Blog : NFT's

Pearson selling textbooks as NFTs–does this open doorways for new startups?

If you went to college (or dropped out of college—hey, all the tech wunderkinder are doing it), you’re already rolling your eyes. Yeah, Pearson could disrupt the NFT space by selling textbooks as NFTs. Let’s set aside the anger and explore what it means for new startups.

Pearson? Textbooks? NFTs?

Maybe you somehow have the luck of never encountering a Pearson textbook. Pearson textbooks are hundreds of dollars and usually required by a class. Even better, Pearson has worked hard to ensure you can’t get their textbooks on the secondary market.

It began with edition inflation. Every year another edition… so you couldn’t just use an old book. Next, there were codes attached to each book for an “online lab,” even books that really didn’t need an online portion. These codes were one-time-use only, so again, you couldn’t sell the book.

Now NFTs are the latest in Pearson’s pursuit of profit.    

Removing the secondary market

But actually, this isn’t about NFTs. Not really. It’s about removing the secondary market. Pearson has been clear that it hates that its books can be resold. A used textbook can be sold up to seven times, even with multiple editions and lab codes.

Removing the secondary market is happening everywhere. Earlier this month, HBO axed a tremendous portion of its library. People were mad, but they can’t do anything about it; they don’t actually own the library, they just own access to it.

Pearson’s NFTs also remove the secondary market but use an entirely different strategy. What you’re purchasing now is your access to this book. You can’t sell it because you only purchased your access. And if Pearson goes through with this, there will probably be limited access; the Terms of Service will likely state that the service could go down or disappear entirely without liability to the company.

NFTs, web3, and the world of artificial scarcity

We’ve talked about this before, but what web3 commerce does very frequently is create artificial scarcity. Planet #24928 of the Metaverse could have infinite lots, but if we produce only 100 lots, then we profit. This isn’t new. A painter could sell 4,000,000 prints, but they chose to sell 40 because that makes their work valuable and rare.

The extraordinary thing, of course, about this new economy is that anything can become rare art, including a Pearson textbook on Quantitative Analysis for management. Many of the most successful NFT products dabble with these elements of artificial scarcity. You might pay $5 for a hat for your Metaverse avatar now, but what if we told you it was the only one in the world? 

More importantly, NFTs are moving firmly into mainstream space. CNN is selling NFTs of articles. While the world hasn’t quite gotten a handle, universally, on what an NFT is or what it means, they have continued to embrace it.

That’s some good news in the world of bad.

The funding window is closing—so go find your unicorn

If you haven’t loaded up Reddit in a minute, you might not realize that the unicorns are missing. In a reference only millennials will get, they’ve been driven back into the sea. Bottom line: You’re running out of time.  

Investors are pulling back. Layoffs are rampant. Startups are having a hard time. The time to throw out a quick mobile app and make millions of dollars was slightly before the Robinhood app launched. Things are getting lean out there.

But that doesn’t mean there aren’t opportunities. You can see that mainstream adoption of NFT, blockchain, and cryptocurrency continues even after the disastrous series of crashes this year. Pearson’s consideration of NFTs means mainstream companies still welcome the idea, provided that NFTs and cryptocurrency can solve their extant pain points. What pain points could your blockchain solve?

What Are Blockchain Smart Contracts?

What Are Blockchain Smart Contracts?

Imagine that you wanted to purchase a car from your neighbor. You open an app and accept a contract. Instantaneously, money is sent to your neighbor and the car is transferred into your possession. Everyone can see that you own the vehicle. Your neighbor doesn’t have to do anything other than send the contract. 

This is the future of the blockchain — the incredible benefits of smart contract technology. But it’s also, like most new technology, potentially dangerous and disruptive.

How is a Smart Contract Created?

Smart contracts are created on a blockchain. They are programmed to exchange a given blockchain’s token (such as wrapped Ethereum) under specific conditions. A smart contract can be sent to anyone, anywhere, if you know their address. This also means that smart contracts can technically be sent to those who have no idea that they’re about to receive them. Driven by blockchain, smart contracts have risen into power alongside crypto and NFTs. Binance, Polymatic, and Solana all support smart contracts.

What Are Smart Contracts Used For?

Smart contracts can send and receive money and record transactions on the blockchain. Essentially, though, that boils down to one thing: smart contracts, given a set of conditions, write to the blockchain. That means smart contracts can be used to validate real-life contracts, exchange goods and services, and complete very fast financial transactions. 

What Are the Benefits and Limitations of Smart Contracts?

Like crypto, the major limitation of smart contracts is that they’re difficult for the average person to understand and they’re difficult to use. More than cryptocurrency, an individual needs detailed tech knowledge to launch a smart contract. But ideally, smart contracts will become more prevalent and easier to use as time passes.

Smart contracts record transactions. But they cannot influence anything outside of their individual blockchain. That means that additional work has to be done to do things like validate real estate transactions or validate car transactions — even if that work is merely acknowledging that the blockchain provides a real record of contracts.

What is the Relationship Between Contracts and the Blockchain?

Smart contracts are built on the blockchain. This provides for triggering events (such as opening a transaction) as well as for recording events (recording them directly on the blockchain). A smart contract is blockchain technology, but blockchain doesn’t necessarily imply smart contracts. NFTs could be called a type of smart contract, as they do convey ownership to an item in exchange for money.

What is the Legality of Smart Contracts?

A contract, legally, is something that two or more parties agree upon. Consequently, no new laws are necessary for a smart contract to be a type of contract; if it is validated that both parties agreed upon a transaction, then both parties agreed upon a transaction. A car can be sold through a smart contract right now, all that would be necessary (which admittedly is a hurdle) is for the law to understand what a smart contract is and how it operates.

That being said, smart contracts aren’t intended to be a legal venue, at least not yet. A lawyer should be involved if smart contracts are used for anything that is more valuable than a car or more obscure than an NFT.

Conclusion

Smart contracts are very disruptive. Presently, someone can borrow money, buy an NFT from themselves, and then send that money back within milliseconds. That may not seem helpful, but people have borrowed millions of dollars to buy their own NFT (in a fraction of a second) thereby boosting the value of their NFTs.

Start to dig deeper and you can see how smart contracts could be disruptive. Because they aren’t regulated (and can’t be regulated) they can give illusions of profitability where there isn’t one. People who work with smart contracts need to be tech-savvy and knowledgeable due to the potential complications and ramifications.

Will NFT’s disrupt the Christie’s of the world?

Will NFT’s disrupt the Christie’s of the world?

Will NFT’s disrupt the Christies, Sotheby’s, and the physical collectible market? 

NFTs are non-fungible tokens that store data on the blockchain. Through NFTs, companies and individuals are able to trade digital items — and track the trading on a digital ledger. NFTs can represent videos, audio, photos, and so forth. They can be used to trade music albums, digital art, and more.

In practice, NFTs are used to store unique, digital goods. In other words, collectibles. People are able to securely trade these collectibles with the knowledge that the item is unique. They can prove that they have the “first” of a digital item. Because of this verification, these items can retain or even increase their value — they can become investments.

NFTs are creating a fast-expanding digital collectible market. But can they disrupt physical collectible markets? Could physical baseball cards and physical stamps someday become digital ones?

Physical vs. Digital: The Advantages and Disadvantages of NFT

The advantages of NFT are clear. As Ben Kopec from OnChain Music says, “NFTs are the new digital merchandise from your favorite artists. NFTs can also be digital collectible items, with the potential to rise in value over time, or the popularity of the artist.”

The truth is that a lot of the world has already gone digital. Look at how people are interfacing with media. People are streaming music. They’re downloading videos. And they have large archives of completely digital games. But part of the issue people have with these digital products is they’re not really “collections.” They can lose their streaming access at any time. They can lose their entire archives if the system goes down. 

NFTs make it possible to really track and keep digital products with value. Someone can have the second copy of a digital album, or the only copy of a digital work of art. But there are downsides, too. Because NFTs are just token-based ledgers, they still “point” to these works of art; for instance, an NFT may just be a URL, which can eventually go down. Additionally, there’s nothing stopping someone from selling more copies of a digital product. The value is that the product is unique, verified, and first.

NFT’s Place in the Modern World: Why Now? 

Are NFTs a good investment? It’s a complicated question.

Right now, NFTs are in their infancy. That means that there’s a lot of profit potential. But it also closes out the market; only early adopters are willing to purchase NFTs. Luckily, because of the proliferation of Bitcoin and Cryptocurrency, people are getting more excited about the blockchain — and technologies like OpenSea and Mintable.

Erik Spivak says, “In my opinion, physical work will always retain its value over digital. There’s something about the energy attached to an object that will inherently put it above something that can’t be held.” Thus, NFTs could be attached to physical works; they could be attacked to mystery boxes, crates, and bags, or integrated into other types of security. But, as Erik further points out, people invest in what they believe in, and they believe in a variety of things.

As long as people are interested in NFTs, NFTs are going to have some value. And because NFTs have such a low barrier to entry, it’s very possible that some of it will yield better ROI than more complex financial instruments. But this also depends on how scaling goes for companies like Mintable.

What’s next for the NFT Market?

The world is waking up to NFTs.

They’re finding NFTs now. There will be a boom; many people who don’t even understand the blockchain or its technology are going to be investing in NFTs because it’s the “next big thing.”

Whether it really has longevity is another question. Crypto currency clearly does. But there have been many experiments with the blockchain; some have succeeded, some have not.

As Andrei Jikh points out, “The fact that they are rare makes it difficult for the creators to mint more of the same token because it’s on the blockchain. Same with Bitcoin which has 21 million maximum coins that will ever exist.” In other words, there’s an upper limit to this type of technology.

It’s likely that NFTs are going to transition at least in part to more physical products. And it’s likely that NFTs are going to have some place in the digital market — people do want access to limited, collectible products. Trading card games like “Magic: The Gathering” are an excellent example of something that could easily transition into a digital arena, allowing people to collect digital items that are unique and inherently valuable.

But NFTs are very unlikely to become all-encompassing or to unseat Christies, Sotheby’s, and other physical collectibles. It’s far more likely that the NFT market will start being used to record such transactions on the blockchain. That will make it easier to verify and track the provenance of collectible items.

Most people aren’t going to need to tie NFTs into their own tech or their mobile apps. But understanding new technologies is our business. Contact Colure’s Mobile App Development Team to either discuss projects or be featured in our next series of “Disrupting Venus.”