For the many other start-ups, scientists and entrepreneurs who are trying to raise capital for their projects, NFTs have presented themselves as an alternative way to raise capital. Knowing how crucial it is for businesses to raise capital for whatsoever reasons and projects, in this article we shall endeavour to understand capitals and the place of NFTs. 

Conventionally, capital has been given through equity, i.e. this is a situation wherein business owners relinquish parts of their ownership of the business for capital. NFTs now bypasses this, leaving both sides satisfied. To better understand people’s motivation, collection system and the building of a vibrant community, an example, such as the one following, would suffice: Let’s say an existing streaming service wishes to launch a new business line - a new documentary section, but at a higher price than the basic plans. It probably needs $5,000,000 to start this new division i.e., investing in equipment and staff, etc. The streaming service could create 2,500 diverse kinds of NFTs, at $2,000 each or even at different prices, whilst increasing the benefits attached to those costly NFTs. Of course, all the NFTs give special benefits to their owners, investors, but they wouldn’t be equal. The NFTs could give access to investors at a discounted price, either to a new section or to the whole streaming platform. This could then motivate the streaming platform’s audience to invest capital in the business because they want the benefits that come with it. 

This new model of raising capital using NFTs is beneficial to both the business and the investors. For the business, it gives them the opportunity to raise capital without relinquishing any ownership over the business. This model establishes alternatives for incomes which encourages investors and their audience to front the business while counteracting the risks and losses that come with the funding. Once the business is launched, investors can also sell or rent their NFTs with profits. The same applies to someone who bought an NFT from an investor. In the end, this model presents a scenario where everyone involved is happy. Interestingly, a new Hollywood film which has turned to NFTs to help raise the finance to produce it is called Zero Contact and stars Anthony Hopkins. 

Source: YouTube

Meanwhile, the success of an NFT project depends on the audience and community built around it and is a key attribute as to whether an NFT project is a success or not. A vibrant community is vital for success when issuing NFTs. Building a vibrant community usually starts with defining who the target audience is, since this is tantamount to building value for your project. A vision can then be shared with the community explaining what the project is and how the community stands to benefit from it. The aim of the vision is to get the audience to believe in it. Once communicated, a social media platform easily accessible to your audience is then chosen for easy reaching. Discord is the most used, alongside Telegram, Twitter and Reddit. The remaining efforts needed to build a vibrant community are getting the audience excited for the project and being transparent with the community. Pitching to your audience about your project can be hard, but an influencer can easily sort this out. If done right, all these will make sure the project is successful.

Once the capital has been raised, efforts should be channelled into creating a vibrant community for your project. Here, the investors are kept updated about the project. This is also the time where the hype is built around the project for its success. Businesses have to do all they can to convince their audience to join their projects because they will definitely have heard of scams and rug pulls. Another important factor is the time and effort that needs to be spent making the project enticing to your target audience. One also needs to be mindful of the transaction fees to use a blockchain as this can be problematic, especially using Ethereum.

The usage of NFTs as a financial instrument has only just begun, as more innovative ways will be unveiled in the nearest future. Although NFT price volatility is a constant, NFTs offer a way to help build businesses and create memorable customer experiences. Another factor that is also overlooked is, if designed correctly, NFTs can be designed to create ongoing recurring income for the issuer similar to a royalty income that is seen in the music and media industries. 

Of note, cryptocurrencies have allowed for the by-passing of institutions that might not allow for payments to Ukraine. Given the fact that martial law has been implemented in Ukraine, bank activities have been suspended. However, cryptocurrencies are good for donations in times such as this since they allow individuals and organisations to directly support causes, cutting off means whereby corruption could thrive. Unlike countries that have banned cryptocurrency and blockchain-related activities, Ukraine had been working on the digitisation of governance (also recently seen with Salvador adopting Bitcoin as legal tender). Ukraine’s Ministry of Digital Transformation, which was established in 2020 and tasked with the advancement of Ukraine’s infotech industry, was recently charged with the procurement of needed equipment in the fight against Russia. The ministry is also charged with gathering cryptocurrency donations. Prior to this, every donation had passed through traditional payment channels. It wasn’t until February 26th, 2022, that the Ukrainian government began receiving crypto donations. The plea for donations was soon posted across different platforms starting from the deputy prime minister, Mykhalio Fedorov’s, Twitter to Ukraine’s Twitter account. Following the success of the donations, there has been a promise for future airdrops as a means to facilitate the long-term support of citizens and organisations worldwide. One can only but wonder what would have happened if Ukraine had taken an anti-blockchain stance as most countries have. Although, the donations received pale in comparison to the sum the US has donated (Biden recently demanded $10 billion authorisation from congress, after America had pledged $350 million) joining many other countries which have offered Ukraine support.

Source: Twitter

Insomuch as Putin’s Russia is the cause for the financial situation in Ukraine, it, too, has fallen onto hard times what with sanctions from a vast number of different countries now potentially beginning to cripple its economy. Sanctions usually work by powerful countries curating a list of important businesses and people its inhabitants must avoid having transactions with. Concerning, but ironic, is the fact that cryptocurrencies serve as a means of sanction evasion for Russia, not just as a means for raising donations for Ukraine. Two sides of the same coin and furthermore highlighting the concerns most have about cryptocurrencies. Habitually, in the global finance scene, banks would block transactions from persons under sanction or their business, as can be seen with the UK sanctioning Ibrahimović and what it has meant for Chelsea football club. Previously, the US and western countries had, in 2014, sanctioned Russia for its invasion of Crimea, the result of which was the swift economic change and the yearly loss of $50 billion. But Russia has not been idle since then. The emergence of cryptocurrencies and digital assets has presented a way potentially for it to evade sanctions. The US has been aware of these developments and warned that cryptocurrencies could pose a serious threat to its sanctions, stressing it had a lot more work to do in understanding how these digital assets can be used.

Blockchain, cryptocurrencies or any other technology or innovation are usually neutral, posing as docile tools. Whether technology is good or bad depends on its users. On the other hand, blockchain, when applied to tackle problems with international payments and finance related problems, can also be used to evade accountability, such as Russia is doing. Some of the reasons Blockchain technology and cryptocurrencies are being criticised are the same as the reasons for which they are being adopted. The US is already looking at regulating cryptocurrencies with a new executive order - all in a bid to stem how Russia is evading sanctions. Is there a way or scenario where blockchain enthusiasts and governments leave happy? Not yet. It is worth bearing in mind governments are usually reluctant to regulate technology.

It is worth remembering that technology is a tool in the hands of its wielder - technology is neither bad nor good. It is, after all, just technology.