NFTs Will Drive BSV Adoption
Almost all BSV transactions today are NFT related. This isn't going to change anytime soon. Why?
BSV just did over 10 million transactions in a 24 hour period. Almost all of these were related to NFTs. Why? The killer app of BSV may be micropayments, but the micropayment economy needs to form around a product. That product is NFTs
There have been lots of things to point to as barriers to BSV adoption - Craig, delisting, limits on scale, general unpopularity. However, an even bigger barrier to adoption may be BSV’s value prop itself. Even though the opportunity presented by micropayments is massive, there are some inherent hurdles to micropayment adoption.
The classic chicken-and-egg problem clearly applies to BSV micropayments, but it’s a common problem for any network driven problem. An adoption problem uniquely posed by micropayments is that they are most appropriately used for “micro-sized” products and services. A one cent payment is a perfect payment for a product or service worth one cent. The problem with one cent products and services is that they aren’t worth going through any kind of significant onboarding to buy. Even valuing a user's time as low as US minimum wage, a two minute onboarding costs 25 to 50 cents. Even the fastest onboarding in BSV, signing up for a HandCash wallet and using their fiat onramp, takes at least a few minutes if you are speedy.
Additionally, one can’t onboard at will for an amount as low as a few cents. Faucets or pew pews are available for users who are “in the know”, but for most of the world, methods like the HandCash fiat onramps with their $5 minimum purchase will deliver the smallest amount of BSV acquired through an initial purchase.
While I wholeheartedly believe that payments under a dollar will be a major part of the future of the internet economy, they pose an inherent difficulty in the onboarding challenge due to the limited value of the product or service relative to the time spent onboarding and the minimum amount of BSV that must be acquired at a time. Even more tricky is the fact that on the other end of the spectrum, the problems with legacy payments start becoming lessened, and their benefits more significant. For a $100+ purchase of a physical good, for example, chargeback protection starts looking pretty nice.
So, what is the price range of products which benefit from micropayment capabilities but aren’t too cheap such that they can’t justify the onboarding cost? In my view, the sweet spot is $1-$2. But, it also doesn’t work as well if these are recurring purchases. If I’m a writer and I have a blog, $1-$2 might be the sweet spot for a single article, but the subscription model serves me relatively well compared to trying to onboard people to a new technology. It is much more beneficial to use a micropayment solution when paying for a one-off product rather than something recurring.
At the end of the day, the truth is that it is extremely hard to create the first app where micropayments are the big draw. It requires hitting the sweet spot between having something worthwhile to justify the onboarding cost, but being sufficiently poorly serviced by legacy payment options such that it is worth the churn that comes from requiring a lengthy onboarding.
NFTs address the hurdles to adoption facing micropayments in several key ways. First, NFTs and NFT economies are highly malleable. Duro Dogs is an example of an NFT game economy that is tailored around the sweet spot price point of $1-$2. A Duro Dog costs $1.99, and there are a growing number of $1-$2 NFT-related purchase opportunities within the game. Because we have a very high degree of control over the Duro Dogs economy, we can continue targeting this adoption sweet-spot pricing range, or adjust it if data reveals that $0.50-$1 or $5-$10 are the types of purchases that get new users over the hump of pulling out their credit card and buying their first BSV, then we can adjust the economy accordingly.
Another killer feature for NFTs in terms of adoption is their ability to help new users get onboarded to the micropayments economy by earning. This is a large part of what is driving the success of games like CryptoFights and Duro Dogs. Players can get their first BSV without going through any significant onboarding hurdle through selling NFTs they have earned to users who have already been onboarded to the micropayments economy. For users in countries where even the current $5 minimum is a significant amount of money, this will be one of the primary ways that users get onboarded to the BSV micropayments economy.
Perhaps the most important benefit of NFTs to onboarding users to BSV is the fact that they intuitively demonstrate some of the primary benefits of using a scalable public ledger. Using a blockchain like BSV makes interoperability much more achievable. Being able to see an NFT like a duro dog seamlessly move from application to application is an experience that helps show why the BSV economy is something worth joining in the first place. The ability to pay for more things may not seem very sexy to outsiders, but the ability to get an immersive, dynamic, interoperable gaming experience has that sex appeal.
Even some of the limitations of NFTs are good for getting users to adopt a currency like BSV. One of these is the problem posed by chargebacks. For NFTs which are not revocable by the issuers, most NFTs, chargeback fraud becomes a major obstacle to accepting legacy payment solutions. Few NFT exchanges accept credit cards directly for this reason. A currency like BSV is much simpler since neither the payment nor the product can be revoked. While I think games like Duro Dogs have much greater potential to drive adoption than a limited NFT collection of a few thousand profile pictures, if people want those pictures, they will have to get BSV first.
As more and more users are onboarded into the micropayments economy, the challenge gets easier and easier. Earning opportunities will increase for apps, creators, and users alike. As more revenue is available, apps, their onboarding, and their marketing will all increase, lowering the barriers to entry, increasing the incentive to join, and helping to get the word out in a compelling way.
Without NFTs, the prospects for BSV adoption would be much more grim, but with NFTs, we could see explosive growth of applications as soon as this summer. My team is focused on exactly that with NFTY Jigs and Duro Dogs.
Next time: Creator economies and the real catalysts for interoperability