There are some who think that non-fungible tokens (NFTs) are just a fad. After all, as the old investing maxim goes: Price is what you pay, value is what you get. In recent months, we’ve seen tens of millions of dollars paid for artwork. As reported, digital artist Beeple sold an NFT piece for $69 million. Elsewhere, Jack Dorsey’s first tweet sold, in NFT form, for almost $3 million. Time will tell if these (and other) transactions were fanciful speculations or shrewd investments.
But there’s a utility to the NFT that speaks to a plethora of use cases in the digital realm, in payments, in asset exchanges and in data flow. NFTs exist as tokens that, generated and transmitted across blockchains, are secure, one-of-a-kind and unable to be duplicated.
But as with any new commerce ecosystem, paying and getting paid may be rife with friction. Many online marketplaces that support NFTs allow for transactions to be made in cryptos, while others allow for more traditional means like credit cards. But having a streamlined path that allows consumers to switch between preferred methods – while encouraging a continued pivot into cryptos as a payment method – has thus far proved elusive in the nascent NFT market.
To that end, FinTech Circle said late last week that it has launched what is being billed as a comprehensive payments solution geared toward NFT platforms and merchants. The solution would let those stakeholders accept credit card and crypto payments. Also on the horizon and yet to be rolled out: support for USD Coin (USDC), bitcoin and Ethereum payments, NFT custodial services and yield-generating Circle accounts for NFT marketplace operators. Circle said in a release that allowing this range of payments can expand the adoption and use of NFTs amid what the FinTech is calling the “marriage of traditional payment rails and leading digital dollar stablecoin USD Coin (USDC).”
In some ways, we contend, the NFT announcement resembles the news on Monday (March 29) that Visa is using stablecoins – specifically the USDC – to settle transactions. In an interview with Karen Webster, Cuy Sheffield, vice president and head of Crypto at Visa, said that crypto-native companies can formulate new business models without grappling with traditional fiat in their treasury and settlement workflows.
At a high level – in the case of both the Visa and the NFT announcements – streamlining the behind-the-scenes complexity of crypto transactions makes it easier for merchants and marketplaces to accept card and crypto transactions.
Circle said in its NFT announcement that its digital asset account infrastructure and APIs will enable NFT markets and other entities “to easily store NFT assets” and allow customers to transfer standard NFTs in and out of their markets and services. Importantly, NFT developers, the firm said, can store their holdings in the company’s high-yield digital dollar accounts, enabling idle working capital to earn between 4-8 percent APY on USDC. This seems a way to pay digital-first firms to develop NFTs for new use cases, while generating at least some additional cash on hand to deploy into R&D and other corporate efforts.
Crypto collectibles, which is how one might think about NFTs, may settle down from their currently stratospheric levels and move toward more mundane fare – less Beeple than Beanie Babies, perhaps. But the way to get there is to pave a path toward fluid, and flexible, transactions.