Where commerce meets blockchain
2021 caught us up on emerging trends in the tech space: Metaverse, blockchain, NFT, Web3, and more. Let alone the investment aspect, in which I have no intent to go further into, I was drawn to a decentralized future of the web. Over on OpenSea, non-fungible tokens are blooming for trading and exchange, so does the development of virtual worlds where you can stand as a sum of yourself, or as a branch of your identity. Granted, we can easily become someone else in the digital webspace. What’s enthralling is how this digital identity gets carried over in real life, through collections of interests, commerce, and communities.
Why do NFTs attract digital artists?
Collecting and trading digital art is no novice notion. Take DeviantArt as an example, since its launch in 2000, the platform welcomes artists to put up their work, connect with collectors, and distribute copyrighted art assets such as photos and videos. Today, any digital art can become an NFT and be featured on marketplaces like OpenSea, Rarible, and Foundation. Staring at digital art itself, you can barely classify what it is, where it comes from, and how authentic it is to its original creation. Without blockchain technology to declare the art’s ownership and distribution, a copy stays as a copy. Now, what’s new for the same digital art in the blockchain space?
The authenticity of digital art is truthfully preserved. A prospective owner of the artwork can initiate the authentication inquiry and gain a firm answer through its lifetime transfers instantly. While kicking out counterfeits, artists can gain shares (generally, 5–10% of the sale price) on the resells, known for “NFT royalties”. This motivates artists to mint and sell their digital arts, and be recognized with greater visibility on social platforms. For instance, last year Twitter rolled out NFT Profile Pictures to iOS users, which helps users to connect their crypto wallets and change their profile pictures with verified NFTs.
What spins out of our understanding is to comprehend that some JPGs become exceptionally priced JPGs. Who knows how much the next collector is willing to pay? Just to number a few, CryptoPunk #2338 is sold for $4.32M, Ocean Front is sold for $6M, and Bored Ape Yacht Club #8817 is sold for $3.4M. Collecting or creating digital art has moved far beyond building connections, leading to subsequent rational and/or irrational decisions for generating profits. You can see NFTs’ presence in taking out loans, making fractionalized ownership possible, forming staking pools in the trajectory of monetization.
What do NFTs mean for business players?
When we zoom out from the creator level to the business level, the disruption in the digital art space with NFTs is just a face scratch to reveal the potential of its infrastructure — blockchain technology. There’s so much to talk about as I’m also wrapping my head around this body of knowledge, there are many emerging trends for product designers to envision and pilot.
1. Distribute full product ownership
The upward market for reselling NFTs and the cost from “minting” (i.e put an NFT on the Ethereum blockchain) put luxury and high fashion brands in a great position to take the first bite. In Dec 2021, Nike acquired RTFKT to accelerate towards creating NFTs for forthcoming sneakers, in their formal patent efforts on CrpytoKicks, a block-chain based system that enables consumers to identify and buy a genuine pair of shoes.
To ground some of us who may not live in the sneaker world, this is a paradigm change to shift customers’ shopping behaviors from waiting in long lines for new drops in stores, as well as purchasing second-hand sneakers from marketplaces that provide authentication services like StockX. As an owner of a pair of second-hand Nike React Element 87, I know I’d prefer getting first-hand verification from brands, rather than marketplace middlemen or resellers.
2. Track inventory from end to end
Continuing with this sneaker story (or any physical product, really), blockchain sheds light on making inventory traceable from one source of truth “immutable records”.
A personal story, when the pandemic first threw us into the swirl in early 2020, my partner and I had to drive from one department store to another in our local area to buy face masks. Though almost every store associate we interacted with was helpful to check up inventory and provide the most accurate information at hand, there was no guarantee. End of the day, we had to rely on “luck” to grant us a chance when the online inventory showed zero, but in-store inventory was positive. I can’t put that frustration into words, in the shoes of a customer who doesn’t own a vehicle and a full gas tank to afford a stake in health and wellbeing. That is the chain effect of information opacity and discrepancy traveled down systems and operations, wrapped in a distanced notion from our day-to-day engagements — the “supply chain”.
To the nature of blockchain technology, immutable records help us better understand “where my product is” and “where my product is from”. One seeks to provide a timely answer on status updates (availability, location, date, etc.), while the other provides full transparency on provenance (yes, from a barcoded package of food to its home farm). Through distributed ledgers to exchange, approve, and validate data to form meaningful insights, we can trust what we buy, know when we get the products, and inform payment disbursements at large — with guaranteed delivery & satisfaction. “Smart contract” and forms of agreements, we’ll dive into them another day.
3. Alleviate or amplify the “out-of-stock” anxiety with drops
Black Friday Cyber Monday (BFCM) was just a few months ago. Holiday sales were taking a hit this past year for many reasons, cargo ships afloat offshore, 7% inflation since 1982, buy-now rather-than-later mentality. and more. In this shopping race (not just for stocking up toilet paper and sanitizers, hopefully!), forecasting product availability is almost as critical as having products on the storefront display.
As more commerce brands are warming up to the idea of tokenizing physical products with their digital twins (NFTs) to ensure authenticity and boost supply chain efficiency, loyalty also follows into play.
“All consumer products — that can’t be eaten — in the next 10 years will have digital twins. They will have NFTs.” — William Quigley, co-founder of stablecoin Tether
NFT drops, as the name implies, refer to releasing NFTs with a stamp on date & time. For example, as a collector, you can use an NFT calendar or watch up for forthcoming drop sections in NFT marketplaces to formulate buying decisions before your favorite NFTs become available (minted). This gives brands a great opportunity to cater towards their niche & most loyal customers to get a foot into the party earlier. Does it sound familiar? That calls out some of magics that Disney’s FastPass, Disney Genie+ now sprinkled over fan customers over the years.
If NFT drops for upcoming product releases seem still bold and deficient for marketing, let’s just say — image sells.
What is the takeaway for designing in the blockchain space?
First and foremost, don’t panic.
The tech world always has something new to surprise designers, who wave the wand behind the curtain and introduce new experiences to the web. It’s an everyday challenge to comprehend what’s probable, identify pitfalls, and bring thoughtfulness into a miraculous vision to guide us working backward. If we’re so attached to “new is better”, our excitement may cloud the way of seeing what should have been considered. Security, privacy, confidence, care, and control will carry through the use and development of any technology, as a user always earns a seat at the table.
One fun exercise I’d recommend is this UX Challenge — Ideate on the Human-centred, blockchain-powered future user experiences, designed by Vy Alechnavicius, a UX leader and practitioner based in London. In this exercise, you may face great discomfort, ask a ton of questions, and fail tremendously in the end. Blockchain can be the wrong solution to solve the problem you want to tackle. Well, so be it.
Shan Shen is a product design leader in the tech space, who loves turning ideas into meaningful experiences, and carries the guilty pleasure of collecting paper books.