Revolutionising the World of Ticketing Through NFTs
11 August 2022
NFTs (non-fungible tokens) have come a long way since they were first introduced back in 2014. In 2018, the NFT ecosystem began to flourish with over 100 active projects operating on the market. Since then, NFTs have broken away from their original association with the gaming and art markets and other potential market applications are being explored. One such application involves ticketing.
NFTs and Ticketing: What is the link?
NFTs are digital tokens that cannot be divided or replicated. Each one is unique, carrying an identification number and meta-data relating to its ownership and history. These tokens differ from cryptocurrencies (or fungible tokens) which can be traded for similar tokens and divided between several parts. The two types of tokens share a significant trait: they are both built upon the blockchain.
Currently, the trading of NFTs is carried out on part of the Ethereum (ETH) blockchain, though other blockchains have implemented their own version of NFTs. Ethereum is a cryptocurrency, like bitcoin or dogecoin, but its blockchain also keeps track of who’s holding and trading NFTs.
As the NFT industry continues to evolve at a rapid pace, using NFTs for ticketing can potentially benefit all stakeholders including artists, audiences, and event organisers.
In an NFT ticketing system, event organizers would first create the required number of NFT tickets on their choice of blockchain platform and either set a fixed price, or else run the sale as an auction. A buyer would purchase NFT-based tickets directly from the ticketing company and when the transaction is completed, a smart contract would be triggered, and the database would send the NFT ticket to the consumer.
Ushering in a new age of ticketing
Traditionally, ticketing systems are designed to prove one’s right of access to an event or service. With NFTs, the uniqueness of each ticket is strengthened, reducing the risk of fraud, theft, or loss. By holding tickets in the form of NFTs, one can verify the legitimate owner of a ticket with a quick scan of the blockchain.
In addition, NFTs guarantee ticket validity as they can be ‘burned’ after use to avoid fraudulent resales or reuses. ‘Burned’ NFTs are sent to a verifiably un-spendable address, eliminating the NFT from the blockchain while transactions leading up to the burn stay on the blockchain ledger.
Being both an immutable and irreversible digital ledger, the blockchain is designed to trace and verify the transactions that take place within it. Thus, NFT transactions are transparent, since one can view the originating source and any transactions thereafter.
The authenticity of NFT tickets also leads to a cost benefit for the event organizers since one can produce an unforgeable ticket for less production cost and in much less time than printed tickets, and customers and organizers can validate the authenticity of every ticket on the chain and track the history of ownership.
Artists also stand to gain from the mainstreaming of NFT ticketing since this system can also facilitate an automatic royalty payment for creators, artists, or resellers. Moreover, creators could allow resales of tickets on the condition that the sale does not exceed the original value of the ticket, otherwise it will be voided.
NFT tickets also allow event organisers to access ticketholder data following the event. This is useful for tracking attendance, market research and optimizing marketing and promotional activities.
Although there are other aspects of NFT ticketing that are still being studied, the live events space is one of the industries that will potentially be completely disrupted by NFTs.
Fans benefit from authenticity and fair pricing, while event organisers can improve security, reduce fraud, and gather valuable market data. Meanwhile, NFTs can potentially introduce new revenue models for both artists and creators.
At AE, we regularly participate in international forums via our membership in the international legal network Multilaw.
Should you wish to discuss any ideas related to employing NFTs for commercial use, reach out to us and we will provide the expertise and guidance required to take your idea forward.