NFTs Offer Cultural, Crypto Bridge out of Fiat
Non-fungible tokens (NFTs) are inextricably tied to blockchain technology and the wider crypto ecosystem by the nature of their technical design.
In the early days of the technology, this meant there was a significant overlap between the community of people who created and collected NFTs and those with an interest in what had previously been the primary use case for blockchains — cryptocurrency.
In the last few years, NFTs have been picked up by artists, gamers, marketers and others with an interest in owning digital objects. Yet with growing mainstream acceptance, a host of actors who previously had no interest in crypto have now found themselves face-to-face with Ethereum and other related blockchains.
As Eytan Messika, co-founder and CEO at French-Israeli crypto startup Nilos, told PYMNTS in a recent interview, “NFTs were the bridge from culture to crypto.”
It was from this observation that NFTs had brought a range of “culture-type businesses” into the crypto market that Nilos, which this week (Sep. 21) announced a $5.2 million funding round, was founded as a platform to help companies with crypto-based revenue streams convert their income into fiat currency.
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But it isn’t just the need to exchange crypto for fiat that they are tackling, he said. Nilos can also help businesses with the necessary compliance monitoring and tax management required to deal with crypto, as well as make incorporating NFTs into a business strategy more realistic and accessible for a range of brands, artists and freelancers.
See also: Andreessen Horowitz Leads Licensing Charge to Protect NFT Market
While the NFT movement was a catalyst for Nilos, a lot of companies in the ecosystem are generating only crypto incomes, Messika added, pointing out that even in the decentralized finance (DeFi) space, businesses have expenses that need to be paid in fiat: “At some point all of those companies need to have fiat payment and off-ramp their money.”
What’s more, he said even “people who you would have never thought would need to off-ramp their money, like DAOs [decentralized autonomous organizations],” all have to manage both fiat treasury and crypto treasury.
Managing Crypto Income, Fiat Should Be the Same
While Messika acknowledges that there are other ways to convert crypto into fiat, he is of the view that existing solutions don’t cater to the needs of smaller businesses due to extensive onboarding processes and high-volume requirements.
And although “crypto-friendly banks” can deal with volumes in the hundreds of thousands, freelancers, artists and smaller companies have a need for off-ramping at a different scale, he said.
Crypto trading platforms do not meet this need either, he added, saying that trying to run everything through a platform like Kraken or Coinbase would make it extremely difficult to keep track of transactions.
This is where Nilos steps in to help businesses keep track of crypto revenues. As Messika explained, “The idea is to be able to unify different accounts and make sure that you have one single dashboard where you can see multiple incomes,” making crypto income management as straightforward as managing fiat income.
Continuing the analogy that managing a multi-crypto operation and multiple fiat currencies should be no different, Messika said that the goal is to be as agnostic as possible when it comes to different types of blockchains.
For example, there has been a strong emphasis on Ethereum — partly due to the way it has been central to the development of the NFT space so far — but he said Nilos has already expanded to Polygon because it has enabled the company to scale and diversify its client base.
Learn more: Despite Ethereum 2.0 Merge Hype, Crypto Payments Won’t Change
On why the Ethereum ecosystem continues to thrive, Messika attributed it to a “Lindy effect” around the ether market — “the more something is already established in the market, the more it has the probability to last.”
Finally, it all boils down to trust, he said. Pointing to well-established communities of Ethereum developers, users and miners, Messika noted the strong network effect in the way Ethereum has become established and said it “still remains the most used and the most trustable chain [there is].”
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