The Business of NFTs - Simon Dale, Managing Director, SEA & Korea, Adobe
Updated: Dec 1, 2022
Biz360.tv speaks to Simon Dale, Managing Director, Southeast Asia & Korea, Adobe on NFTs, how they can be authenticated and the opportunities it provides both to businesses and investors.
How has the current cryptocurrency situation affected the confidence of NFTs investors? Do you expect the sentiments to change anytime soon?
Non-fungible tokens (NFTs) are creating an entirely new economy of digital creativity and opportunities for creators and businesses alike. Without a doubt, they are revolutionizing the idea of investing in and making a living out of digital assets and/or art. NFTs first emerged between 2012 to 2016 and were eventually popularized over the years as they began to usher in a period of growth and become mainstream across markets. In 2021, we witnessed a surge in the demand for NFTs when global sales of nonfungible tokens jumped to more than $17 billion. Today, the NFT market continues to expand at an unprecedented rate, and we can see this happening in the Southeast Asia region as well.
For businesses and investors, many exciting opportunities in the NFTs space have yet to emerge. As it evolves, Adobe recognizes the fluctuating costs of NFTs that accompany this early-stage technology.
The recent developments of the space are wavering consumers, and while the prices will ebb and flow, the NFT ecosystem is here to stay. The pain points – such as determining authenticity, intellectual property rights, and unjustifiable high costs – will be addressed in time with regulations and innovative tools.
At the end of the day, NFTs offer a myriad of decentralized opportunities for creators and businesses alike. While there is still uncertainty surrounding blockchain technologies, the Ethereum Merge proves to be a confidence boost as evidenced by the recent spike in NFTs sales. At Adobe, democratising creativity is our mission and for the past four decades, we have been dedicated to helping artists and creators flourish in their work, regardless of platform and medium. Our participation in the Behance x Polygon integration, which offers a low-fee alternative to other NFT platforms, will allow NFTs to remain relevant and enticing for all.
What are the immediate challenges and concerns when it comes to transacting NFTs as a business, and how can businesses and investors overcome them?
Like many early-stage technologies, NFTs face several challenges. For one, NFTs are considered to be environmentally unfriendly as each NFT transaction traditionally involves a competitive proof-of-work mining process for validation, using large amounts of gas and electricity that mostly come from sources that emit greenhouse gases, negatively impacting the environment.
However, the industry is already looking for ways to make NFTs more sustainable and environmentally friendly. For instance, new blockchain platforms like Flow and Ethereum 2 reduce greenhouse gas emissions significantly, by using more energy-efficient consensus processes. Adobe’s Behance x Polygon integration also supports these energy-efficient blockchains to reduce the industry’s carbon footprint.
Businesses and investors can look to invest in platforms and marketplaces that make an effort to engage in sustainable or clean NFT projects.
Additionally, as digital assets that are hosted and transacted entirely online, NFTs also face cybersecurity and fraud-related risks. Whether you are a business or creator looking to mint an NFT or an investor looking to fund or collect NFTs, authenticity is an imperative concern.
To overcome this, Adobe has partnered with platforms like OpenSea to adopt the “Content Credentials” function, which is backed by the Content Authenticity Initiative (CAI). This is integral for businesses and investors to track attribution to the rightful owners accurately. With the CAI technology, artists can attach cryptographically verifiable, tamper-evident metadata to their work with important information.
By combining this attribution data with the ownership information attached to the NFT, collectors can ensure that their NFT is authentic and credited properly.
What kind of opportunities do NFTs provide businesses, and will it help shape the future of business operations?
NFTs are morphing into a significant and valuable digital asset class, especially as economic and social activities are increasingly ushered into the virtual, online space. In fact, for many reasons owing to its cultural and economic diversity, Southeast Asia is at the forefront of the industry’s growth.
For businesses, NFTs can serve as an effective marketing tool to raise brand awareness and increase customer engagement. Businesses can even create their own NFT collection and leverage this as an additional revenue stream. Projects involving digital collectibles have already been popularized across industries such as media, entertainment, and gaming – with renowned brands like Coca-Cola, Starbucks and Adidas already creating unique digital assets and merchandise.
Besides marketing, NFTs also offer potentially lucrative investment opportunities as well. With clearer provenance and technological innovations surrounding the space, businesses may be able to associate these unique, unreproducible digital assets with investment returns in time to come.
Adobe supports the development of the NFT market because we acknowledge the notable and unique creative opportunities that NFTs offer for all in the digital economy. We can expect NFTs to become an integral aspect of many business operations moving forward, as the shift to digital becomes even more prominent. From digital customer loyalty programs to NFT-powered games, the possibilities are endless.
Copyrights are already a complicated issue in the development of content and now we are adding authentication issues to the mix. How is the NFT industry navigating these legality and verification challenges? (e.g. If I take a photo of the Mona Lisa, can I claim that it's my work? And if Mona Lisa is alive, can she claim image rights?)
Copyright issues are an area of concern with any kind of content creation. Art and other assets in the digital sphere are particularly vulnerable due to the nature of the online space – copying, distributing, or selling digital materials are mere clicks away, which means that tools for attribution and authentication must be comprehensive and verifiable.
NFTs are a proof of authenticity and ownership in a unique digital asset, which means that sellers can prove that it was created and sold by a particular account, perhaps associated with an artist, but they cannot prove any other ownership beyond that. The added authentication NFTs provide is not aimed at addressing copyright ownership.
Creators and buyers alike will have to be mindful of any intellectual property rights issues that may arise. When it comes to NFTs, creators should ensure that they have the requisite rights and permissions, and buyers need to understand what rights they are obtaining with the purchase as well.
What are leading technology companies, such as Adobe, doing to support businesses and investors in the face of these challenges, especially when it comes to authentication?
As with any emerging technology, NFTs have enabled the most robust and exciting digital economy we have ever seen. Even with its challenges – authenticity, intellectual property rights, high costs, and environmental concerns – the ecosystem is undeniably a new economy for digital creativity.
Adobe’s “Content Credentials” (beta) function makes a significant difference in ensuring the authenticity and provenance of a digital artwork. For instance, if a business decides to create digital art via Photoshop, they can choose to preserve attribution throughout the entire creation process. Instead of simply stating the creator’s name as the owner of the artwork, metadata is used to track the entire creative process such that potential buyers will have greater visibility as to whether the seller of the NFT is the same as the Photoshop user who exported the artwork.
Artists value creative meritocracy, which the CAI offers in terms of transparency. This helps to generate greater and better opportunities in the digital economy, empowering creators to explore innovative ways to further their careers. For businesses and investors, this decentralized management can prove to be beneficial for investment returns, as unique pieces tend to drive higher prices and overall engagement levels.
Another barrier to entry into the NFT space is the initial cost – as it can be expensive due to the need to pay the gas price for minting an NFT. To alleviate this pain point, Adobe’s Behance has now integrated with Polygon – a more eco-friendly, and thus, more cost-friendly way, for creators to create NFTs.