Collectibles: NFTs revamping the ticketing industry
NFTs (non-fungible tokens) are the latest buzzword in the crypto space, and it’s no surprise that they have been dubbed one of the hottest tech trends of 2021.
If you’re wondering what they are, or why they’re so hot, here is a quick explanation:
According to Coindesk, an NFT is “a unit of data stored on a digital ledger called a blockchain, where it can be bought and sold. Unlike Bitcoin and other cryptocurrencies, which are interchangeable, each NFT can represent something unique. For example, one NFT could be used to represent a digital trading card. Another could represent a work of art. Or it could represent an in-game item like a custom sword or shield.”
While this may sound like any collectibles you’ve seen online, what makes them special (and valuable) is that they are verified with blockchain technology—the same tech that underpins bitcoin and other cryptocurrencies. This provides verification that each NFT is authentic and unique, meaning you can trust that you’re buying the real deal.
Non-fungible tokens (NFTs) are the latest craze to sweep the world of digital collectibles, and they’re becoming more popular for real-world use too. With an NFT, owners can buy and sell virtual objects in a secure way. In some cases, the tokens are attached to actual physical goods that buyers can have shipped to them. But in other instances, the NFT is merely linked to a digital good—like an MP3 file or a tweet—and provides proof of ownership over it. The possibilities for NFTs are endless, but one industry in particular has seen a huge uptick in interest for using these tokens: the ticketing industry.
The ticketing industry is currently experiencing a major shift. The days of waiting in line to collect a physical ticket are over, as the rise of digital tickets has made them much more convenient for event-goers. Now, the future of ticketing lies in non-fungible tokens (NFTs). In a world where we’re learning that our online footprint is everything, NFTs can provide an additional layer of security for consumers and event organizers alike.
Not surprisingly, there are several benefits to having NFTs in place. For starters, they make it easy to determine who actually owns the tickets—which is crucial for reselling tickets. In fact, many venues ban reselling because they are unable to verify whether or not those tickets were purchased legitimately in the first place. An NFT-based system would allow authorized buyers to easily prove their ownership and resell at face value or below. And it wouldn’t be difficult to enforce: if you’ve got the NFT, you’ve got the ticket!
Event organizers also have a lot to gain from this new technology. For example, they have complete control over who sells their tickets—and at what price—since they can choose which third parties can act as middlemen. Plus, with smart contracts the transaction and its details are transparent on the blockchain. The platform enables users to make payments in a safe, simple, and secure way that is not controlled by any centralized authority.
The ticketing industry is ripe for this NFTs technology because of its potential to solve two problems that have been plaguing it for years: scalping and counterfeiting. Scalping occurs when tickets to extremely popular events are bought up by scalpers who then sell them at inflated prices—often above face value—through unapproved secondary markets like eBay or Craigslist. This can be frustrating for fans who are left without tickets when their favorite band goes on tour or their favorite sports team makes the playoffs; but it’s even worse for venues and promoters who miss out on vital revenue from those sales.
This is the first time that fans have been able to actually own their tickets in such an asset-backed way, rather than just holding on to an object that has no real value beyond what it unlocks. This has huge implications for the ticketing industry: NFTs make it possible to upgrade traditional paper tickets into dynamic digital assets. When a ticket is sold out at face value but later resold for 50 times that amount, the majority of that revenue does not go back into the hands of the event producers or venue owners—and often not even back into the hands of the original holder of the ticket. With NFTs, however, all parties involved benefit from every resale transaction.
In addition to making for a more efficient and secure system for accessing events, this model also creates value for the artist at a number of levels: firstly by having more money in their pocket at any given time; secondly, they get a sense of empowerment that comes with having control over what happens to their creations and thus have less incentive to sell on outside markets (which is already a concern among artists); thirdly, it makes for an interesting new market where there are fewer people controlling access to tickets and more people being able to purchase them as the creators want them to be available for everyone.
The use of blockchain technology in the ticketing industry has been around for several years, but it is now being used to create unique digital assets: non-fungible tokens (NFTs). NFTs are digital assets that can represent any kind of asset, from a piece of digital art to the rights to a sports game. They are sold on cryptocurrency marketplaces like OpenSea and other online platforms, and each NFT is verified by the same blockchain technology that records cryptocurrency transactions. Just as no two Bitcoin transactions can be the same, NFTs cannot be duplicated; this makes them valuable and exclusive. The value of a given NFT is determined by the marketplace and tends to be based on its collectability, uniqueness, or usefulness.
Because they are so new and their use cases are still emerging, it’s difficult to know what NFTs will look like in a few years. However, there are already some potential uses for them in the ticketing industry and beyond. One early adopter of NFTs was the National Basketball Association (NBA), which started selling highlight videos as NFTs through TopShot in 2019. Since then, TopShot has expanded beyond sports highlights into memes, rare video games, even trading cards—last month a fan bought a NFT for $10,000, representing the first-ever trade on OpenSea. The NBA’s foray into the world of NFTs is just one example of how many industries are beginning to adopt NFTs. In fact, there are now more than 2 million unique NFT listings on OpenSea alone — and that number has continued to grow as the industry matures and companies look for ways to add value to their products in interesting ways through these assets, which can be traded on secondary marketplaces like OpenSea for significant gains after initial sales price, similar to how people trade stocks on Wall Street today.” And it doesn’t stop with the basketball team either: “The NBA also allows fans to purchase tickets and memorabilia (eBay style) using an app or a website, making them available for sale at any time during the season.
The advantages of tokenizing tickets for events with limited seating are clear:
– Authenticity – Every ticket is unique and can be validated by its owner. This prevents fraud and counterfeit tickets from making their way into the hands of disappointed fans.
– Resellability – In cases where a fan can’t make it to an event, they’re able to sell their ticket to another willing buyer while still maintaining ownership of their tokenized ticket.
– Proof of ownership – If a fan doesn’t want to sell their ticket, they can prove that they have it just by showing someone else its corresponding NFT. This also saves them from losing their ticket as well as the seller losing money if they are not redeemed for whatever reason (lost, stolen, etc.)
Disadvantages of the current system
Ticketing is an industry that has stayed more or less the same for a long time. While there are many advantages to this—people can easily buy tickets and know what they’re getting—there are also some problems with the current system. First, ticketing is highly centralized. In other words, there is usually a single source of truth (usually a server operated by the ticketing company) that tells you who bought what tickets and whether or not they’ve been used. This means that if the central authority fails (e.g., their servers get hacked), the entire system can come to a standstill and no one will be able to get in or out of any venues they have tickets for. Second, organizations face challenges when it comes to resale value and fraudulent number of sales when using centralized ticketing. It’s common for events to sell out quickly, which leads to price gouging on the secondary markets run by resellers—and organizations don’t make any money from these sales. Third, scalpers often buy large batches of tickets quickly and sell them at much higher prices on secondary markets; organizations also don’t see any revenue from these transactions because they’re run entirely outside of their control.
The ticketing industry is certainly changing. Attendees are becoming more skeptical of the traditional experience, while artists and venues are looking for new ways to retain fans and create sustainable income streams. With NFTs, the industry can marry these concepts together and create innovative experiences for its customers. By giving fans exclusive access to events through NFTs, artists can build a strong connection with their audience. Additionally, by offering digital tickets and passes, artists can reduce losses from counterfeiting and scalping.