NFTs are here, and the world is still grappling with what this technology represents for our collective future. Businesses building in the space have already seen a glimpse of the potential that NFTs hold, but few understand how to maximize business opportunities and build for what's next. As the demand for NFTs continues to grow, the true potential of NFT products will begin to emerge and impact our experience as users and developers of software.
This potential already exists within NFTs and the Web3 marketplace ecosystem that is growing. However, the current perspective of marketplaces is a bit narrow, often restricted to a place to buy, sell and trade PFP collections or 1-of-1 artwork. This is just the tip of the iceberg, and Web3 companies launching true products are already looking beyond the current norms to explore how NFTs improve their unique product vision.
These utility-driven projects are becoming quite complex, including a functioning micro-economy, user rewards, and engagement tools that propel the product forward. Once the full scope is understood, clever minds begin to see these projects in a similar light as SaaS products. While the standard blueprint for an NFT launch includes a minting site and a third-party marketplace to facilitate trading, more robust projects know that this framework won’t suffice.
At the end of the day, most Software as a Service (SaaS) products we use are very specific marketplaces in which users exchange value or services. Want to rent your home to travelers every month? Open up AirBnb and start listing on the platform. Want to exchange ideas with your team? Launch Trello and start managing your project through the exchange of content.
These platforms facilitate an exchange between individuals, making them marketplaces by definition. This gets into the pure exchange feature of SaaS products, providing a hub for interaction between different audiences on both sides of the transaction. The value of this exchange differs drastically from app to app, including monetary, knowledge, or organizational value. Despite the variations, once businesses recognize SaaS products as marketplaces, the power of NFTs starts to crystalize.
The current framework for NFT collections is extremely limited, as many are focused on the initial sale of a collection instead of the long-term utility provided by the NFTs in question. As non-utility-driven projects still dominate the market, savvy minds are looking beyond the mint and evaluating what product and brand potential the NFTs represent. As highlighted above, NFTs are becoming increasingly powerful and shaping business models across the industry.
One of the value propositions of blockchain tech is the ease of commerce, enabling asset owners to carry out P2P transactions at will. Owning a digital asset is powerful partly because of the control of this asset, being able to buy, sell and trade it on secondary markets. This is where NFT marketplaces will elevate SaaS offerings, coupling the blockchain with specific product offerings to deliver more transparency, long-term value, and secure user verification.
Looking at Uber as an example, what value would NFTs provide to that platform? To understand this, it must first be clear that these platforms will integrate NFTs as seamlessly as possible to provide an intuitive experience. This means interacting with NFTs without knowing you’re doing so. Think about YouTube or Spotify. Users don’t care if they are interacting with MP4 or WAV files. This becomes a frictionless experience to exchange and consume.
Let’s get more specific…
If Uber mints an NFT that represents each specific ride that a user book, this asset can be stored and accessed to improve customer experience and add value. Maybe the NFT contains the billing information, the driver’s credentials, and information on the trip itself. This can then be referenced to verify reviews or as documentation to confirm why a user might have been banned. These NFTs can be collected, and users can be rewarded for them as they authenticate a user’s ride history and loyalty to the platform. This is just one small example of what is possible by integrating NFTs into existing SaaS marketplaces.
Most businesses are focused on the primary sale of a product. This is for good reason, given that product royalties don’t exist for IRL secondary markets. Up until blockchain technology, there was little to no financial incentive for a business to help facilitate secondary sales of their products. Now, this is being turned on its head, and secondary markets represent one of the largest opportunities for Web3 businesses deploying NFTs.
Now that users have true ownership over their assets, they have the ability to resell. Businesses that create these digital assets are in a position to help facilitate the reselling of these assets. Even if only 5% of users decide to resell, the associated platform fees and royalties are something very interesting in terms of cash flow. Brands can become “partners” with their users, assisting them in the resale process in a way that was never before possible.
Previously, products that enabled a private marketplace system required extremely complex development. As an example, Uber has a product with a private system for users to track activity, account balance, and more. Developing this platform required an exceptional amount of forethought in order to nail the functionality. Now that businesses are moving in the user-owned direction, NFT marketplaces simplify this process, provide a place to conduct business and make it easy to capture the secondary market across different products. Businesses will need to create their own marketplace to capture the market and excel.
I believe it’s only a matter of time until everything becomes secondary market-focused. This feels like a natural progression of the industry, especially when you examine free mint trends and other new strategies around NFT launches. The real value will come as the growth of a project leads to more visibility and increased secondary market traction.
NFTs are more than digital collectibles. This technology has the potential to disrupt SaaS product offerings and a range of other business models across industries. Much of this disruption is based on the reality that these products are marketplaces, and NFTs significantly boost the power of marketplace ecosystems. This will allow businesses to have full control over their digital assets, tap into the true power of blockchain, access more revenue through the secondary market, and optimize business processes. As the NFT market continues to grow, we can expect to see more and more SaaS products deploy NFT infrastructure.
New business models are being formed around blockchain offerings that will be duplicated and advanced in the years ahead. At my company Liteflow, we are helping creators and business owners explore Web3 and tap into new revenue models using NFT infrastructure. If you’d like to book a demo, we’d be delighted to explore how to bring your Web3 ideas to life!