Ripple CTO David Schwartz said the firm is currently working on a non-fungible token (NFT) strategy. He added that based on observations, people care little about the underlying technology, only the NFT itself and the user experience.
“Ripple is currently working on an NFT strategy. I think the key element here is the user experience, it has to be flawless and I don’t think people care all that much what technology is under the hood. The people who use NBA Top Shot just want to own the shots.”
Ripple Keeps Cards Close to its Chest
Schwartz gave a rundown of the NFT ecosystem, including accounts of his personal experience using them. But he stopped short at detailing exact specifics on how Ripple will get involved with the NFT space.
Nonetheless, based on his points of discussion, it’s possible to speculate the general area the firm could be working on. A dominant theme was the idea of developing federated sidechains.
Schwartz said the priority for the XRP Ledger is to retain its advantages as a payment mechanism. With that in mind, additional functionality, whether that’s CBDCs, NFTs, DeFi, etc., should operate on sidechains separate from the mainchain. That way, XRP’s payment capabilities remain intact and unaffected.
“NFTs shouldn’t be cluttering up the mainchain they should live on federated sidechains so they don’t bloat the XRP ledger… because you don’t make XRP worse for payments.”
Sidechains allow tokens and other digital assets to move securely and freely from one blockchain to a separate blockchain. A federation is an entity acting as an intermediate point between a mainchain and one of its sidechains. This group determines the rules for transfer between chains.
Are NFTs a Fad?
NFTs encompass various use cases, including digital art, collectibles, tokenization, authentification, ticketing, certification, etc.
In recent times, the hype surrounding them has caught mainstream attention, particularly in digital art. As with anything that’s overly hyped, the real danger is that the hype will fade away.
On that, Schwartz cautioned that NFTs could be a fad, but it’s too early to say at this time. However, he also believes there’s something to them that isn’t going away.
He referenced the insane prices some NFTs are fetching, added that the “current crop” takes advantage of people’s desire to brag.
“I think it’s early to say. But I do think that there’s something here that’s not going away. The current crop of NFTs at least seem to be exploiting people’s desire to own something that other people don’t or can’t own.”
Some have already sounded the alarm on an NFT downturn. Peter Wood, CEO of CoinBurp, said all financial markets, including NFTs, operate in cycles. While it’s inevitable the bubble bursts, he said the market would come back stronger, just like Bitcoin did after the 2017 peak.
Data from Nonfungible.com shows the average price for an NFT has plummeted 70% from $4k in mid-February to $1.4k this week.