchain has been an important developing theme for us over the last two years and, as a team, we have invested time learning more about it with a focus on the way in which it will likely automate trust in industries such as financial services, document management and signing, and company administration.
While blockchain is often discussed as the technology underpinning cryptocurrencies, it transpires it has made its mainstream appearance through the use of NFTs, as described above.
Perhaps the most astonishing sale to date using NFTs was that of digital artist and graphic designer Beeple’s ‘Everydays’, which sold for $69.3 million through auction house Christie’s. This extraordinary price, one of the highest ever paid for a living artist, clearly shows the value of authentication in an immutable form. People will pay a significant premium for assets that eliminate any potential for fraud, in our view.
NFTs are part of the Ethereum blockchain, a protocol that has been developed not just for cryptocurrency issuance but also for storing additional information, allowing for the creation of smart contracts and asset repositories. In fact, anything that requires a clear proof of ownership can be placed on the blockchain.
Unique digital identity
One real world example of this could be concert ticketing. Currently rife with fraud, this entire industry could be fully trusted in the blockchain world. Every ticket issued for an event would be placed on the blockchain with its own unique digital identity.
Not only could this eliminate ticket fraud, it may allow for a whole new level of event management. Using smart contracts, the terms of the ticket could also be managed. For example, it could be explicitly written onto the blockchain via a smart contract that a ticket cannot be resold and so it would be impossible to trade tickets on.
The ways of extending this are limitless and the disruptive effects will be far reaching, in our view. In the case of a blockchain decentralised ticketing system, there would be no need for a Ticketmaster or Eventbrite.
The process of placing property assets on the blockchain could significantly simplify the process of buying and selling property – the future of traditional conveyancing would be in doubt.
Simply put, wherever trust is a required part of processing asset ownership, blockchain could replace the need for lawyers or trading hubs like auction houses or ticketing platforms.
We have long believed blockchain will revolutionise the process of trust in business. NFTs in the art world show what can happen when the system is created for that process.
Over the next 10 years, we are likely to see significant changes in the way transactions of all types are recorded.
Research company Global Market Insights has estimated that the blockchain market will grow at a compound annual growth rate (CAGR) of 70% from 2020 to 2025, giving a market size of $25 billion. In our view, the growth and opportunity is clear and we believe the order of magnitude is likely to be highly underestimated.