Non-fungible tokens (NFTs) are the most popular trend in the crypto world right now. Simply put, NFTs are a way to prove digital ownership of online assets. They bear similarities with cryptocurrencies such as Bitcoin, Ethereum and other alternate coins which have created an online enthusiasm.
NFTs transform digital works of art and other collectibles into unique, verifiable assets that are easy to trade on the blockchain technology. They are digital assets that depict ownership and are worth whatever a person believes their value is, and can vary widely in what is offered.
Although NFTs are currently speculative assets. Their existence dates back to 2017 when they were first minted on the Ethereum blockchain. According to JPMorgan, the NFT market has grown at an explosive rate as at 2021, with monthly sales hovering around $2 billion.
Nigerians are also moving strongly in the NFT direction. The ownership of digital assets in Nigeria is becoming increasingly popular, according to a report by finders, about 13.7% of Nigerian Internet users own non-fungible tokens (NFTs). This is just above the global average of 11.7% users.
Oyindamola Oyekemi, a 24-year-old Nigerian artist who creates portraits using ballpoint pens, sometimes in 2021, tweeted her drawing of Ethereum co-founder Charles Hoskinson. Hoskinson noticed the tweet and put it up for sale as a non-fungible token (NFT), or unique digital item with its own digital signature. By the end of the month, the tweet was sold for $6,300. Worthy of note is Jason Osinachi who sold two NFTs for $16,227 and $23,633 and thereafter quit his job as an academic librarian at the University of Nigeria, Nsukka to focus on digital arts full time.
The mind-boggling question you may ask is, how can individuals/entrepreneurs benefit from NFT. The sale of an NFT does not mean an ownership of the original work as the Intellectual Property Rights of the creator still reside with him. What the buyer merely owns is a blockchain receipt (digital files) that acts like a receipt showing that the holder owns a version of a work and not the actual NFT and this does not prevent the creator from selling copies of the work to other people.
Given that NFTs are fast becoming mainstream in Nigeria, there are a wide range of opportunities for startups and established businesses in the creative industry such as visual artists, musicians, game designers or art vendors that makes digital arts to test the waters with NFTs.
There are other ways, startups can make an income from NFTs one such way is by creating Digital music, for example, M.I, a Nigerian musician and rapper, last year indicated interest to launch an exclusive NFT collection. Foreign musicians such as Rock band Kings of Leon, also released an album as an NFT and earned more than $2 million from the sales.
The creation of Virtual real estates is gaining traction in countries such as USA, for instance, pieces of land in virtual worlds such as Decentraland are purchased and are sold at a higher value. There’s also the inclusion of Digital pets such as CryptoKitties, a game that lets you collect and breed one-of-a-kind digital cats.
Importantly, as NFTs are being bought and sold in record numbers. There’s a high demand for secure, encrypted marketplaces and brokerages that allow buyers and sellers to view, commission and transact NFTs. This simply means that there are also opportunities for startups to become NFT brokers.
Royalties is also a passive way of generating income. The NFT Royalty is offered for the original creator of an NFTasset every time they are sold. The recursive selling will generate the royalty fees to the creator in the event of valuing their creation and innovation. For example, if an artist mints an NFT art and is listed in the marketplace, the artist will receive 10% from every sale.
All of these suggest opportunities which could be utilized by startups/entrepreneurs in the creative industry. While the future of any blockchain experiment is unknown. It has however been predicted that NFTs are here to stay and will continue to grow beyond the art and gaming realm, especially if wealthy investors continue to invest heavily in it.
Entrepreneurs in the creative industry and potential buyers are encouraged to invest in NFTs as they make their first step into a revolutionary future. We however advice that they seek professional advice to guide and protect their interests as they deal in it.
Omoruyi Edoigiawerie and Victor Adegbite
This article is published by Edoigiawerie & Company LP, a full service law firm offering bespoke legal services with a focus on startups, established businesses and upscale private clients in Nigeria. The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances. Our firm can be reached by email at hello@uyilaw.com .
Photo Credit: Aljazeera