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A representation of virtual currency Bitcoin is seen in front of a stock graph. Picture: REUTERS/DADO RUVIC
A representation of virtual currency Bitcoin is seen in front of a stock graph. Picture: REUTERS/DADO RUVIC

The once-obscure crypto trade is quickly cruising into mainstream business and finance as a viable and legitimate industry across the world, including SA. Recently, some early adopters and wealthy entrepreneurs attended Africa’s largest auction of non-fungible tokens (NFTs) where many hundreds of thousands of rand were invested into this crypto asset form.

For the uninitiated, “non-fungible” means the token is digital, unique and cannot be replaced or copied. NFTs are essentially special digital tokens that are incorruptible in nature and can carry a high value in the real world.

NFTs are stored on a decentralised platform called the blockchain, a ledger that stores every NFT or other crypto asset that has been created. For this reason, the blockchain is often used as a digital certificate of ownership.

Another way to think about the blockchain is to consider it an open, transparent and ultra-reliable bank safety deposit box. Your NFTs are assets stored by this particular bank, which follows all the procedures you would expect from a normal bank to protect your assets from theft or fraud. The blockchain makes sure the rightful owner remains the sole and only owner of the assets that are stored within it.

This blockchain “bank” also helps facilitate the safe trading and sale of these assets, and follows the rules set out by the contract that governs the asset, creating an incorruptible trail of to whom and where the assets have been sold or transferred to over time. Even more remarkable is that all of these processes happen automatically, and all of the ledgers are immediately verified by hundreds of thousands of independent auditors called nodes, all of which, combined, make these particular transactions incredibly fast and safe.

A crypto-wallet is needed to transact on the blockchain, much like you would require a bank card to make payments in the real world. Due to their immutable nature, NFTs can also be used as financial instruments. They can be used as NFT asset sale transaction instruments and NFT asset options. Moreover, they can be used as certificates of authenticity, linking the NFTs to real-world assets.

Lease agreements can now be drafted as smart contracts, where the performance of obligations is effected by the smart contract itself. Some of the oldest forms of smart contracts are found in food and beverage vending machines. You insert the coins and the beverage comes out. There is no need for a trusted human intermediary to deliver the beverage. The contract, built into the vending machine, attends to the delivery obligation.

Some recent examples in SA show how the potential of NFTs can foster our country’s economic growth. Earlier in November, several NFTs were sold at a Cape Town auction run by Momint, mostly for worthy charitable causes. One item was a world-first — the NFT of a rhino horn, which sold for R105,000. All the net proceeds of this sale have gone to BlackRock’s rhino conservation efforts to save the endangered rhino population in SA.

Another item was the NFT of a rugby ball signed by Bryan Habana, coupled with a one-on-one real-world session with Habana himself. The NFT sold for R80,000, with all proceeds donated to the Bryan Habana Foundation to encourage young people to succeed in sport. 

And close to home for so many of SA’s struggle heroes was the auction of former ANC president Oliver Tambo’s spy pen gun NFT. The spy pen gun itself was a gift to Tambo by the East Germans during the apartheid struggle, and was secretly kept by struggle stalwart and former intelligence minister Ronnie Kasrils for many years. The actual spy pen gun asset is now under the custodianship of the Liliesleaf Farm, which is where anti-apartheid activists including Tambo and his closest friend, Nelson Mandela, hid from the apartheid state. All net proceeds of the R50,000 sale of the spy pen gun NFT have gone towards saving Liliesleaf and its huge real-world heritage value from financial distress.

There is certainly room for the continued growth of NFTs as a nascent industry on our continent. The value of all NFTs auctioned that night places the items in the top 5% highest-value NFTs sold in the world to date. It is clear that we have only just begun to explore the many different ways NFTs and blockchain technology can be leveraged to unlock value, especially in Africa. SA is already a pioneer in the conservation NFT space, and the creative potential to drive digital value for real-world growth is immense.

Given the incorruptible nature of the blockchain, there are many more use cases for its application. If we could move all government transactions and expenditures to the blockchain’s ledger, for instance, no government official would be able to loot, launder or steal from the public purse.

The application of blockchain technology in the SA context may prove to be just what we need to catapult our nation to the forefront of the global fourth industrial revolution. NFTs have already proven their ability to raise funds for conservation efforts and other local charitable causes, we must now concentrate all our efforts on developing this technology further, to truly harness its capacity to empower and uplift our nation.

• Crespi is CEO of Virtual Nation Builders and partner at Schindlers Attorneys.

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