NFT sellers are steadily ditching cryptocurrencies
Earlier this week, online travel platform MakeMyTrip forayed into the non-fungible token (NFT) market. While MMT’s foray was covered widely, a curious aspect of MMT’s NFTs was that they didn’t involve cryptocurrencies.
Each NFT on MMT’s platform is priced at Rs. 14,999 and buyers need neither a cryptocurrency wallet nor crypto holdings in order to purchase them. However, once bought, they can choose to trade these like any other NFT, either on MMT’s own platform or on OpenSea, one of the largest NFT platforms in the world. They can even choose to trade using cryptocurrencies once the NFTs have been bought.
The MMT NFTs is an example that has been brewing in the industry for quite a while now. While both NFTs and cryptos are based on blockchain technology, experts have often argued that NFTs should not be subjected to the same rules and regulations as cryptocurrencies.
As a technology, NFTs use blockchain technology to signify the ownership of a digital item. In simple terms, they’re the digital equivalent of a deed, which shows that a person owns a physical item. MMTs platform isn’t the first to use fiat currency for NFT sales, but it is amongst the biggest.
In December 2021, auto-maker MG Motors also sold NFTs using fiat currency, while production house UV Creations and online gaming platform Spartan Poker have conducted similar sales. MakeMyTrip and MG Motors did not respond to requests for comments.
All of these firms used a platform called nGageN, built by a homegrown blockchain firm KoineArth, which was also the firm behind the digital passport feature on the MG Astor automobile.
According to Praphul Chandra, chief executive officer of KoineArth, the nGageN platform is built to answer a common concern amongst brands and creators who want to dwell into the NFT space — that cryptos can not be accepted as legal tender by any business in India.
The platform doesn’t really remove cryptos from the equation. It is built using the Polygon platform, which means that each NFT sale includes a transaction of the company’s Matic token on the backend. However, this part is handled by KoineArth and the nGageN platform. The company has partnerships with payments service providers PayTM and Mobikwik, which allows users and brands to transact strictly using fiat currencies. The function of the blockchain on the backend is to keep the record of the transaction, and remember who owns a particular digital asset.
“Under the hood, we make sure that the gas fee is paid, and the buyer or the brand never sees crypto anywhere in their transaction. We bear the cost of the gas fee,” he said. Chandra eventually hopes to make nGageN an OpenSea like platform as well, but with payments being done using INR instead of Ether, Solana or any other crypto token. KoineArth gets a cut of the revenues from each NFT sale.
The gas fee is the transaction fees required to execute a crypto transaction. Since each entry into a blockchain ledger is a transaction in itself, KoineArth has to bear these fees on the Polygon platform.
KoineArth isn’t the only firm that has recognized the problem of attaching cryptos with all NFT sales though. Toshendra Sharma, founder of NFTically, also said that the company is working on solutions that will detach NFTs from cryptocurrencies. He said that the solution would allow people to buy NFTs using credit or debit cards too.
“Brands are often worried about the regulatory scenario around cryptocurrencies,” Sharma said. “We see concerns about crypto exposure. They’re worried that government regulations may make it unviable for them (in future). Specially legal and compliance teams say they shouldn’t be doing this,” he added.
In future, Chandra notes that platforms like these could take cryptocurrencies completely out of the equation when it comes to NFT sales. Chandra noted that a platform like nGageN can not only be used for trading NFTs for fiat currencies, it can also be used to trade any assets, or traditional assets for NFTs and vice versa.