Jacquelyn Melinek

<div id="highlights-block_618d55903aee5" class="highlights">
 <ul>
 <li>“You see literally everybody in marketing wanting to do something within NFTs.”</li>
 <li>“Growing entry of major players including Microsoft, Home Depot, Tesla, Whole Foods, Starbucks, and increasing appeal of tokenization through crypto currencies remain a key driver of growth,” according to a report by Brandessence Market Research and Consulting</li>
 </ul>
 
</div>



Non-fungible tokens (NFTs) have taken the crypto world by storm during 2021 and now every major brand and marketing specialist wants in, but this isn’t a bad thing — as it could help <a href="https://cms.blockworks.co/sam-bankman-fried-gaming-nfts-have-mainstream-potential/" target="_blank" rel="noreferrer noopener">drive mainstream adoption</a> of crypto, Yorke Rhodes, Microsoft’s director of digital transformation, blockchain and cloud supply chain, said in an interview with Blockworks. 



“You see literally everybody in marketing wanting to do something within NFTs,” he said.&nbsp;



Crypto assets have “pretty good” recognition by anybody who’s an asset investor, Rhodes said. “Crypto is an obvious foundation for digital assets and NFTs are digital assets,” he said.&nbsp;



On one side, he predicts that almost every major bank will become a custodian of digital assets in one form or another. While on the other side, Rhodes said NFTs are an interesting opportunity for brand marketers.



NFTs saw a growth of 328% in transactions during the first three quarters of 2021, according to a <a href="https://brandessenceresearch.com/requestMethodology/PostId/1735" target="_blank" rel="noreferrer noopener">report</a> by Brandessence Market Research and Consulting. “Growing entry of major players including Microsoft, Home Depot, Tesla, Whole Foods, Starbucks, and increasing appeal of tokenization through cryptocurrencies remain a key driver of growth,” the report said.



NFTs are most known for unique one-of-a-kind digital artworks, verified via blockchain technology, they can be anything ranging from a digital certified song to a screenshot of a tweet.&nbsp;



Earlier this month, Nike filed to trademark “virtual goods” for products ranging from footwear, clothing and sports bags to art, toys and accessories. These requests <a href="https://cms.blockworks.co/nike-files-to-trademark-virtual-goods-hiring-metaverse-designers/" target="_blank" rel="noreferrer noopener">hint at the possibility</a> that the company is planning to either sell its products as virtual goods or non-fungible tokens (NFTs) or is trying to protect its products from becoming NFTs. 



Separately, Visa made headlines in August for buying its first NFT — <a href="https://cms.blockworks.co/visa-steps-into-the-metaverse-with-first-nft-purchase/" target="_blank" rel="noreferrer noopener">CryptoPunk #7610</a>, for $150,000 in ether — and the company’s head of crypto <a href="https://cms.blockworks.co/visa-head-of-crypto-says-cryptopunk-wont-be-companys-only-nft/" target="_blank" rel="noreferrer noopener">told</a> Blockworks it wouldn’t be their only NFT purchase. 



The expectation is that NFTs will become integral to the burgeoning concept of the metaverse, which Microsoft’s CEO Satya Nadella <a href="https://cms.blockworks.co/microsoft-ceo-the-metaverse-will-bring-real-world-into-any-digital-space/" target="_blank" rel="noreferrer noopener">highlighted at a conference</a> earlier this month, previewing Microsoft&#8217;s foray into the space.



In recent weeks, the concept of a metaverse, which is a digital universe where people can interact virtually, has inundated the market. Meta, formerly known as Facebook, has rebranded to reflect its future vision, adding that moving forward the tech giant will be “metaverse-first, not Facebook-first,” Blockworks <a href="https://cms.blockworks.co/zuckerberg-says-facebooks-new-name-will-be-meta/" target="_blank" rel="noreferrer noopener">previously reported</a>. 



Separately on Wednesday, Disney CEO Bob Chapek said during the company’s fourth-quarter <a href="https://www.fool.com/earnings/call-transcripts/2021/11/11/walt-disney-dis-q4-2021-earnings-call-transcript/" target="_blank" rel="noreferrer noopener">earnings call</a> that the media giant plans to take a leap into the metaverse as well, consistent with its history of adopting technological innovation. 



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“Suffice it to say, our efforts to date are merely a prologue to a time when we&#8217;ll be able to connect the physical and digital worlds even more closely, allowing for storytelling without boundaries in our own Disney metaverse,” Chapek said. </blockquote>



<h3 class="wp-block-heading">NFTs more mainstream ready than DeFi</h3>



While decentralized finance, or DeFi, is also a popular sector within the crypto industry, Rhodes said it’s harder for the public to grasp. “Then NFTs&#8230;brands can embrace them without really understanding too much about the tech,” he said.&nbsp;



Last week, Microsoft&#8217;s Rhodes said that the industry has hit an inflection point and the whole crypto ecosystem is just scratching the surface of what NFTs’ are, Blockworks <a href="https://cms.blockworks.co/microsofts-rhodes-crypto-defi-and-nfts-have-moved-beyond-early-adoption/" target="_blank" rel="noreferrer noopener">previously reported</a>. 



In the near future, Rhodes said he expects to see things like NFTs at the top of the curve, where it currently sits.&nbsp;



“Many brands will continue to ape in with their own version of an NFT, which in most cases is going to be a relatively conservative approach, right? As a first toe in the water,” he said. “Then as they learn more, they’ll start to realize there’s a lot more they can do with the technologies on the brand side,” he said.&nbsp;



Between now and the next summer, Rhodes thinks people will start to evolve their understanding of NFTs and what they can do with it beyond just trading cards.&nbsp;



“I think you’ll start to see much more awareness in the market around what NFTs can be and how you might use those,” he said.



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Microsoft’s Blockchain Director: Major Brands Embracing NFTs Will Drive Mainstream Adoption

<div id="highlights-block_61841f3e50245" class="highlights">
 <ul>
 <li>The whole crypto ecosystem is just scratching the surface of what NFTs’ are, Rhodes noted</li>
 <li>Growth in crypto comes through understanding, especially for executives at traditional financial institutions, Nate McKervey, head of blockchain and DLT at Splunk said during the panel</li>
 </ul>
 
</div>



The crypto industry has passed the stage of early adoption, according to Yorke Rhodes, director of digital transformation, blockchain and cloud supply chain at Microsoft.&nbsp;



“If we look at framing this as an innovative technology and a crossing the chasm moment similar to other innovation waves I think we can learn a lot from those just how long it takes to cross a chasm like this,” Rhodes said during the Bloomberg Financial Innovation Summit Thursday.&nbsp;



“You have the early adopters and once it reaches a tipping point it becomes de facto and when I say we’ve reached an inflection point in 2021 with NFTs, DeFi and crypto, I think we’re at that point where we’ve moved beyond the early adopters,” Rhodes added.&nbsp;



Rhodes said he began the Microsoft blockchain <a href="https://cms.blockworks.co/microsoft-ceo-the-metaverse-will-bring-real-world-into-any-digital-space/" target="_blank" rel="noreferrer noopener">journey</a> in 2015. Over the past six years, he has been working to enable “enterprises to cross the chasm from a tech perspective” at the company.



Globally, the blockchain ecosystem has seen a spike in attention, deals and funding during 2021. The total funding for decentralized finance (DeFi) deals year-to-date in 2021 is over six times the amount raised in 2020 for DeFi deals, according to a CB Insights’ blockchain <a href="https://www.cbinsights.com/research/report/blockchain-trends-q3-2021/" target="_blank" rel="noreferrer noopener">report</a>. Additionally, global blockchain funding hit over $15 billion within the first nine months of the year, up 383% from $3.1 billion in all of 2020, the data showed.



<div class="wp-block-image"><figure class="aligncenter size-full"><img loading="lazy" decoding="async" width="512" height="267" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/11/chart-microsoft.jpg" alt="Global blockchain funding" class="wp-image-10457" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/11/chart-microsoft.jpg?w=512 512w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/chart-microsoft.jpg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/chart-microsoft.jpg?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/chart-microsoft.jpg?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/chart-microsoft.jpg?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/chart-microsoft.jpg?w=80 80w" sizes="auto, (max-width: 512px) 100vw, 512px" /></figure></div>



The recent growth in crypto can be attributed to a number of factors, but a lot of it comes down to understanding, especially for executives at traditional financial institutions, Nate McKervey, head of blockchain and DLT at Splunk said during the event.&nbsp;



“A lot of it comes down to the high variance of executive understanding. In some conversations we have to explain the technology, remove skepticism as much as possible but you can’t really remove skepticism until you understand the technology,” McKervey said.&nbsp;



“Those executives who have dug in and kind of have started to understand are recognizing this is potential and they’re starting to get ahead of vendors and peers. Really this is something I think everyone goes through, I went through the same thing. I was very skeptical of this technology for years,” McKervey added.&nbsp;



The move from the fear of the unknown happens through education and is a journey Rhodes expects executives to go through.&nbsp;



<h3 class="wp-block-heading">NFTs potential is “just scratching the surface”</h3>



“We’re watching the market carefully with all of the interest in crypto, DeFi and NFTs and I think that we’ve certainly reached that inflection point in the industry,” Rhodes said.&nbsp;



With that said, “NFT is a very interesting programmable digital asset that can represent many things” beyond ownership of digital images, Rhodes said. “It can also represent abstract things like entitlements &#8211; a ticket to a basketball game is an entitlement that gives you access to a specific event,” Rhodes added.&nbsp;



In general, non-fungible token (NFT) adoption has risen tremendously and continues to increase, some even predict that the space will <a href="https://cms.blockworks.co/wave-financial-ceo-institutional-adoption-of-bitcoin-defi-and-nfts-will-increase/" target="_blank" rel="noreferrer noopener">grow 100 times</a> over the next few years. The NFT funding space has exploded to over $2 billion in 2021, up 6,523% from 2020’s annual total, according to CB Insights.&nbsp;



“The ability to digitize physical assets and such even physical contracts and digitize so much more in the form of NFTs is going to make software devour the world. It’s going to make us be able to do the business so much faster,” McKervey said.&nbsp;



The whole crypto ecosystem is just scratching the surface of what NFTs’ are, Rhodes noted.