A conversation with a panel of experts on the adoption curve of NFTs for the CGC online Youtube channel that dives into the state of NFTs and the challenges required to scale and also deliver an optimal user experience.
Darren Smith, VP Product at Epik
Guests: Thomas Emmanuel, Chief Product Officer at YellowHeart
Jiri Kobelka, CEO & Co-Founder of Tatum
Dirk Lueth, Co-Founder of Uplandme, Inc.
Benny Giang, Founding Team, Product at Dapper Labs
Darren Smith Thanks for joining us for this panel discussion on NFTs and mass market adoption. I'm Darren Smith, and I'm your moderator for this session. A little background on me, I spent most of my career in the video game industry, including 20 years at Nintendo, where I ended up as a director of Nintendo of America. And while I was there, I worked on developing games and game platforms from the Nintendo 64 to the Wii and DSi and 3DS, and also developed some online services for all the platforms and really many other things.
I joined Epic in 2018 as the Vice President of Product to bring NFTs into games. And I should also mention that after joining Epic, I attended the first crypto game conference back in Kiev. And I have to say congratulations to Andrew for growing this event since then. And we at Epic are really honored to continue to be a part of it.
On our panel today, we have representatives from a cross-section of the NFT landscape, from games and metaverses to marketplaces and infrastructure. And I think it's quite fitting that we are moderating this panel because at Epic, we're a B2B company, and pretty much work with all the companies involved with brands and gaming and crypto gaming and, of course, NFTs. And so we aren't really competitors here and we're really focused on helping grow the entire industry. So let me take a moment to let each of our panelists introduce themselves. Ari, from Big Time Studios is going to be a little bit late, but let's get it started alphabetically. Ari would have been first, but Benny, now's your chance.
Hey, everyone. Really excited to be here. This is Benny here from Dapper Labs. Originally started on the founding team of CryptoKitties when it was a 10 -person type of project and that blew up and that was extremely exciting. Still remember it as if it was yesterday that we launched CryptoKitties and the whole NFT space kind of exploded back in 2017, 2018.
Since then, I've been working on a few blockchain experiences or digital collectibles. The one that I spend the most time on these days is NBA Top Shot. I lead one of the product teams there in charge of building almost everything that you see in Top Shot except for the marketplace. That's the second team that we have on Top Shot. So I'm really excited to be here and happy to talk about products that have a ton of users and digital collectibles with sports licensing.
Great. Thanks, Benny. How about Dirk?
Hi, I'm Dirk. I'm co-founder of Upland. Upland is a metaverse based on real world addresses where people play, earn and connect.
So that means actually we're replicating the real world so you can purchase properties which are based on those actual addresses and we have we're about to reach 1 million NFTs we've sold as properties so that's a big big milestone for us. Currently one of the largest applications decentralized applications out there with really humans I didn't say with almost 40,000 daily users and yeah we've been growing since that the life right now for the cities of San Francisco, Oakland, Chicago, New York, well Manhattan, Brooklyn, Staten Island so and the way and probably going to talk about it right really going for the mass adoption play here as well.
Oh, good idea. So how about Jiri next?
Hi, guys. My name is Jiri. I'm the CEO of Tatum. Tatum is a blockchain Infrastructure company. We actually support over 65 blockchains right now, including Flow, by the way, from the devlabs, which is great. I have to recommend that one. Great job. And we are basically infrastructure for developers. So we are powering almost, say, a couple of hundred NFT projects, NFT marketplaces. We do quite scalable things. Our best customer is doing about over 20,000 operations per second.
They are quite focused on NFTs recently and have released an NFT based on ERC 1155, so you can have shares inside NFTs and all that. We're trying to help developers to build things as easy as possible and as fast as possible.
Great, thanks Jiri. Okay, Thomas.
Hey everybody, nice to be here. I'm Thomas, Chief Product Officer at Yellowheart. Outside of my background, I delivered the first barcoded ticket to a mobile device back in 2003 or 2004.
We are focusing on music and using NFTs in the kind of from artists to their fan base. We launched Kings of Leon's newest album as an NFT, which was received really well. Since then, we've launched Extentatium and Zhu. We did some events with him down at Live Rocks or Red Rocks in Colorado. And most recently, we're actually launching today Maroon 5's NFT collection. A really interesting component there is that they're launching it down for their fan base. They want to create a community inside of that. We'll talk more about that in a little bit. Thanks for having me.
All right. Great. Welcome, guys. So, we're here to talk about the mass market adoption of NFTs and really where we are in achieving that and how to get there if we aren't already there. So I think the obvious first question is, are we there yet? And if not, why not? So let's start with Benny, what do you think?
Yeah, we are far away from mass adoption. I mean, if you were to put together all of the collectors who own at least one NFT in this entire space, it might make up one million or two million. So, you know, I could speak towards like NBA Top Shot, like the NBA is huge. It's one of the largest brands. And there are literally millions of fans around the world who watch the games and follow the teams and follow the players. So I could say that from our perspective, like we've only just begun and we're still in beta. So I think the day where Top Shot is fully integrated with broadcasting and people
are watching the NBA games, and during the games, a moment is created and minted and people could buy it when they're watching from the stadium or watching from their TVs - we haven't hit
that mass yet. So I think that we're very early on and the whole sports vertical - there's gonna be a lot of growth. We've been doing a lot of experiments that hopefully one day will bring on more, like
hundreds of thousands or millions of fans.
Great. So Dirk, how about you? What do you think, are we there?
Yeah, well, I agree completely with Benny. We're not there yet. I mean, we're in really early days. You know, it's maybe 10 minutes past 12 for the first day or so or second of January in a year. But what does really mass adoption stands for? I Googled a bit to see what people were saying and what does it mean? And I saw some people are saying that 10 % of the total market, whatever that is, of the population is using. And to say maybe you add one or two other people, I think that’s when you see signs of mass adoption. These are just arbitrary points I thought about. As well, you walk in through the subway, maybe if you have a game, right, and you see someone playing your game. You've never seen it before, right? OK, so this really seems arbitrary. And the next thing is, of course, that we are already mobile focused, right? If one blockchain game is somewhere in the top list of Apple or Google on those charts, I think there's still a long way to go. You can say where Dapper Labs, if they were on there, actually because they were so popular at the time. I think that's one instance.
And then the other thing is that you have the old argument - your mother and your father are using it. They said, “hey, I bought this,” and they didn't even know that they had an NFT in there. And then maybe there's a Super Bowl ad, with a blockchain company, but however, this produces a positive return on investment for the company who did the ad, right. It's not just, you know, that they want to be there and just advertise, right. They can say, hey, you know, because we did the ad, you know, we did X amount of revenues. These are just some arbitrary examples.
That evidence doesn't seem to be there yet. So if we see that, that's a good sign that we actually have mass adoption.
Yeah, I see that part of everyday life, right, at the end of the day, where people are fired up and do something. It's not just, you know, I go in there, buy something and then, you know, I hodl and then two months later I come back or whatever.
OK, how about how about you, Jerry?
So I think, you know, I have to agree with guys, of course, I have no other choice, it's true. I would say that from our perspective, when we look at the projects being built, what we see, is that basically, in six months we’ve see a huge increase of apps, I'm not saying NBA Top Shot maybe. We actually see a lot of projects. Some of them are huge ones. And also, you know, we see more and more interest from enterprises. You know, if you are considering outside the gaming and outside the sports and all that, there are actually huge enterprises who are interested in blockchain space as well, and also NFT space. So I think we are somewhere like my best guess would be around a few percent. We still have four or five to grow.
Great. Thomas, what do you think?
Yeah, so I think we're definitely still early on. You know, I think, as you were mentioning, it's kind of six months time frame where NFTs usually crossed into the mainstream. But, you know, there's a learning curve. And so when we even when we are launching these big campaigns and onboarding a tremendous amount of people, we're kind of the front lines of seeing people's challenges with understanding the technology, understanding the multi-step process to participate. And so we're putting tools in place to kind of help ease that learning curve. You know, but it's still a lot of education and awareness.
We're seeing that even with a lot of the artists that we're working with, a lot of their messaging and it's kind of very thorough in the instructional aspect of it, but yeah, I think it's really exciting as well. I think projects like MBA Top Shots really kind of verified certain use cases, right?
So there's a lot of stuff happening in the space right now that is kind of experimental, trying to kind of validate the products, trying to work some of the business models around them. So I think we have a ways to go, but I think it's kind of like the end of the beginning.
Yeah, I think from Epic's standpoint, we totally agree. We aren't there yet. I think the numbers we need to hit is tens of millions of consumers participating. And thanks, Dirk and Benny, for sharing some stats that are great. So as evidence, we are not quite there yet. I think awareness among consumers is really growing though. I mean, I think you know you've hit the pinnacle of awareness, or at least starting to when the Saturday Night Live creates a skit about NFTs and then makes an NFT of that. Webster's just recently added NFT to the dictionary. And yes, they made an NFT of that too, in case you didn't know. So for us, we've seen awareness and acceptance grow among our business customers. I think you've all acknowledged that too. So certainly within the last six months or so, this interest has grown significantly and we've seen more doors open on our business side. But I think as we roll out our solutions for NFTs with our AAA game company customers, we're going to see consumer adoption just go up significantly.
So we're really excited about that and really excited about that for all of us. So let's talk about how we're going to grow from where we are right now. So when I was at Nintendo, we had this, when we were trying to get mass market adoption of Wii, we had this strategy of audience expansion, bringing in those people who had never played video games or even just were just lapsed players. And we targeted them specifically with products and messaging and we were really successful at it. Obviously the end result was stunning where we had Microsoft and Sony going after traditional gaming.
For traditional gamers, Nintendo grew the entire market, not just for Nintendo, by taking this approach. And I remember meeting with partners outside of the game industry at the time, just thanking us for helping their families come together. Like, you know, grandpa played bowling with Wii Sports with the grandkids - something they never imagined could happen. So what's your strategy to expand the audience of NFT users?
I think when we go into mass market adoption, You have to use tools which they're used to, right? So it's going to be hard to tell the mass market. You have to create a wallet and have to deal with a private key and passphrases. I think that's just a no-go. I mean, we all wish and it's a big part of the decentralization and the way everything is set up, but you have to make some compromises. So I think what does work, it's email or maybe social sign-ins or something, which, you know, gets the masses on. I mean, that's pretty clear. The second thing is you have to actually start producing products, especially in the energy space, which are more for the mass market, right?
Because, of course, like the people, you know, and all the arts, you know, we've sold for millions of dollars, right? It's nice for the media, right? Always to have, you know, they create big headlines. But, you know, who can afford 69 million euros at the end, you know, it's just not happening, right? So what you need is actually other type of NFTs. And that's the true mass adoption.
It's something people can purchase for $2 or $5 and, you know, then trade it and not really just in there for the speculation and hope they can sell it for 5,000 when they bought it for five, you know, they purchased for five, they, you know, they're proud to have it. They want to show it to their friends, even their wallets. And that's also, by the way, one thing which is completely missing. How can you show your stuff to others? How can you use it in a certain way? So I think that it's important that we really lower the price.
And then the last thing is, in this context, I would like to mention that it's also important to use a different language, right? So I think you cannot really say, well, it's about true ownership and so on. Most people say, “what does this mean?” When you have to translate it and we always say here at Upland, if you don't own it, you cannot sell it. So that's something along those lines. And that's actually the new paradigm which we are bringing - the people are able to become part of the ecosystem and they can sell the NFTs, they can sell their digital goods. And that's how you have to really use the lingo, which the mass market understands.
Wow. OK, so mass market approachable prices and changing the language are going to be a part of the strategy to achieve mass adoption. Great. OK, Thomas, how about you? What's your strategy?
Yeah, I definitely agree with the language aspect. Right now, I'm really building the right kind of tools and infrastructure for onboarding users. So a lot of the activations that we do are within traditional fan bases. And so we have a wallet, for instance, where you can log in with a username and password. And then it's all built on layer two. So we've taken away the gas fees, our wallet is gassless, our marketplace is gassless. So that helps reduce the kind of learning curve associated in
the multi-step process. And then in terms of accessibility, we're launching these campaigns with music artists. We're selling albums. We're selling them for like 50 bucks a piece, and it comes with a vinyl, a physical item, as well as a digital. And there's really a long-term thinking. It's really about building a community of value through these tokens that you can continuously engage with and deliver benefits and really kind of focus attention in different ways.
So for instance, with Kings of Leon, we launched the album and the audio files. They actually gave us high quality WAV files and we had them like the next day available for an upgrade. If you would have had a single transaction where you bought an album, that would be it. You'd be stuck with whatever you bought. And then they just launched their tour a couple of weeks ago and they offered specific discounted tickets and they're having pre-events like kind of pre -show festivities for token holders every Friday for the month of August. So they're really looking at this and trying to cultivate this community, which I think is important. So I think the price factor, you know, in making it accessible, as well as thinking about this more in a longer term strategy is really beneficial.
Just to kind of comment on Maroon 5. So today they're launching a dial along with their album NFT kind of compliments. And that's really focused on social and environmental impact. And so they have a particular asset that fans are buying, that their fan base is buying to participate in this community. And that all of the money collected from that, what they're calling a seed, is then put into this pool of resources that that community is going to manage. And so I think that this is all kind of great in terms of making it accessible, encouraging adoption, conversation, and really kind of moving beyond the technology into what this can enable.
Excellent. How about Benny?
Yeah, I think that a lot of great points were brought up like language, wallets and payments, gas fees, the price factor. I think for us, when we launched CryptoKitties, we experienced a ton of friction, you know, with the mainstream rushing in and trying to buy a crypto kitty at one time, we had over a million site visits and only a thousand were able to buy a crypto kitty. So the conversion at that time in 2018 was very poor. Everyone had to set up MetaMask.
We built pretty much like educational tutorial videos for MetaMask explaining the blockchain and all of that. And we kind of learned a lot through that time period until 2020 when we started NBA Top Shot. So we made sure that in the language of NBA Top Shot, we never really talk about the blockchain. And in the realm of wallets and payments, we also have our own wallet and we accept credit cards. And you could also withdraw it via bank transfer or wire transfer gas fees so NBA Top Shots built on flow blockchain so you don't have to worry about the gas fees price factor wise this is a really important key piece is the economy and so we've made NBA Top Shot. We have these packs that you could buy - the most affordable one is nine dollars all the way up to a thousand dollar packs. But you could also go to the marketplace and buy a moment for two dollars. We're not talking about crypto punks, you know, where all of them are in the hundreds of thousands or millions where normal people can't even purchase one, right?
So all those points are really really great and I also 100% agree. There are some new things that when you reach a certain scale that we're starting to see from our perspective. One thing is this idea around digital waiting rooms or people waiting in line. Whenever we drop a pack, it's like a supreme pack drop or like a sneaker drop. And we literally at one time we had about 350,000 people line up in order to get a pack. And that's I think like two football stadiums full of audiences just waiting in line wanting to buy a pack. And one thing that we kind of went inside that popped in our head was like, well, there's 350,000 people waiting in line for four hours. They're kind of getting bored and a bit frustrated.
And we decided to put a live stream right inside of the waiting room that connected to Twitch. And our Twitch stream now has tens of hundreds of thousands of viewers. And that's a really great area for entertainment. We've brought on NBA players to talk about their moments. We've brought on other influencers. And I think that is a kind of a new wave of introducing NBA fans to get closer with NBA players because at the end of it, that is the core connection that we try to bring here, right? It's NFT from the players to the fans.
The other thing that we've been working on is a mobile game called Hardcourt. It will be free to play. And the hopes of this is that this will reach hundreds of millions of people who are NBA fans. And they can play the Hardcourt. There's not much information about it yet. We're still working on it doing a lot of page testing But that idea is to open up the top funnel and engage the gamers. The third thing is we have a hashtag. It's called #NBATopShot and it's been trending multiple times. We've had discussions at the NBA because at certain times the NBA Top Shot hashtag is actually more popular than other hashtags that come from the NBA official channel and that's creating a social experience tie-in with Twitter we know that with sports Twitter is a really important piece where fans kind of talk about what they just saw in the game and and provide criticisms or hype up the crowd and we're seeing a lot of people who see an amazing highlight and they're like hey NBA Top Shot this and I know that our LiveOps teams, we take into account that there's a lot of people who really want a moment and we might make it happen. So that's like a really interesting time with social experience and it will help with mass audience adoption as well.
Great. Thanks, Benny. It's really interesting to hear. I think for us at Epic, we're a B2B company, so our strategy is really just empowering game companies to offer NFTs in their games, and we're working with companies of all sizes. Each of them has their own slice of potential NFT customers, but we're also leveraging our relationships with AAA game companies to really help them offer to their millions of users and help grow that market for all of us. We're also working to bridge the real world to the digital world. We have lots of relationships with brands and celebrities and influencers and we're tapping into them and tapping into their fans to help bring new NFTs to their fans.
All right, let's talk about some of the things that are holding back growth. I'm sure we've all found there's a certain resistance even the concept of an NFT, right? You know, why should I pay for something I can see on the internet for free or even Benny's case? You know, why should I watch a video from a basketball game? How is that even worth something? So I think to be truly mass market, do we need to have people come to accept that there is a value? Is this resistance holding the market back? And how do we overcome this? Can we start with Dirk?
I mean, that's, of course, a little bit of holy grail, right? How do we get there? I think there's not, you know, the solution, how to do it. I think we have to go and start trying a lot of things.
And, you know, let's say, of course, it depends always, you know, when you're creating a game, you need to create something which is engaging. And, you know, we're always skeptical when you think about, when the NFT just got drops, they get dropped somewhere, then people, OK, they have it. and the only thing they can do, it's selling it on the marketplace. At Upland thing - we need to pass content to NFTs or utility to it. So you can actually do something with it. So, for instance, we're going to launch soon what we call the NFT portal. People will be able to import NFTs from other platforms into Upland. And then let's say, since you're going to have a virtual house in Upland, you can put a drawing up there and maybe brag it and show it to other people. We import a virtual car. We're introducing cars in Upland. You can drive a virtual car, right? And these kind of things are where people actually engage much more around the content, right? I think that's something you have to do for people to actually really like it. I think that's the most important thing in my mind.
So the value comes from the utility of the items?
Yeah, I think the value comes from the utility, right? Because otherwise you always have those peaks, right? You know, everyone talks about something which is pretty hip, but then, you know, you cannot do anything with it, you know, it dies off. Then you have to create this engagement around the products, right? And to get people excited about it. So that's what we have seen, especially in the past. And then, of course, you need to get some social proof. Social proof can come from celebrities and what you just said, when you work with famous people, so they're using it.
And so that's also what's probably going to help for the mass adoption. But the social proof has to be credible also in a certain way, right? If you're now just, let's say, a musical artist, you just drop something, right? Then maybe you have really hardcore fans who buy everything you do, right? But then you have, of course, maybe, I don't know, whatever the number is, five percent of your fan group. But I think you have to try to get actually to the other 95 percent. And there you cannot just drop something and go and it's you as a musical artist,you have then the responsibility to say, OK, what can you do with it? Why should you have it, right?
I think that's what I'm also seeing a little bit. The people are just saying, oh, make quick money or so. It's a different thing now with NFTs. Yes, you sell it, but you have to give this additional value of engagement also with it. Otherwise, I think we're not overcoming the barrier or the hurdle that you just mentioned.
Thomas, what do you think about that? It seems like the things you're offering actually do come with some real world piece of it. Whether they're Kings of Leon, you can actually give the vinyl or with a ticketing experience, obviously you're experiencing something in real life. What do you think about this, getting people to accept that there is some value to things that maybe don't have those real world things tied to them?
Yeah, so I think when you think of, you know, in terms of digitally native NFTs, I think that it really does come down to the value proposition of the asset. So on the art side, art is kind of, to each their own, it's perceived value and supply and demand kind of mechanics, but I think in terms of utility and the value proposition of outside of just art and what kind of experiences or benefits that asset can have. So I think in terms of digital native, and then as you mentioned, on the side of the real world, there is more of a quantitative kind of approach to the asset and kind of what it's enabling for you.
But I think there's also like opportunities where you see even digital experiences. For instance, Maroon 5 in their digital album artwork is actually going to be a listening party with the band as well. So still kind of remaining in the digital realm but still having some kind of experience around it. So yeah, definitely to me it's about utility.
Benny, I feel like I need to come to you because I called you out about the value of watching a basketball clip. So what do you think? Do we have to have people come to accept there's a value to become truly mass market?
I think that the way that we see it is very simple, right? There are fans and there are creators and I think that relationship will never go away. I think that. As people, we have musicians or artists or NBA players or celebrities that we follow because they give meaning to our lives. And the way that they lead their lives is so fascinating, and we just want to be closer to them because it's important to us.
So at the end of the day, no matter if it's NFTs or Patreon or Instagram or Twitter, like all it is that the fans want to get closer with the people that they admire that inspire them in their lives. And so NFTs is just another tool that a creator can use to get closer to the fans. Where I see things not happening, going very well is when the artist or the players or whomever they themselves aren't ready to engage fans on a higher level, right?
Maybe they're really focused on certain things in their lives or maybe they're following is way too big and there's no way for them to kind of spend the time of the fans and So, you know whether they're creating their first Twitter account or their first Twitch account or creating new NFTs what I see is that some of them just drop NFTs and then they kind of walk away and they never really had the full intention to be there, e.g. “I do care about the fans and hey I do want to spend time with them.” For those who do, from what I've seen there are like maybe 10 or 20 NBA players who are really into Top Shot, they're on our Discord and when people find them in our Discord like LaMelo Ball, they're like, “holy crap.LaMelo Ball is here and LaMelo Ball is talking about “Hey guys, I'm trying to get this moment to complete this challenge.” He's in it with everybody else. He's not on some special pedestal. He's equal with the fans. And I think that's like the most exciting part, at least from what I've seen with NBA Top Shot. And at the end of the day, that's value, right? The value is being alongside all of the NBA players that you really, really love and be able to speak with them on this court. So, yeah, that's my perspective on value.
Yeah, so I think for Epic, for me personally, my collection of digital items really represents my personal memories and experiences and achievements. And there are some things that have utility, but there are these other things that, hey, that's just a representation of me. So if I can show this off to everyone, I'm sharing my digital identity and like I said, showing off your status and membership and class. I think that's really important. Obviously, we have some of that in social media today with people expressing themselves through their own personal pictures or their favorite memes. But it's extended even more with digital items. I think that's a value everyone can recognize.
I think as we grow this and there's more examples of this, people will come to realize, this has a value, not just maybe as a utility, of course, that's always going to be there. But the value in allowing me to express myself. I think soon these doubters about the value of that will become believers. So I think it's going to evolve over time.
So, I think we're at about 40 minutes into this, and I see we have a lot of questions coming in. We're going to take questions a little bit later, so please continue to add them there, and we'll grab them as soon as we can. So let's talk about scaling this on the back end. So to support a mass market level of consumers, the blockchain infrastructure we have is going to have to support, you know, 100 million users. What does that mean for the current infrastructure we're working with today, and how do you see this scaling to support this volume? I'll give it to Jiri here, because he's on the infrastructure side.
When it comes to scaling. We have kind of issues with Ethereum right now, right? So this is going to happen to, I guess, most of our blockchains because of their limitations in performance. We can see that binding smartchain is actually getting into trouble as well sometimes. What I think will happen, when it comes to transactions, we have to go with a kind of next generation of blockchains. I'm not saying this because we have many here, but actually I think Flow is one of the good ones.
I mean, there's always something to improve, but I mean, I think it's the right way to do that. On the other hand, it's also important to say that most of the operations, marketplaces, and users are not doing right. It's mostly reads, like, you know, most of that. So, you know, getting information about NFT with the owner, what is the history of the NFT, and all that. So, and for this, we are looking for major, major infrastructures, and this is, for example, what we are actually working on. So, you know, if you are thinking about, for example, in gaming, you have, you know, easily 10 million people online, and to be able to leverage NFT in-game assets, it requires a little bit more than Ethereum or some, you know, similar chains. You actually need much more. You need much, much, much, much higher power and performance. So, we are looking basically for, for operations about, well, basically millions transactions and operations per second.
Now we currently, we actually don't have a blockchain which would be ableto do this. So either you will use some second layers and others tools, but then you are losing some benefits, or we will have to work on some next generation blockchains which will be able to power such huge loads.
Great. Okay. Thank you. Benny, how about you?
How are we going to scale? Yeah, that's a good question. Obviously like from Dapper Labs and I've seen all the nuts and bolts for the Flow blockchain, so I'm obviously going to be a big supporter of it. I think that when I came into this space with CryptoKitties built on Ethereum, the energy, the community, and the tools were amazing. I think the idea around interoperability where we could build CryptoKitties and people could pull your CryptoKitties into a DeFi app, and then you could pull it into a different type of app, that's so cool that it's like Lego blocks that you could build on top of each other. But, you know, as the Ethereum network kind of grown a lot with a mixture of DeFi and NFTs and speculators and ICOs or whatever, it's really crowded the network and we know from the gas fees, it's kind of, the only way it could work is you have to sell NFTs that are thousands
of dollars so that the hundreds of dollars of fees make sense. You cannot sell a $9 NFT because the fees would be greater. So yeah, there's a lot of thoughts around the scaling issue and I think for Flow, that idea of having everything on one chain, on the main chain, there's no fragmentation to layer two’s is the approach, is the future that we see. We see the Lego blocks and that's one of the reasons why NBA Top Shot is doing so amazing with large amounts of users and there's a lot more coming down the pipeline where I think we're going to push the boundaries of tens of millions of new consumers coming in and not even knowing them, creating a wallet and be able to own. I mean, the jury is still out there, I mean, layer two’s have their benefits. The main concern there is cross-chain communication. When you break everything into tiny pieces, it's going to be really hard to make sure that communication is very clear and easy. So that's going to be a big challenge. It's not impossible, but it will be a big challenge.
Great. Okay. Well, let's take a look at the future. So if we achieve mass market penetration, what do you think the world's going to look like for consumers and what's it going to look like for your company? Dirk, how about you?
Yeah, I think people will stop talking about NFTs, right? They will rather talk about products or stuff they do in the game, in the metaverse or together with the artist and so on. So I think that's how Iwould clearly define it. We have to remember also for NFTs, you need to have some kind of liquidity at the end of the day when, you know, it's because when you take a fungible token, right, of course you have liquidity, then you go to a certain exchange where you get all the liquidity, right, and NFTs, when you think about it, it has always this trading aspect because when you own something, you want to be able to trade it, but then, you know, there must be enough people actually doing it. There's no sense to have an NFT just completely in isolation, right, and then because you have to find somehow those products would have some kind of, what I call it maybe a quasi fungibility in the NFTs, I'll explain the second word that is, they will probably thrive and go to mass adoption, right. I'll give you one example.
In Upland we're selling addresses right now and every address is different every time is an NFT but at the same time because when we’re selling a city like Chicago or New York, right? There's still already a lot of very similar things, but they're not similar at the same time, but this creates liquidity and will and allow lots of users to come in. I'm sure NBA Top Shots going the same the same kind of direction, right? So that's where you have to have these kind of fuzzy, whatever you call it, I think I even call it network effects. That's because what we've learned from all the social media applications they all had their network effects and NFTs also must have their network effects in a certain way. If they are all unique, you cannot really have a network effect and that's that's what is important
Interesting, so what do you think it's gonna look like for your company as mass market adoption is achieved?
Coming back to the scaling issue, we overcame that, we also had some issues like all blockchain companies in the beginning with gas fees. We don't have gas fees either - in the beginning we had 30 transactions, now we have 60 transactions per second - so it is high performing, but more importantly for us is that we actually create the experience for the users. If we know that everyone tries to buy the same thing at the same time, there's such high frustration, so you need to set the right expectations. We have waiting rooms where people actually start to understand “okay maybe I’ll get in” and so that's going to be very important for us as a company because we’re in the final stages of closing a very large partnership deal, we're expecting hundreds of millions of people coming into Upland soon.
Thomas, how about you? So what's the world going to look like for consumers and what's it going to look like for your company?
Yeah, so I would say, you know, what attracted me to NFTs mostly were the correct models. And so an example of being able to do that in a broader sense is when you look at, like, Western medicine, if everybody was healthy, the system would not be making money, right? So there's a challenge there in how that's been structured, where in Eastern medicine, you pay them when you're healthy and you stop when you're sick. And so that's just kind of like a large example of how the model is ultimately serving and reinforcing and so with NFTs, I see the ability to engineer incentive structures very specifically and to bring it more into the context of Yellowheart. We started off as a ticketing company, solely in terms of the initial offering and with the mission of putting rails to tickets around secondary market sales and so the challenge there was when you think about the value chain from the artists and the creators to even underwriters promoters etc that are putting on these and taking the initial risk and putting the time into actually creating it. You have scalpers that come in and buy up the inventory and then sell it for multiple times the face value. And that's pure value distraction. And so I see NFTs as allowing us to kind of move from this value extractive economy, the kind of physics of Wall Street, to value creation and the network effects that were mentioned earlier.
I think from an EPIC standpoint, I think we see in the future that people are just going to expect to have an NFT for everything they buy that has some kind of value. And that content is going to have high quality IP and like everything, not just digitally, but for physical goods too. So as a B2B company, we're going to be there connecting the content providers, like brands and celebrities to games, to the content consumers, and be the infrastructure for those games.