“To NFT, or not to NFT, that is the question: Whether ’tis nobler in the mind to suffer the slings and arrows of FOMO, or to take arms against an OpenSea of troubles and by opposing end them.” Shakespearian parody aside, the decision to enter the NFT marketplace should not be taken lightly. The usual “Test, learn, modify, repeat” model does not quite apply. Here’s why.
This article assumes that you know what an NFT is. You know what a blockchain (distributed ledger) is. You know what a smart contract is. You have a digital wallet and own some ETH and other crypto. You have taken digital custody of at least some of your crypto. You have purchased and sold (or attempted to purchase and sell) at least one NFT. You have taken digital custody of an NFT. If all of the above is not true, you should recuse yourself from any group discussion about your company’s NFT strategy, because you are not qualified to contribute. That said, it will take you less than a day to obtain all of the knowledge you need, so go for it! If you need a primer for your journey, check out Blockchain – Cryptocurrency, NFTs & Smart Contracts: An executive guide to the world of decentralized finance.
The decision matrix for your NFT strategy has to start with a classic risk analysis. There are four basic areas that must be workshopped with your team along with a group of subject matter experts.
Known Knowns: Risks We Are Aware of and Understand
The “known knowns” area should not be assumed. List the things you think you know about the risks of NFTs. Include public perception, social justice warrior attacks, and all of the soft risks as well as the known tech risks such as the “Pick any two” trilemma of scale, decentralization, and security.
Unknown Knowns: Risks We Understand but Are Not Aware Of
In the workshops we do, I like to spend a little extra time enumerating the “unknown knowns – risks we understand but are not aware of.” Much of this risk can be mitigated by a “lunch & learn” session designed to help the leadership teams adopt a common nomenclature while interactively discussing the “art of the possible.”
Known Unknowns: Risks We Are Aware of but Don’t Understand
The “known unknowns” list is always long, and while it is easy to enumerate, special care must be taken to ensure that items on this list don’t belong in one of the other categories – especially “unknown knowns.” If someone (internal or external) has the knowledge you need to mitigate or limit a given risk, you owe it to yourself to obtain this knowledge. My promise to my clients is always, “We’re going to make new mistakes, not old ones.” I have T-shirts for everyone that say, “Make new mistakes.” When thinking about NFTs, that is the best possible approach.
Unknown Unknowns: Risks We Are Not Aware of and Do Not Understand
By far the scariest area of any risk analysis is the list of “unknown unknowns.” This is where we are forced to operate outside the boundaries of our imaginations. It’s a list of things so evil, so horrifying, so unlikely, so insane, so _____ [fill in the blank] that you can’t even imagine it happening. We often leave this area blank because if you can imagine it, it doesn’t belong in this box. The only way to mitigate “unknown unknowns” is to be maximally adaptable and “ready for anything.” Which is easier said than done.
When we do these workshops, I like to enumerate the above lists of risks with vigorous Socratic debate between highly experienced and highly inexperienced participants.
Those with superficial knowledge play the role of consumers. Those that are “too smart for the room” play the role of the know-it-alls they are. “Is our NFT marketplace simple enough for ____ to use it?” “Does everyone need a digital wallet?” “Can they use a credit card?” “Will there be tax issues for our consumers?” “Do we need to warn them about anything?” “Are we putting our fans at risk?” “What happens if some foreign hacker counterfeits our NFTs?” And on and on.
In the end, these workshops surface the best possible answer to a question such as, “Should we get into the NFT business?” The leadership will be aligned on the nomenclature, potential strategies, the art of the possible, the downside, and the upside. When considering a family of technologies where most potential consumers have awareness but little or no experience, this is about the best you can do.
If you are thinking about the NFT space or other blockchain or decentralized finance projects, please reach out. We’d be happy to chat about them with you and, if appropriate, work with your team to help you answer the question: “To NFT, or not to NFT?”
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Author’s note: This is not a sponsored post. I am the author of this article and it expresses my own opinions. I am not, nor is my company, receiving compensation for it.