Anyone who has spent above marginal time on the internet in recent weeks has likely encountered a new term floating around tech spaces: NFT.
Notably, the technology made headlines when a piece by digital artist Beeple sold for nearly $70 million at a Christie’s auction in March.
But what exactly is an NFT, and is the craze around the technology something travel brands should pay attention to?
Starting with the basics: NFT stands for “non-fungible token,” or, as Larry Pang, head of business development at IoTeX, says, an NFT is a type of cryptocurrency.
What makes NFTs – compared to other cryptocurrencies or physical money – different is their uniqueness: Because NFTs are non-fungible, each token, which is stored on the blockchain, has a unique identifying code and is therefore not interchangeable.
The most high-profile use cases for NFTs have been around the sale of digital items such as art or music. The digital asset, Pang explains, becomes something someone can own, and it can be traded in a peer-to-peer fashion without intermediaries.
In travel, Pang believes NFTs present an opportunity for travelers to prove they have done a particular thing: If a traveler visits a specific landmark in the physical world, for example, he or she could receive a digital souvenir in the form of an NFT.
“It’s a great way to not only log your travels, but it also allows [proprietors] or restaurants or graffiti artists or anyone that has something in the physical world that they want people to engage with to offer something in a digital world as an incentive to engage in bridging the gap between the physical and digital,” he says.
Proof of travel
Recently, IoTeX introduced a new product that allows travelers to mint exclusive digital assets based on “proof of travel.”
Called Pebble Tracker, the hardware is able to capture and cryptographically sign real-world data such as location, climate, motion and light using a built-in secure element, similar to the ones used in smartphones for FaceID.
Once gathered, verifiable data from the Pebble Tracker is then assigned to a decentralized identity, which IoTeX describes as a “personal data locker,” which allows users of a device to own and control the verifiable data exclusively.
In April, IoTeX announced it has partnered with blockchain-based online travel agency Travala to explore using Pebble Tracker to record travelers’ journeys on the blockchain, fueling new use cases like decentralized travel logs, travel competitions and location-based NFTs via the aforementioned proof of travel.
Pebble Tracker can prove “in a tamper-proof way that you were at a certain place at a certain time,” Pang says.
NFTs are a lot about clout.
Larry Pang – IoTeX
“It’s basically an asset tracker that provides tamper-proof GPS readings and proves facts to the blockchain in order to generate a response.”
Someone visiting a museum, for example, could collect digital “badges” by visiting all the Spanish-style art in the museum, incentivizing them to complete a specific itinerary and rewarding them with proof of what they completed.
But what would be the incentive to collect these digital badges in the first place?
“NFTs are a lot about clout,” Pang says. While some people collect shot glasses and magnets from their trips, he believes the future is in having a digital wallet, something “you can show to other people and say, ‘Hey, this is what I’ve done.’”
The next foray for NFTs, he continues, is going to be around digital reputation. “It’s not just about ‘I have this.’ It’s more about ‘I’ve done this, I’ve visited this, I’ve experienced this.’”
With Travala, which in March partnered with Viator to make tours and activities bookable via cryptocurrency, IoTeX has discussed the possibility of creating different scavenger hunts – “kind of like a decentralized, Amazing Race-style thing” – where travelers could prove they completed a certain chain of activities.
“People trust the blockchain,” Pang says. “So having that level of trust – but also expanding that footprint of trust into the real world, not just in these digital currencies – in travel opens up a lot of interesting ideas.”
By completing certain activities, another scenario could be a traveler earning loyalty points or discounts for future flights. For destinations, DMOs could also work with local artists to offer limited-edition digital art for visiting small businesses.
“As the world opens up again, I think a lot of brands are considering new ways to connect with their audiences,” Pang says.
Of the IoTeX and Travala partnership, Thomas Helldorff, vice president for airlines and travel at Worldpay from FIS, says that creating digital travel logs could indeed facilitate the proof of completion of a particular travel element.
“That in turn could trigger B2B payments between the travel distributor, e.g., an OTA, and the travel supplier.”
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That said, Helldorff says he doesn’t see much of a use case for NFTs in travel just yet.
Looking at the concept of NFTs from a payments perspective: “Travel companies are not in the business of speculation,” he says.
“With laser-thin margins, they need to know exactly what they will be earning from a particular itinerary and would hedge even medium volatile currencies against their base or reporting currency. Airlines and travel companies that do accept cryptocurrencies like Bitcoin or Ethereum typically do this through an exchange that immediately convert those tokens into stable, fiat currencies. Travel companies, that way, don’t take any exchange risk.”
With NFTs, “travel companies could issue premium experiences as NFTs that could be sold in a secondary market or used after the fact to commemorate the event,” Helldorff says.
However, “It is uncertain what demand there would be for this or the benefit to the travel companies.”