Understanding Non-Fungible Tokens (NFT), Accelerating Adoption in Indonesia

Fever non-fungible token The global (NFT) that has occurred since the beginning of this year has opened up opportunities for local players to offer easy ownership of (digital) art objects that have been absent for collectors. As of this year, there are at least four NFT marketplace platforms that are already operating in Indonesia. They are ShopMall, Collectible, ChickenKingNFT (owned by KFC), and Digital Paras each of which offers its own unique value.

According to data Wette.de, the global NFT market has market cap of $43,08 billion and trading volume of about $3,6 billion. Meanwhile, according to DappRadar, NFT's sales volume jumped to $10,7 billion in Q3 2021, up more than eight times from the previous quarter.

The world's largest NFT marketplace, OpenSea, recorded sales volumes of up to $3,4 billion in August 2021. Activity remained strong even in September when global stock markets faltered. Rising cryptocurrency prices during the COVID-19 pandemic is often cited as the driver behind the growth of the NFT market — as people use cryptocurrencies to buy NFTs — but analysts say crypto assets have value, regardless of market conditions.

As of October, Beeple still ranks first on the list of top NFT artists with a total artwork value of $145,03 million. According to Cryptoart.io, he has sold 1346 works of art so far with an average sale value of $107.752. The second-ranked artist, Pak, follows at a distance with a total of $56,41 million.

Understanding NFTs

From various literature, NFT is easiest to understand as unique digital assets. These assets exist across a variety of industries, from digital art, real estate market virtual, to collectibles, games, and much more. Basically, all types of media can be minted or tokenized and converted into NFTs: art, trading cards, memes, gifs, video clips, audio clips, tweets, this article — you name it. Once tokenized, these assets can be bought, sold, and traded using cryptocurrencies.

Why is the world jumping into NFTs in droves? According to entrepreneur series United States of America Gary Vaynerchuck (or “GaryVee”) , There is The three added values ​​offered by NFTs are utility, access and social currency. If you understand the concept behind membership cards, rewards credit cards, tickets to special events for VIP members, meaning you understand NFTs.

“If you ever buy skin or other virtual items for your video game, you understand NFTs. The reason you want that item is to be of utility in a world you care about, or to have influence and bragging rights among your friends and others. “NFTs will extend the same utility and ‘flex’ social currency to everything else,” explained Vaynerchuck.

He continued, the reasons people buy NFTs are the same reasons people wear designer logo clothes, drive luxury cars, or hang pictures on the wall with important people. It's the same reason people care about blue ticks on Instagram.

“Years into the future, I believe that we will all be checking each other's digital wallets and bonding over shared interests in our NFT purchases. Everyone will have some kind of NFT project, the same way everyone has a social media account.”

On the one hand, NFTs will help ordinary people realize their true destiny as artists. This method is similar to social media platforms that bring people together an influencer. NFT will unlock pintu for so many people with artistic inclinations to explore paths they never thought possible.

The next interesting thing is that NFTs are revolutionizing IP ownership. The fact that artists will continue to earn royalties from the resale of their digital work will empower content creators in a way never seen before. Each popular NFT marketplace has its own rules and preferences for managing and paying royalties.

On Rarible, an artist can tokenize and organize NFT sales themselves. For example, when creating listing in Rarible, he can set what percentage of royalties he wants to earn on each resale secondary market.

In the first stage, after minting a digital art product for the first time, the artist gets all the sales after deducting the platform commission.

On subsequent sales, the artist will earn a 20% commission on each sale, even if he or she is no longer directly involved in the sale. Unfortunately, when items are moved to another NFT platform, for example OpenSea, the royalty scheme is no longer valid and cannot be transferred.

Ideosource Co-founder and Managing Partner Edward Chamdani explained that royalties are the most important thing for every creator. He gave an example in the music industry, in the past the medium for listening to music from your favorite musicians was via vinyl records, cassettes and CDs. As time went by, iTunes and Spotify started appearing which actually helped the supply chain to the end consumer.

However, its existence killed the supply chain that had previously been formed because musicians could no longer print cassettes to CDs. In the end, the music label was also affected and finally went out of business. In fact, the musician's biggest income comes from selling physical goods because that is the source of his royalties.

"Musicians have not been protected since ancient times, from the beginning they received royalties from every CD sold, now the presence of digital platforms means they cannot produce CDs. If you calculate the royalties you get from digital platforms, it's more than that long term, because when compared with CD sales revenue "It's bigger in front," explained Edward.

The presence of royalties is allegedly the driving force why many artists are interested in entering the world of NFTs. Apart from Rarible and OpenSea, there are many marketplace choices with the unique propositions they offer. These include Axie Marketplace, CryptoPunks, NBA Top Shot Marketplace, SuperRare, KnownOrigin, Foundation, Nifty Gateway, Solanart, and Hic Et Nunc.

This last platform, according to monitoring DailySocial, has become a favorite destination for local artists to sell their work. One of which is the band Souljah which uses NFTs to market the artwork of the song entitled “Keep On Moving”. Souljah released a limited number of never-to-be-released NFTs again on September 30, 2021 via his own website and selling digital merchandise via Hic Et Nunc.

NFT with local wisdom

Hype NFT makes people flock to make this platform an alternative investment commodity, especially supported by presence secondary market on multiple platforms marketplace popular. However, NFTs are still a very new market, so you need to be extra careful.

Behind these risks, there are many platforms marketplace global environment which is less friendly for Indonesians who are still unfamiliar with the world of NFT. To purchase a work on an NFT platform, collectors need wallet (wallet) that is compatible with the blockchain network that supports the NFT you wish to purchase via marketplace choice.

If you plan to buy and sell NFTs via an Ethereum-based blockchain platform, a compatible wallet is required. For example, OpenSea is compatible with Metamask, Bitski, Fortmatic, WalletConnect wallets and others. Just like filling money in a wallet, you need to fill the wallet with a certain amount of crypto assets before buying, registering, or minting an NFT. Additionally, it is necessary to find out what crypto assets are used by marketplace that you want to use.

Lastly, create an account at marketplace. In most marketplaces, the process of registering, creating NFTs, selling and buying on the platform incurs blockchain network fees, the amount of which depends on which blockchain-based system is used.

Majority marketplace NFT only accepts payments with Etherium coins. There are others that accept fiat currency and more standard payment methods, for example PayPal, but this is still rare. Because of these conditions, NFT transactions can be said to tend to be expensive when using ETH. As of November 10, 2021, 1 ETH costs IDR 67,6 million ($4.808).

This gap was then exploited by Collective as a player marketplace New NFTs that design platformis as friendly as possible so that NFTs can be adopted quickly. Collective adopts NBA Top Shot to Indonesia by utilizing fiat currency via payment gateway for NFT transactions.

Kolektibel CEO Pungkas Riandika explained that every NFT transaction is carried out in fiat currency and the payment is integrated with popular digital payment instruments, such as GoPay, OVO, Virtual Account, debit/credit cards, so you can pay via Alfamart and Indomaret.

Collectibles are different from marketplace Another NFT because it stands on the network public blockchain Vexanium for recording NFT ownership. Vexanium is said to be the only one public blockchain native to Indonesia with a legal entity in the form of a foundation (Vexanium Teknologi Nusantara Foundation) created by Danny Baskara.

Vexanium does not charge any fees at all. Different from other public blockchain networks which charge gas fees when transacting NFT. This strategy can be implemented because Vexanium uses the DPOS mechanism (delegated proof of stake). This is one of the variants of proof of stake which provides operational benefits that are very energy efficient and environmentally friendly.

“Next, because Vexanium has the ability to approach decision makers (block producer) in the Vexanium DAO entity. Decisions such as determining costs (resource fees) related to NFTs. These things cannot be found in public blockchain others," he said DailySocial.

According to Pungkas, this step is expected to be breakthrough for Indonesians because they can directly collect NFTs in an easy way. "If you pay attention, in DeFi to make transactions using crypto it requires a long process, one of which you have to have wallet, there is gas fees, etc. That makes NFT adoption difficult.”

Collective's approach differs from its peers in terms of payment methods. TokoMall only provides TKO crypto assets for NFT exchange, Paras Digital which uses NEAR, and ChickenKingNFT which uses ETH. All three utilize integration with the MetaMask wallet for transactions.

Market differentiation

Each marketplace These NFTs have their respective target markets to popularize NFTs in Indonesia. TokoMall, for example, targets local creators, consisting of artists, digital artist, and a reputable creative community to dive into NFTs. So far there are 40 partners who have collaborated, including Nevertoolavish, MaximallFootwear, DAMN! I Love Indonesia, Banyan Core, Si Juki, ONIC E-Sports, SoreSore, Mr. Kinur, Karya Karsa, Jakarta Metaverse, and Museum of Toys.

In this way, each creator who already has a fan base can more easily attract the masses to learn more about NFTs. TokoMall also allows collectors to exchange their collected NFTs for physical merchandise from partner merchants on TokoMall through the company's newly released TokoSurprise feature.

“The difference with other platforms is because what we encourage is digital meets reality", so these collectors have the opportunity to exchange NFTs for real items, so it's not just a digital collection," said VP Marketing Tokocrypto Adytia Raflein to DailySocial.

Raflein also said that the presence of TokoMall is expected to encourage artists and brands to be creative in the NFT world with a local platform and much friendlier costs, rather than having to use a global platform.

In the TokoSuprise mechanism, creators who release a limited number of NFT works are marketed through TokoMall. Every collector who buys the work has the right to exchange it for physical merchandise at TokoMall. In the future, TokoMall will collaborate with more creators from various business verticals, such as consumer companies to the e-sports industry so that NFTs can become more popular. mainstream in Indonesia.

Since two and a half months TokoMall launched, currently has more than 8.500 collectors, more than 5 thousand NFT works produced by 40 official partners. In terms of sales, more than 250 NFTs have been recorded with a transaction value of IDR 200 billion.

Meanwhile, at the stage of Kolektibel's emergence, the company entered the basketball sports segment through its first partnership with the Indonesian Basketball League (IBL). For IBL, this innovation is a way to bring basketball fans and IBL closer together with its athletes. IBL prepares match video documentation, carefully curated based on important moments in the match.

Shortlist the moment is visually repackaged and registered within blockchain smart contracts, which means that each asset has historical ownership data recorded. This opportunity also opens up new additional income for athletes and clubs through NFT sales.

After IBL, Kolektibel will target other IP owners who have various assets categorized in sports, creative, legendary moments and culture. If you look at the derivatives, there will be more and more NFT assets that can be collected by collectors. “Sport has fast dynamics and is close to society. "Therefore, this category is our step to understand further what NFT development will look like in the future," added Pungkas.

As for Digital Paras ambitious to be a pioneer of transformation in digital collectibles, including games, comics, toys, and digital works via capabilities Smart contract and blockchain technology. Therefore, the target users are pop culture enthusiast, like fandom and Gamers with a focus on the Chinese and Southeast Asian markets.

Final, ChickenKingNFT leveraging the already strong KFC brand to attract new collectors. Through its website, ChickenKing offers 4.848 uniquely generated limited edition NFTs. The story of the Chicken King, refers to 6 chickens originating from 6 different backgrounds and characteristics, who compete with each other to prove which of them stands as the best chicken in the universe.

KFC offers every member card holder the opportunity to get discounts on physical and partner store merchandise, attend exclusive community meetings, and other offers. Currently, ChickenKingNFT can be purchased via OpenSea.

First step towards mainstream

The presence of the platforms marketplace This locale paves the way to more use case other NFTs. On the global stage, many IP owners from various industry verticals have entered NFT, such as gaming, fashion, music, logistics, real estate market, identification and documentation, and many other things. This means that all this is just a matter of time until it happens in Indonesia.

"This technology [NFT] will enter the mainstream because it is time," added Edward.

Vaynerchuck believes that NFTs are representative of a major cultural shift. History teaches humans that with change comes mass skepticism and confusion. Many who scoff at the idea or viability of NFTs simply don't understand the larger implications. Like the concept of online dating in the 90s or riding in a car with a stranger (Uber and Lyft), every idea is “crazy” until it isn't.

NFTs will continue to be seen as a “fad” by those who have not changed their mindset to embrace where the world is headed.