Realistic Use Cases for NFTs and Atomic Swaps: Bitcoin Masterclasses #5 with Dr. Craig Wright

by James · May 18, 2023

Despite what he has said about exchanges in the past, Bitcoin creator Dr. Craig Wright likes the technology. But it should be used for businesses dealing in real assets of real value to the economy, not empty price speculation. This third session of the fifth Bitcoin Masterclasses series examines why NFTs and “atomic swaps” are necessary and the best ways to implement them legally.

“This is what NFTs are supposed to be used for – buying, selling, etcetera … if we do this right, we should be able to buy, exchange all kinds of things,” notes Dr. Wright.

What we are effectively doing here is: Party A proving what they actually have; what the goods and services are and their tracking; and trade one (tokenized) good for another while knowing the full story. We exchange inventory and yes, even competitors will do this sometimes if it is mutually beneficial.

The example of perishable goods comes up again, but other goods/services with values can change with time and circumstances, such as concert tickets and travel-related items. Luxury brands and electronics are interested in reducing the number of counterfeit goods on the market. For all these items, it is useful to know their full history.

Brainstorm ideas for NFTs and nuclear swaps in various industries

This session features a short breakout session where the audience brainstorms ideas for real-world NFT use cases and secondary exchanges (eg commodity futures) that can come from them – as well as how these can be implemented.

The first proposal is an entertainment “OG superfan token”, which is not a new idea, but an element for which there is a clear demand. Recording artists have shown value in selling limited/special editions, mass releases with low serial numbers and special access at concerts (eg meeting the performers).

Other proposals include tokenized supply chains for wineries and small-scale agriculture, profit sharing, authorized resale marketplaces for sports and other events, return processes, custom fashion items with royalties for the designer, car rentals, and possibly even a trading market for invoices and crowdfunding activities for projects.

Dr. Wright encourages participants to consider other things such as upper limits on the size of a market and potential amounts that can be raised, legal/tax/accounting issues (are you selling a security or a commodity?), and whether something is considered a “pre- sale.”

– Practically everything where you don’t have direct cash payments is a kind of security. That’s where people go wrong. Whether there is security under the regulations is another question, he says.

Brainstorming suggestions may reflect the demographics of those working in the blockchain industry, so there is often a bias towards high-end/niche entertainment and lifestyle goods. However, it is important to remember that much of the economy consists of more mundane supply chains such as supermarkets and machine parts, and these sectors may contain more untapped value. It is useful to study how these industries work.

Regardless of industry, nuclear swaps can work for anyone who engages in peer-to-peer exchange, and this direct form of trading lowers costs and increases efficiency. They also enable more participation by independent parties along the chain – everyone earns their correct percentage of a final sale – rather than everything being controlled by large conglomerates. Smart contracts allow these percentages to be negotiated, adjusted and paid automatically, no matter how small.

“Visa and Mastercard make more money on Walmart sales than Walmart does,” notes Dr. Wright.

The Bitcoin Masterclasses series is aimed at developers, and sessions often contain a lot of technical details. However, most are also beneficial for entrepreneurs with little or no technical knowledge, who want to expand their imagination of what is possible. As always, we recommend anyone interested in the blockchain world to watch these sessions and hopefully find the next big (and profitable) idea.

See Bitcoin Masterclass #4: nLocktime and Delayed Transaction

New to Bitcoin? Check out CoinGeeks Bitcoin for beginners section, the ultimate resource guide for learning more about Bitcoin – as originally envisioned by Satoshi Nakamoto – and blockchain.