NFTs have become one of the biggest trends in the cryptoactive world in 2021, with a 55% increase in sales compared to 2020, rising from US$ 250 million to US$ 389 million. And in the first weeks of 2022, platforms like OpenSea have already set absolutely new sales records.

The acronym NFT (Non-Fungible Token) is gaining prominence in the digital world. NFT is a digital certificate of ownership that certifies the authenticity of an asset, such as a piece of art, a collectible, a video sequence or a photograph. Artists, musicians, photographers and designers can turn any digital work into an NFT asset and offer it for sale. Registration is done through a blockchain platform, the same technology used for cryptocurrencies.

However, despite its recent popularity, buying an NFT is still a bit complicated. In order to purchase a digital one-of-a-kind, one must first open a cryptocurrency wallet, purchase the digital coins, and then use them to buy the NFT from a specific online marketplace.

To simplify this process and ensure access to NFTs for everyone, Mastercard has announced a partnership with cryptocurrency exchange Coinbase that will allow Mastercard cards to be used to purchase NFTs on Coinbase's upcoming marketplace. Coinbase is an investor in OpenSea.

Globally, work is feverishly underway to make NFTs more accessible. For years, the trend across the digital economy has been to make all technologies inclusive. Blockchain technology in particular is still a big mystery to many. And every single cryptocurrency is its own blockchain. And economies of scale apply again in this technology: including more people in new technologies drives innovation, supports economic growth, and expands opportunities for users and consumers.

Mastercard's entry into the NFT market is intended to increase security in addition to facilitating purchases. Here, it is important to note that it is not the blockchain itself that poses the risk, but mostly intermediate trading platforms between the end customer and the crypo-wallet. 

And it is at this point that Mastercard will provide its full expertise in the field of cybersecurity capabilities to ensure that customer data is protected and purchased NFTs are secure.

The NFT market has moved a total transaction volume of almost US$ 400 million of digital assets in 2021 and has attracted interest from retailers, galleries, brands across a wide range of sectors and institutions outside the cryptocurrency world.

Mastercard believes there is an opportunity to further invigorate the NFT market by encouraging more people to transact in this way securely and dramatically simplifying the buying experience. The rapidly growing number of NFTs will enable this expanding marketplace to support more creators and originators and usher in the next evolution, or even revolution, of digital commerce.

The success of the NFT is rooted in the fact that it can be used to sell everything from artwork to collectibles to audio, game pieces, text, GIFs and even memes. Mastercard believes that NFT technology can move beyond art into many other areas. In Brazil, for example, work is currently underway on very interesting applications to further revolutionize the music market. The NFT technology in this market has the possibility to turn the value creation of the music market upside down once again. 

Supporting the ecosystem

The partnership with Coinbase is another move by Mastercard to support the global cryptocurrency ecosystem. Last October, the technology and payments giant entered into an agreement with cryptocurrency broker Bakkt to facilitate the offering of digital currency solutions. Connecting Mastercard's network with Bakkt's digital asset platform enables Mastercard partners such as banks, fintechs and merchants to offer services with cryptocurrencies. This includes the ability for consumers to buy, sell and hold digital assets in wallets held by Bakkt. It will also be possible to issue debit and credit cards with cryptocurrencies in a simplified way.

Expert advice

Proponents say NFTs are a way to fairly compensate artists who have lost income due to the widespread availability of online media. Critics, on the other hand, see it as another speculative bubble in the cryptocurrency market just waiting to burst.

NFTs are unique collectible cryptoactive coins that have been around since 2012. These coins were simple satoshis or small fractions of a bitcoin with unique information that could link them to real assets. In most cases, however, the coins were used to trade artwork such as digital cards of the meme "Rare Pepe" on Counterparty, a peer-to-peer trading platform based on the Bitcoin blockchain.

Each blockchain has its own non-fungible token standard, compatible digital wallet, and marketplace. For example, if you create NFTs on Binance Smart Chain (BSC), you can only sell them on platforms that support BSC assets. This means you can't sell them on platforms like OpenSea, a marketplace based on the Ethereum network.

To help banks and merchants adopt digital assets such as cryptocurrencies and NFTs, Mastercard is expanding its consulting business to offer a range of services, such as risk assessment and strategy development for crypto and NFTs, and loyalty programs using digital currencies.

Another focus of Mastercard Data & Services is to support central banks in their adoption of a digital currency. To do this, Mastercard Data & Services uses its testing platform to design different scenarios and leverage its extensive experience in payment systems, regulatory policy, governance, and security.

The actions are part of Mastercard's strategy to offer payment solutions that allow more freedom of choice and different experiences, especially for young people. A survey conducted by the company found that 77% of Millennials are interested in learning more about digital currencies and 75% would use them if they understood them better.