NFTs are in a transitional stage.
NFT ticketing promises to give actual utility and practicality to the technology. As the concept becomes more widespread, it will help to supplant the consumer idea of what an NFT is from expensive, potentially scamming, pieces of digital art to technology that can be applied positively to aspects of their lives.
Updates to Ethereum protocol go through the Ethereum Improvement Proposal (EIP) process. Anyone from the community can submit a proposal and if it meets certain standards, it becomes an EIP which is then discussed and voted on. If the proposal passes, Ethereum is updated with its improvements.
"ERC" stands for Ethereum Request for Comments. It is a type of EIP focused on standards for Ethereum applications, a category that includes tokens.
Tokens are transferable units of value. Colloquially they are referred to as cryptocurrencies or coins. The latter is a technically incorrect term though. Tokens generally fall into one of two buckets: fungible or non-fungible. Fungible tokens are mutually interchangeable, like dollar bills or pesos. Non-fungible tokens are unique and noninterchangeable, like a painting or book.
Prior to ERC-1155, the two predominant token standards were ERC-20 for fungible tokens and ERC-721 for non-fungible tokens. They cannot ideally be wrapped into the same smart contract. This limitation meant that if someone wanted to transfer, say, USDC (ERC-20) and a CryptoKitties NFT (ERC-721), they would need to execute multiple transactions, which was inefficient and expensive.
ERC-1155 solves this by combining the two token standards. ERC-1155 is a token standard that enables the efficient transfer of fungible and non-fungible tokens in a single transaction.
As well as allowing for the transfer of multiple token types at once, and the attendant gains in efficiency and lower transaction costs, ERC-1155 has a number of other special characteristics:
- It supports an infinite number of tokens, in contrast with ERC-20 and ERC-721, which require a new smart contract for each type of token.
- It supports not only fungible and non-fungible tokens but also semi-fungible tokens.
- It has a safe transfer function that allows tokens to be reclaimed if they are sent to the wrong address, unlike ERC-20 and ERC-1155
- It removes the need to "approve" individual token contracts separately, which means signing fewer transactions
A very interesting use case of semi-fungible tokens is concert tickets. They are interchangeable and can be sold for money before the show (fungible). After the show, they might lose their pre-show value and become collectables (non-fungible).
How NFTs Solve Traditional Ticketing Challenges?
NFT ticketing can potentially disrupt the traditional ticketing industry by solving the inefficiencies faced by the current ticketing system.
Preventing forgery: One of the major downsides of paper tickets and QR Codes is that they can be easily forged, creating a gap in security for event venues and disappointment for fans who unknowingly bought a fake ticket. But since NFT ticket transactions are recorded on a blockchain ledger, event organizers and attendees can validate the authenticity of every ticket on the chain and track the history of ownership. Making it near impossible for bad actors to falsify a ticket.
Reduced costs & faster production: The costs associated with selling and minting NFT tickets can be potentially lower than the cost needed to produce and distribute traditional tickets. NFT tickets can often require much less production lead time than physical tickets, allowing organizers to mint and distribute tickets within a few hours.
Ongoing revenue opportunities: The blockchain technology behind NFTs opens up the potential opportunity to generate tangible value for all involved. NFT tickets can provide ongoing royalties to the artist and event organizer via smart contract technology. If a ticket holder sells their ticket on a secondary marketplace, a percentage of the resale revenue may also be redirected to the artist. Ticket holders can also resell NFT airdrops they are gifted as a part of the ticket’s built-in rewards.
Lowers chances of loss or damage: Traditional paper-based tickets can be easily lost or damaged. Since NFT tickets are stored in a digital wallet that can be accessed via a mobile phone, the risk of losing or damaging your ticket is exponentially lower.
Music Festivals & NFT Ticketing: Match Made In Heaven
Coachella is potentially the most notable of these more localized efforts. With Coachella Collectible NFTs, AEG Worldwide presented a novel case for NFTs use cases as both memorabilia and lifetime pass. Although the Coachella collection received mixed reviews, it opened the door for others, like Las Vegas’ Afterparty, and Swedish music festival Way Out West, to launch endeavours of their own.
With Afterparty, Soin Holdings Inc. delved into a venture much like Coachella. Aiming to shake up the standard music festival model, Soin offered 1,500 NFT collectables that served as an access pass for the two-day Afterparty festival that went down in March 2022.
Backed by crowdfunding platform Corite, Way Out West set out on a similar campaign, but in a smaller dose. Also taking parallels to Coachella, Way Out auctioned off three-lifetime tickets in the form of NFTs. Corite also offered attendees the option to mint their festival moments and memorabilia as NFTs, but ones that lacked any sort of festival pass mechanics.
Future of NFT Ticketing: Sports Events
NFT ticketing can open the door for venues and leagues in offering ‘dynamic tickets.’ These could be digital passes that update as they are redeemed and offer additional bonuses such as airdrops of additional NFTs, access to exclusive merchandise, or free vouchers for food and beverages. Tickets could stay with individuals across multiple events, and continued engagement could bring in even larger rewards, including upgraded seats or personal meet and greets.
For example, the NBA is looking into issuing NFT “ticket stubs” to fans when they redeem their tickets at a venue. Why? Because ticket stubs from memorable games turn into big money down the line, and currently, the NBA sees none of that. However, NFTs can be programmed to funnel a percentage of all future secondary sales to a given address, in this case, owned by the team that issued the tickets. In this way, fans retain something that may prove to go up in value, and the NBA generates a new stream of passive revenue from secondary market activity. It’s a win-win.