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 Non-Fungible Token: A Win For Digital Capitalists In Nigeria?

 Non-Fungible Token: A Win For Digital Capitalists In Nigeria?

For the purpose of this article, we shall be taking a look at the meaning of digital capitalist vis a vis Non-Fungible Token (NFT). Secondly, we shall attempt to give an analysis of government regulatory policies in Nigeria as it concerns the digital economy, particularly as it concerns the unpredictability of cryptocurrency. Lastly, we shall take a look at the acceptability of NFT as a digital marketplace for creatives, digital marketers, big tech companies (like Meta), sports companies, athletes, intermediaries, etc.

A digital capitalist is another way of describing a private entity that operates in the digital space. This commonly refers to tech-based digital services or product providers. 

In Nigeria, there are currently a large number of digital capitalists, including foreign big tech companies like Meta, Google, e.t.c, vying for the unlimited economic and financial benefits that the digital space has to offer. Like every other business entity, digital capitalists seek to provide a solution to an existing problem. However, digital capitalists have taken a step further by bringing essential products and services to our fingertips. A common example is the retail market capitalists such as Amazon, eBay, Jumia, e.t.c. The services rendered by these digital companies have eliminated the difficulty of shopping and replaced it with a more effective and efficient method of commercial activity.

What is a Non-Fungible Token? Commonly referred to as NFT, the word “Non-fungible” means transferable. NFT is a digital asset that certifies unique ownership of an item, but without a fixed value, making it un-interchangeable. An NFT acts as a token of ownership over an item, so even if the owner of the item never even has it, the NFT proves they own it. Protected under the decentralised format for which cryptocurrencies are known for, blockchain technology, these tokens can be anything from a picture, audio, or video to a 3D design or animation. While they work under a similar system to that of a cryptocurrency, they are the very opposite of a currency given that because they do not adhere to a fixed value, they are not interchangeable. Therefore, in practice, a non-fungible token (NFT) is a non-interchangeable unit of data stored on a blockchain, a form of digital ledger, that can be sold and traded.  Because each token is uniquely identifiable, NFTs differ from blockchain cryptocurrencies, such as Bitcoin.

NFT is a much-needed tool of marketing and it represents the future of digital capitalists through the use of cryptocurrency. Though, it has been said to be a show of class by the wealthy, especially in the area of digital art collection. 

Despite the class remarks that sales of NFTs as generated, it is indeed a unique and industry innovating tool that has served as a catalyst for a new dimension of digital commercial activities. The success of this is predicated on the use of cryptocurrency (Ethereum) as an acceptable means of payment for trading in the NFT space.

With a population of over 170 million people, of which over 60% are youths, it is a fact that Nigeria is the most populated black country in the world. Thus, with a teeming youthful population with diverse interests and creative potential, the rewarding possibility of investing in the digital financial technology space should be a necessity for the government in order to keep pace with the developed countries of the world.

The Nigerian government has expressed its genuine interest to move from analogue to a fully digital economy. This is an attempt to keep pace with the fast-paced and ever-evolving financial technology innovations in the world. However, the Nigerian government is yet to provide the necessary infrastructural facilities to complete the transition to a digitised economy. In addition, an essential aspect of a digital economy is the presence of robust and dynamic domestic laws and regulatory policies. To this end, we have witnessed the Nigerian government, through its regulatory body, the Central Bank of Nigeria, consistent restriction of the use of cryptocurrencies like Bitcoin, Ethereum e.t.c as an acceptable means of exchange. However, the same government introduced a digital currency called E-Naira as the government’s alternative to more established digital currencies like Bitcoin, Etherium, et al, a laudable step which begs the inevitable question of the country’s digital sophistication and security in the event of a cyber attack/hack?.

Nft is a new tech trend and like all tech innovations, it has had its fair share of criticism, chief amongst it has been NFT described as a “status symbol” with little or no intrinsic value, in addition to the fact that a buyer of an NFT piece does not necessarily own its copyright. However, there has been a wide acceptance of NFT around the world from established sports franchises, athletes, celebrities, Multi-national business organisations like Nike e.t.c.  The most recent and controversial NFT sale has been the reported Liverpool Football Club release of over 170,000 Non-Fungible Tokens, which has been projected to raise more than £8.5 million for the club. The record of high purchase sales and resale of NFTs has raised numerous eyelids, especially, with the use of a high carbon footprint. However, this has not reduced the global plunge into this “newish” tech trend that has only been around for a decade. 


Which brings me to a question I ask myself, why should the Nigerian government not endeavour to make a profit from cryptocurrency via NFT? Conversely, if the Nigerian government’s policy against trading in cryptocurrency persists, it would do no harm not to actively/directly oppose it. At the very least, a possible scenario could emerge where private companies, and entrepreneurs, could make headway with the myriad opportunities that cryptocurrency has to offer by trading NFTs. Though, there is no law in Nigeria that has declared cryptocurrency trading illegal. It is obvious that the posture of the government and the central bank is that of an adversary, which does not bode well for the nation’s future in the digital and financial technology space. In spite of this, it is laudable that efforts have been made by the Securities and Exchange Commission (SEC) through its introduction of regulatory guidelines for digital currencies and crypto-based start-ups, indicating that they will supervise crypto-token or crypto-coin investments where the nature of the investments qualifies as “securities transaction”.

Joseph Asikpata

References

https://www.thedrum.com/opinion/2021/11/22/five-the-biggest-companies-already-using-nfts

https://en.wikipedia.org/wiki/Non-fungible_token

https://www.wired.com/story/how-to-buy-sell-nfts/

https://www.nairaland.com/7065838/cbn-fines-uba-access-bank

https://www.usatoday.com/story/sports/nba/warriors/2021/04/27/warriors-become-1st-professional-sports-team-launch-nft-collection/4856913001/

https://www.reuters.com/article/us-football-nfl-gronkowski-nft-idCAKBN2B11Y4

https://www.livemint.com/news/world/hollywood-celebrities-who-have-launched-nfts-11644626580528.html

https://www.thisisanfield.com/2022/03/liverpool-projected-to-earn-more-than-8-5m-from-controversial-nft-sales/

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