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Facilitating Marketplace Extensibility Using Non-Fungible Tokens

      With the recent market surge and interest in non-fungible token (NFT) technology, many new industries and ideas have begun to circulate regarding its possible use cases. While many of these technologies are flourishing in the infant stages of the new Web 3.0 era, the crypto industry as it stands remains rather a niche and has yet to produce large sums of practical implementations that show the true potential of NFTs. Much of the new implementations are over-complicated and very specific to special markets like the up-and-coming play-to-earn style gaming. These types of markets are only available to customers who have an interest in Web 3.0 technology and are often created by companies with no background information or proven history of success (barring Atari-backed project “The Sandbox”). If Web 3.0 really is the future of our internet, the market must force itself to reach beyond the metaverse and into traditional industries.

Concept:

      We recently had a pitch with a potential client in the cannabis industry, which led us to think about bridging the gap between NFTs and the industry. The concept was simple: create an NFT that represented membership into a certain market where holders would be given the ability to purchase products exclusive to them. This concept of exclusive markets is not original. In fact, the idea made the headlines at the beginning of 2020 as Costco memberships skyrocketed and customers brawled over toilet paper in the grocery aisle. Not only is the exclusive market proven to be a popular choice by customers, but the idea grasps a very important business concept that is often overlooked by NFT creators and Web 3.0 enthusiasts. Value.

Intrinsic vs Extrinsic Metaverse Value:

      Most NFT projects are simple. A team develops some art, markets it, sells it and people use it as their social media profile picture. More recently, this technology has been pushed further and NFTs have begun to represent virtual land, virtual items, and even virtual pets. But they still lack a broader market reach. What value do they offer to the plumber, the carpenter, or the nurse that doesn’t have the time or savvy to mess around with buying virtual stuff? The answer for a vast majority of people is none. These virtual items and all of this metaverse talk provide no value to ordinary people who are just going about their daily lives. Rather than viewing Web 3.0 as a monumental change in financial and privacy thinking, most normal people see it as a large group of individuals wasting money in highly volatile and unproven markets, and it would be naive to say they are wrong or call them skeptics.

      It can be said that all of the aforementioned uses for NFTs are providing intrinsic value to NFT holders. That is, they are taking crypto-savvy individuals and creating products for them. This includes gamers who want to be paid to play, decentralized finance users who want additional value in their applications, and crypto hustlers who are looking for the next big project to earn a few bucks on. The overarching idea is that these are all examples of Web 3.0 creators trying to recatch old fish. They are trying to convert non-crypto people into crypto regulars. Likewise, creators are trying to represent real-world assets in a virtual manner. This methodology has yet to overcome a very large obstacle in human psychology. If people do not see value in virtual assets, then they are lost, customers.

      On the contrary, if Web 3.0 creators are fishermen at a small pond, they simply need to walk upstream to a larger ecosystem. Rather than trying to bait new customers into a market for which they have no interest, creators should be looking for ways to provide external metaverse value to non-crypto individuals. They should be taking crypto assets and materializing them in the real world, not the other way around. This is representative of push factors, evangelists do this all the time. If you cannot bring them to you, then you go to them. By embracing the use of external metaverse value, Web 3.0 creators can reach a much larger audience, convert more customers, and provide goods and services to people while still utilizing the power of blockchain and NFT technology. This provides market reach to those who do not connect with rapid advances in technology by simply extending what they can do in their daily lives via the use of NFTs.

Extensible Marketplaces:

      Consider the concept of a membership-based grocery store like Costco. The grocery store has products they would like to sell, but they believe they are worth more than the average instance of that same product. For the likes of Costco, this comes in the form of bulk food. One can buy a twelve-pack of granola bars at Walmart for $3.99, or they can go to Costco and get the eighteen-pack of the same quality bar for the same price. Costco may be making less revenue per unit than Walmart, but the market is not available to everyone. In order to access the amazing granola bar deal, prospective customers must buy a membership to Costco. This membership fee more than makes up for the lost per-unit cost of the granola bars. Not only does Costco sell a membership, but the new member is encouraged to frequently shop there because they are now invested in the marketplace. Additionally, the customer themselves will eventually yield a proper return on investment due to all of the savings from the bulk food.

      Now, grocery deals aside, this concept can be replicated using NFT technology. Imagine a cannabis market that functions similar to Costco. They have a decent number of storefronts and also sell products online for delivery. The company's online presence and existing customer base are a prime foundation for an exclusive marketplace where they can sell special strains of cannabis created by themselves or which are typically hard to buy elsewhere. The implementation of their marketplace can be a simple extension of their website where the exclusive products are offered after a customer verifies they are a member. This idea appears straightforward enough, so how is it implemented? The extensible marketplace is a prime candidate for non-fungible token technology. Simply create an NFT that grants access to the marketplace, verify ownership on the website by having the customer log in with a Web 3.0 compatible cryptocurrency wallet, and allow them to shop the exclusive content like normal.

Email vs Web 3.0

      While they will likely work in tandem, this NFT-based approach offers several benefits when compared to the standard email-style login system.

  1. Authenticity - The main benefit of this approach is that it allows instantaneous authenticity checks on customer membership status. When a customer chooses to sign into the marketplace using their Web 3.0 compatible wallet the website can automatically check whether or not they possess a legitimate membership before allowing access. This trumps the standard email-based approach because emails can easily be shared with family and friends to grant access to others. Password sharing is much less likely with cryptocurrency wallets as those granting access are permanently sharing the keys to their crypto funds held in that wallet.

  2. Decentralization - As Target’s famous 2013 data breach can attest to, data stored on centralized servers is a goldmine for hackers and data miners looking to manipulate a system. By organizing logins based on a decentralized technology like Web 3.0, bad actors looking to steal, hack or simply break a system are met with an extra layer of security. This approach bolsters a website's infrastructure in just a few extra steps.

  3. Cryptocurrency Payments - While this may not be seen as a benefit to all, providing a Web 3.0 connection on a website opens the doors for cryptocurrency exchange. Crypto payments are decentralized in nature and are naturally secure. They don’t require regular payments to card reading companies that take 2-5% in transaction fees or wrap up transactions into flat rate batches like many card infrastructure systems do. In an opinionated sense; if a company truly believes that cryptocurrency is the future, a Web 3.0 connection is a natural gateway to facilitate crypto payments.

  4. Raising Liquidity - Much like how Costco recuperates their losses from selling bulk food, an NFT style membership could be accompanied by a membership charge, wrapped in the form of a purchase cost. When a company decides to launch an NFT-based membership they hold an initial sale where the NFTs can be purchased for a fixed cost. This provides an excellent opportunity to raise capital for the company or nullify any operating costs associated with the integration.

  5. Scalability - Though the NFT’s presence on a blockchain is permanent, the ownership of the NFT remains flexible. Customers can sell their membership on secondary markets, they can be gifted to friends and family, or simply held indefinitely. Likewise, the price and supply can be changed when necessary to match market demand. If a time comes when the company needs liquidity or has room to expand its membership base, it can issue another sale of NFTs to meet its needs.

  6. Room for Growth - The previously mentioned benefits all revolve around the marketplace functionality of the NFT. However, this technology offers significant room for integrating new, novel ideas regarding its ownership. For example, NFT holders could log into websites to redeem exclusive monthly coupons or be given access to special events like facility walkthroughs.

Conclusion

      Companies offering an NFT-based membership program stand to seize the opportunities of a rapidly developing modern industry. By harnessing the capabilities of decentralized technologies like Web 3.0, non-fungible tokens, and blockchains, industries that rely even partially on internet-based sales can provide their members with tangible, extrinsic metaverse value through an extended marketplace. This exclusive marketplace can be accessed by holding an NFT which can be seamlessly verified on the website. Additionally, the company opens its doors to modern, innovative technology like cryptocurrency payments and has the opportunity to raise capital through the NFT sale. This membership program can be scaled to meet market demand and benefits can be expanded as new ideas come to fruition. All of which come as a benefit of the ever-growing modern internet known as Web 3.0.