How Tokenization & AI will change e-commerce
Currently tokenized digital assets are gaining adoption with more financial institutions using blockchain and tokenization internally to track and trade assets than ever before. Bitcoin is also going mainstream with it’s first approved ETF while more than doubling in value over the past 12 months. After peak hype in 2021 along with the scandals and very public downfalls of the likes of FTX we appear to be slowly coming out of the “trough of despair*” that comes after any over hyped trend falls out of favor like the dot com boom. It looks like blockchain technology really is here to stay with it’s undeniable value to solve specific problems.
The broken promise of NFT’s
The real estate and the auto industry have used titles as a way to prove ownership for decades however having just paid $44.95 for a Carfax report it’s clear much more could be done to improve the current system’s efficiency and transparency with large bureaucratic and financial burdens serving the gatekeepers better than the customer. Although investors and experts in the past predicted NFT’s and asset tokenization to be the obvious solution to this, the technology is widely seen as a bust by the general public after peak hype only produced the perceived utility of owning a jpg of an ape. It has proven hard if not impossible to leapfrog the current incumbents due to their stranglehold on regulation and flow of information (eg: a startup can’t compete with the DMV to issue titles and would have to get the government to change laws to even participate). It has also proven very hard to drive mass adoption with business models that make financial sense, more than just gimmicks to business. This isn’t all bad news as leaves a huge under served market of physical assets where title, provenance and authenticity provide clear value and benefits for it’s stakeholders, still with no clear solution ripe for change.
Why the time is now
Advances in computer vision and AI models (now in their own hype cycle) enable using a phone camera to recognize an item and estimate it’s value more easily than ever. Beyond this we can create proprietary models to grade items based on condition and estimate an items value more precisely at a lower cost to the owner, rarely if ever needing human intervention thus for the first time removing barriers to value and title items that cost less than a car or house. Using computer vision with machine learning and AI we can also provide businesses with a clear picture of it’s real time total product market value on secondary markets, trading timelines and price fluctuations due to events even predicting these for the future. Coupling this with tokenization will also empower individuals with access to the “live” value for each of their owned items with a total portfolio value directly in a digital wallet on a smartphone. This now provides a clear value proposition to businesses who have had to sit on the sidelines and watch their products trade on secondary markets with no clear way to benefit.
Sustainable Commerce
Coupling tokenization with AI will usher in a frictionless and more secure ways of trading items on secondary markets opening up new ways for brands to capture revenue and provide value to secondary market owners of their products. An owner now simply taps “sell” on items in their wallet to post the verified item on the brands e-commerce platform or on another suggested marketplace if the brand does not wish to offer a secondary market. A request to photograph the item to grade it’s current condition, then simply confirm it’s recommended price, description and location and it is placed back on the manufacturers or other marketplace for sale. The manufacturer and future buyer are all guaranteed the items provenance and authenticity. The manufacturer can earn when an item is sold. Push incentives and experiences to current owners increasing items value and earn a percentage of it’s sale. Owners of non tokenized items will be able to use the app to verify value, verify authenticity and put the item for sale.
A Venmo like app for your physical tokenized assets
When items are sold new via an e-commerce site like shopify a plugin tokenizes items and places them into a custodial wallet for the owner. This item is then accessible to the owner via their account on the merchants site, via an app (like Venmo) with the owners other items. Additionally the brand affixes a provided QR code or NFC chip to the item scannable by any smartphone without the need for an app, this opens the items detail page, owners can authenticate (login) to access selling tools and gated content of the item. For the crypto savvy the item can also be transferred to a non custodial wallet. When the owner wishes to sell the item they can either scan the item to access sales tools via the merchants site or directly via the app if the brand has not enabled secondary market tools with their ecommerce.
When items are sold our P2P platform insures escrow of funds, safe and secure shipping to the new owner and the transfer of the tokenized item title to the new owners wallet without intervention from the manufacturer.
Blurring the lines between Physical & Digital experiences
At any time the brand is able to push content, experiences, tickets and other access to current owner(s) of items in a few simple clicks, accessible by the owner on their wallet. This could be early access to concert seating to owners of a bands limited edition vinyl. Owners are notified via push notifications and or email.
Conclusion
With the ushering in of a more mindful generation with a preference for original items as opposed to new cheaply manufactured items. The recent explosion in vintage clothing, thrift and marketplaces like Etsy & Reverb are only the start. Many established sellers ranging from individuals to corporate brands have yet to benefit.