You have probably heard of the acronym “NFT” by now. The elusive yet disruptive force of NFTs, or non-fungible tokens, is often talked about alongside the metaverse as well as cryptocurrency. In this article, we’ll provide an intro into NFTs, the importance of UX, and what the future may bring.
What are NFTs?
NFTs are unique assets that reside on a blockchain and cannot be duplicated due to their cryptographic nature. “They are digital representations of assets and have been likened to digital passports because each token contains a unique, non-transferable identity to distinguish it from other tokens” (Investopedia). The explosion of the current NFT market mostly revolves around digital art, sports cards, and other collectibles, but its use is spreading into other major industries.
What’s the big deal?
When a physical asset is converted into a digital asset, this removes extra agents in the process and allows for the democratization of art and other tangible assets. Artists can now connect and interact with their audiences directly without the extra middlemen, pointing to a clear benefit of market efficiency.
Since blockchain is still an emerging technology, this opens up a whole new space for creators, designers, consumers, and other stakeholders to benefit from this technology and shape its future. Most importantly, it presents an opportunity for UX to shape and influence the equity and accessibility of NFTs (Investopedia).
How can UX impact NFTs?
UX has assumed an important role in shaping the future of blockchain and its use cases, and there are many present opportunities for UX enhancements. For one, purchasing NFTs involves several steps and is surprisingly not as streamlined as one may think. There are several online NFT marketplaces available, including OpenSea, Rarible, and SuperRare. In order to purchase an NFT from one of these platforms, the buyer must already own the cryptocurrency ether in a digital wallet (note: ether is the cryptocurrency that is powered by the Ethereum blockchain platform). Educating the public about the components of owning an NFT is the first step in ensuring the movement is fair and accessible for all (Investopedia).
A good UX strategy would help streamline the multiple steps associated with purchasing NFTs and allow for a clean interface that facilitates smooth transactions on the consumer side. “NFTs allow the owner to create digital, collectible assets on blockchain technology like Ethereum. However, it can be difficult to clearly convey the value of these digital items if their interface is not well designed” (Morioh). Since current NFT marketplace platforms involve several different elements to make a purchase, requiring knowledge of cryptocurrency and blockchain technology, their ease of use and reach are limited as of now. By addressing these pieces, UX can solve current educational and transactional pain points and help broaden the reach of NFTs across the population to support mass adoption – leading to numerous future possibilities and use cases across industries.
Where can NFTs take us?
The current NFT hype is largely associated with digital art and often regarded as a luxury available to the few who can afford them or are knowledgeable about them. However, blockchain and NFTs are rapidly evolving and offering utility for many other industries. As NFTs continue to make their way into the mainstream, it is predicted that major traditional sectors, such as healthcare and finance, will be radically transformed in the future.
Healthcare
- In a recent publication in Science, the authors assert that NFTs can help foster “a more democratized, transparent, and efficient system” wherein healthcare patients have more say in how their protected health information (PHI) is shared. Currently, electronic health record-keeping has many problems, one of them being commercialization of patient health data. NFTs can provide patients actual ownership of their health data via the blockchain ledger and the ability to track it and potentially monetize it (Fast Company).
- NFTs can be used for the management of blood donations where a blood donor receives a digital token that gets tracked to its eventual recipients. The blood donor’s NFT can also be used to register blood type and by using blockchain technology, distribute certain blood types where they are needed most (TheStreet).
- Wearables and the collection of health and fitness data offer another opportunity for NFTs to aid in data collection, accessibility, and patient control of their health data. Various companies are already leveraging NFTs in this area to help patients create a digital token of their data that they can then safely forward to their doctors (TheStreet).
Finance
- NFTs can positively disrupt the supply chain industry by eliminating common pain points that supply chains experience, and even help prevent supply chain disasters such as the one we experienced in 2021. “NFTs and blockchain (distributed ledger technology) can reduce costs, eliminate bottlenecks, create greater transparency into supply networks and help to prevent chaos” (Supply & Demand Chain Executive). Individual NFTs, unique by nature, provide data transparency and reliability, which could eliminate information discrepancies between parties and aid in efficient processing and tracking of data.
- In trade finance, a sector that experiences complex regulatory and supply chain requirements along with intricate workflows with multiple parties, NFTs can reduce fraud and middlemen by creating digital tokens composed of assets and documents. Tokenization would ultimately increase transparency, free up resources, and reduce overhead costs allowing for an enhanced global trade system (FinTech).