When NFT replaces the key to your house, you'll regret not knowing the blockchain

Still wondering what's up with crypto, blockchain, smart contracts and NFTs?

Nati Bichler brings order to the technology that fundamentally disrupts the world of commerce

Nati Bichler

09/21/2022

Wednesday, September 21, 2022, 10:35 p.m. Updated: 11:05 p.m.

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Will cryptocurrency and smart contracts on the blockchain bring transparency to the world of marketing? (Photo: Unsplash)

In 1995, Bill Gates sat down for an iconic interview with David Letterman in front of millions of Americans and was asked to explain the Internet.

He was asked: "I heard you can listen to a baseball game over the Internet. Does a radio sound familiar to you?"

As the crowd laughed, Gates replied, "That's true, but the difference is that you can hear the game whenever you want."

Letterman was quick to ask: "Okay, so it's stored in one of the computer's memory components.... Does a videotape sound familiar?"

Again the audience laughed, Gates did not answer, and the interviewer continued: "Seriously, what am I missing here?"

So Gates replied "You can find information about fields that interest you", only for Letterman to reply that he subscribed to several magazines in different fields.

Almost twenty years later, it is easy to understand in retrospect that this Internet of 1995 is nothing less than a historical turning point, one on which the world is being reshaped.

In recent years it seems that they have joined forces together to produce the next digital revolution.

Blockchain technology offers new possibilities for the transfer of value in a secure and decentralized manner, and at the same time the chip revolution that accelerated computing power, machine learning and a consistent increase in bandwidth offer us a three-dimensional meta-versal future in which we will manage our lives.

Crypto and NFT - the beginning of an era

The two most well-known applications of blockchain are cryptocurrencies and NFTs.

While public sentiment around cryptocurrencies runs the gamut from admiration to suspicious disdain, the NFT field seems to have acquired a reputation as a financial bubble at best and a pyramid scheme at worst.

You can understand that. 2021 and the beginning of 2022 were a particularly crazy period in the NFT worlds.

Tokens that represent ownership of images, some of which can be called works of art and others ridiculous gibberish, have been sold with a cumulative turnover of tens of billions of dollars.

Certificates of ownership of pictures of monkeys were sold for hundreds of thousands of dollars each, and at some point it seemed that everyone had become an art collector.

Rani Rahab, behind you!

No wonder that when the market turned bearish (or when the bubble burst - for those who prefer superlatives with dramatic motifs), the dealers evaporated and the art collecting industry returned to the hands of those who really understand and are interested in it.

But those who really know the technology, its irons, how a smart contract works, how a transaction is structured, and what are the differences between the various layers of the blockchain, understand very well that pictures of monkeys are nothing but the beginning - the first experience with a breakthrough technology that will disrupt more and more fields and industries, Just as the Internet has done for the past twenty years.

NFT as a digital certificate of ownership

The Italian car manufacturer Alfa Romeo has announced that customers who purchase its new SUV, Tonale, will be able to receive an NFT with it that will live on the blockchain and extract from the vehicle the mileage data, the treatment history, the faults that have been repaired, the lights that have been lit and even the driving habits on it.

When the car owner wants to sell it on the second-hand market, he will be able, for the first time in history, to present the NFT as an authentic and unforgeable certificate of trust on the blockchain.

Hence the difference in value between vehicles that come with NFT and those that do not is going to be significant.

The crypto wallets in which the NFTs are kept will become more and more friendly and open so that they can be used as the car key.

In fact, the crypto wallets do not store tokens but keys, but that is already a topic for a separate article.

Once the amount is transferred from the buyer's wallet to the seller's wallet, the vehicle key, which is embedded in the blockchain as an NFT, will also be transferred to the buyer's wallet.

The money didn't go through?

Neither does the key.

Insurance companies will be able to benefit from customers who show a history of safe driving and timely treatments.

Besides the car key, the NFT will exchange the gym membership, the right to visit an exclusive restaurant (like the FlyFish restaurant which is only open to designated NFT holders), and the tickets to the shows.

Ticketmaster already announced earlier this month that it will start issuing concert tickets as NFT.

A smart contract can define in advance the royalties that music creators will receive every time their songs are played on the radio or in any other media.

He will also be able to define the percentage of royalties YouTubers will receive from Google from the revenue generated as a result of selling advertisements.

A rate per kilometer for a taxi ride can be defined in advance in a smart contract, and be applied between driver and passenger without mediation, and from here you can set sail with your imagination.

Little by little, a generation of consumers will grow here who demand to see the ownership of their assets embedded on the blockchain and represented through NFTs.

We call this generation WEB3 Natives.

This ownership will serve us in the digital and physical worlds, the boundaries between which are evaporating anyway.

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The implementation of the smart contract in the worlds of marketing

The beating heart behind blockchain applications in general (called in the professional jargon "decentralized applications", or dApp - Decentralized applications), and NFT in particular, is the smart contract.

This piece of code, which lives on top of the blockchain, defines predetermined and immutable conditions for the transfer of value between participants, and is transparent and exposed to all.

Will smart contracts revive the digital media industry?

If you try to outline the supply chain of a sponsored exposure (Ad Impression) from the moment it was created until it reached the eyes of a surfer, you will find that it is a multi-stage process that involves quite a few intermediaries.

So many factors are involved in this process that one exposure can go through dozens of hands.

Among them are exchanges, demand side platforms, ad networks, data management systems, submission systems and more.

Those who pay the price are the advertisers, who purchase exposure at a cost that embodies all the commissions paid to each and every intermediary along the way.

And the transparency?

zero.

Now close your eyes and imagine an alternative world, where the buying and selling of exposures is conducted on the blockchain, just like coins.

Every publisher knows exactly where it was created, which hands it passed through and what layers of data were added to it.

In such a situation, not only will we be able to cut out most of the middlemen (thanks to the transparency that will be created and the ability to purchase directly from the ends), but we will be able to guarantee through smart contracts the amount of hands, from which sources, and also how much we are willing to pay for a desired result.

It is true that submission systems allow more and more flexibility around these issues already today, but as mentioned these systems belong to business entities with a very clear interest, and it does not always align with the advertiser's need to lower costs and improve advertising effectiveness.

Some of us claim that it is quite the opposite.

What NFT means to marketers

Today, brands spend millions of dollars on digital advertising on the various platforms.

It wasn't always like that.

About 20 years ago, convincing brands to spend thousands of dollars a month on digital advertising would have seemed like an impossible task.

The first customers did not see this as part of the marketing activity at all, and sent us to work with IT ("the guys who take care of the Internet").

The technical understanding that was required at the time to produce an established and meaningful marketing activity (A/B tests for example) was right at the level of a software engineer.

Over the years the market developed, the big apps entered the field, and tools were created that allow every marketer to use the technology without understanding the technical components inside the black box.

Looks like we're back to the same point.

The relevant question is no longer whether this phenomenon is here to stay, but how it is used in the worlds of marketing.

At this stage it is not enough to know it from above, this requires technological knowledge, just like in the beginning of the digital age.

This is exactly how the foundations of a revolution look, of an evolutionary change that requires a new way of thinking about everything we know.

To truly understand this, we need to break away from the thinking patterns that help us understand the operating system of the previous world, and specifically the Internet, and open up to new thinking patterns.

Those who are not familiar with the ins and outs of technology will always know the solutions late, and with that delay the limits of marketing thinking will also open.

Nati Bichler is a partner and one of the founders of K logic and the K Verse group, which brings together companies specializing in advanced marketing, and currently serves as the vice president of the innovation, strategy and WEB3 unit.

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