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What's ahead for NFTs beyond art? Scott Kominers, Professor at HBS and Research Partner at a16z crypto, shares insight on the future of NFTs.

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Digital artwork sold as NFTs can rake in millions of dollars, but the value of digital assets as NFTs extends beyond art auctions. According to Scott Kominers, the ability to use NFTs as a proof of digital ownership is revolutionizing digital marketplaces.

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Kominers is a Harvard Business School Professor and researcher at a16z crypto who recently joined Round to share his outlook on the future of NFTs as privately owned goods, digital records, and commodities for our online avatars. Here are three key takeaways.

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1. The ownership of digital assets like NFTs is creating a unique digital marketplace

Kominers sometimes uses a cartoon psychedelic duck as his online avatar (viewable above). But this duck is no ordinary image — it is an NFT artwork known as a SupDuck with an associated token stored on the Ethereum blockchain. SupDucks constitute a new class of digital assets that solve a fundamental problem in market design. Namely, you can’t have markets without property rights and records of digital ownership. Using a private key, Kominers can prove he owns his SupDuck to any interested party. He can even point his profiles on Twitter and Instagram to display his SupDuck NFT. Before, you lost ownership of a picture once you uploaded it to Twitter or Instagram. But now, with NFT displays, your image belongs to you, and if you move to a competing platform, you can remove Twitter’s or Instagram’s rights to reference your digital assets. This exemplifies how digital ownership promotes market competition: when users own their digital goods, they control their experiences. It’s easier for them to switch platforms, so tech companies have to work harder to keep them.

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2. NFTs can function as digital records for real world assets or experiences

All Round community members who joined for this event left with an NFT souvenir, proof of their digital attendance. In the future, Kominers predicts people will often use NFTs as credentials in this way. NFTs will be able to verify someone’s academic bonafides or certify their work history. He argues that chain reputation data will help employers make hiring decisions and empower individuals to own their activities and accomplishments. NFTs could function as digital contracts. For example, people could replace home titles with digital deeds. Unlike the paper contacts we use today, “these digital assets are permanent and immutable and so could potentially serve as better vehicles even for established forms of property transactions.” There’s tremendous value of digital record-based systems for collector’s items too — items like trading cards or limited edition sneakers, that require storage in climate-controlled vaults. What if, instead of selling the actual sneaker, you sold its NFT? That way, the ownership transfers, but the sneaker stays safe in its vault. However, Kominers notes that we won’t see these mainstream applications of NFTs until we address the barriers that prevent average users from accessing blockchain technology.

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3. As people spend more time online, their desire for digital assets in digital spaces (like the metaverse) will increase

Kominers recognizes incredible potential in the metaverse, but he doesn’t think we’ll choose to hang out in online parks over real ones anytime soon. “We’re still a long way from creating metaverse spaces beyond targeted use,” he says. However, as metaverse technology and infrastructure develops, he anticipates that we’ll spend more and more of our time online, and we’ll want digital assets that reflect our identities, the communities we belong to, and even our sartorial preferences. “One thing that’s really interesting,” says Kominers, “is when you go to events in these [digital] spaces, everybody’s wearing The Hundreds or Adidas or Nike/RTFKT.” Right now the number of established physical world clothing brands with a metaverse presence is tiny, but Kominers sees “tremendous opportunity” for brands to launch digital outposts. “On the one hand, the total user base for these assets — at the moment — is small. But on the other hand, the platform competition is still potentially fruitful if you want to go there."