Tech panel examines the future of NFTs • St Pete Catalyst

While the price of non-fungible tokens (NFTs) representing digital art has fallen precipitously after soaring last year, a panel of experts believe the future is still bright for this innovative technology.

Ken Evans, general manager of the Tampa Bay Innovation Center, hosted a virtual TECH Talk on Tuesday about what the future holds for NFTs. Angela Dalton, founder and CEO of Brooklyn-based Signum Growth Capital, and Nicholas Grous and Frank Downing, analysts for St. Petersburg-based ARK Invest, joined Evans on the panel.

Evans started the discussion by asking when the panel thinks they will see widespread adoption of NFT technology among businesses. Downing said he agrees with information technology research and advisory firm Gartner’s recent assertion that inflated NFT expectations have peaked.

“There’s been a huge bull market in crypto over the past two years, and we’ve seen a lot of innovation, a lot of investment, and a lot of ideas, and we need a lot of follow-up,” said Downing. “So there’s a lot of focus on the space, and that’s really good, and I think there’s going to be a lot of building going on.

“But there is also a lot of foam on the market.”

Downing compared the current NFT market to the initial coin supply boom and bust of 2017-2018. He said that startups have realized that launching a token is an effective method of fundraising and money is flowing into the space before adequate product development.

While there are early use cases for NFTs, such as digital art and games, he said the industry is learning as it goes without a playbook to follow.

“I think as the broader markets have sold crypto, especially in the NFT space, we will see some consolidation, and some of that foam will die out,” Downing said. “It’s hard to put an exact timeframe, but in the two to three year period, you’ll see…these big ideas that we’re talking about now come to fruition.”

Grous called NFTs an interesting mix of investment and consumption not typically seen in the digital realm. The technology provides proof of digital ownership, and people have won — and lost — significant amounts of money using it as an investment tool.

In a May 11 article, CNET noted how the high-profile Bored Ape Yacht Club NFT collection has lost about half of its value since April. However, his digital art still sells for hundreds of thousands of dollars, and shares of streaming giant Netflix have also halved over the same period. At press time, Amazon shares are down 25% in the past month.

When it comes to long-term usefulness, Grous called digital art just the tip of the NFT iceberg. He compared the technology to the initial launch of Apple’s App Store, which “caused a massive shift” in the way people consumed and interacted online.

“If you had asked anyone back then what the App Store was going to allow,” Grous said. “I don’t think anyone could have told you that there would have been Uber and Lyft and all of these multi-billion dollar companies that would have sprung up because of this simple shift from desktop to mobile. I think that’s is where we are in the NFT space, where we just launched this “App Store”, this ability to create utility around digital property.

“In 5 to 10 years, we’re going to have this massive boom in apps and utilities that’s going to come out of this simple idea around digital property.”

Dalton said that while she thinks the speculation is a hype cycle, the technology is just beginning to prove itself through digital art. She sees the Metaverse as a neighborhood, with games like Fortnight serving as streets that audiences will wander down to watch a movie or interact with friends. In a virtual community, Dalton added, everything around you looks like art.

Dalton also used established technology as a benchmark. She explained that in Web2, the current iteration of the internet, invisible protocols allow people to move freely between websites. In Web3, which developers are building, she said communities solve specific problems using blockchains, but interoperability between blockchains is still in its infancy.

“Yeah, it (NFTs) has become very hyped, but it’s limited by the fact that we don’t even have interoperability in those NFT platforms yet,” Dalton said. “We’ve seen some really positive indications that we’re moving forward.

“So I think the next wave will be much more interesting for the hundreds of millions of people and not just a few speculators.”

To achieve mass market adoption, Grous said transactions with digital tokens must match the simplicity of e-commerce. He said purchases should be processed in fractions of a second, without the “fear” of having digital wallet keys and the potential loss of assets.

He added that consumers would appreciate developers recreating some of the Web2 frameworks in the decentralized Web3 platform because of familiarity. Grous noted that this is a common debate at ARK during brainstorming sessions, and he believes that greater centralization will lead to widespread adoption of emerging technologies.

“It’s something we have to be very careful with over time and build, because centralization comes with convenience, but also with points of failure,” Grous said. “So it’s a double-edged sword that way.”

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