fintechview sat down with Dr Alex Zarifis from the University of Nicosia and a research affiliate of the Cambridge Center for Alternative Finance at the University Cambridge to discuss his research on Fintech and NFTs. Alex has researched new business models and services in Fintech and Insurtech for over ten years. His research has been funded by the EU, UK and has received several awards.

Could you share with us your view on the future of Non-Fungible Tokens (NFTs)?

There is a wave of digital transformation sweeping through finance, and NFTs can be a part of this. There are some existing implementations of NFTs in finance and several more are being explored. There is a-lot of discussion on their merits but it is not clear what final form they will take when they mature. Not everyone sees them positively and there are several reasons to be uneasy, such as the prevalence of scams, but there are also reasons for optimism for NFTs’ future. Firstly and most importantly, they solve the problem of how to own digital assets. Additionally, some of the most popular cryptoasset exchanges are offering them. While their unique functionality can be useful this innovation will have difficulties reaching a wider audience until more clarity is achieved on two main issues, business models and trust. It is for this reason that I am researching what the NFT business models are, and how do they build trust.

What are the business models of NFTs that are viable?

My research shows that there are four business models: (1) NFT creator, (2) NFT marketplace selling creators’ NFTs, (3) Company offering their own NFT (fan token) and (4) Computer game with NFT sales. We found that these four are business models that have sufficiently proven themselves and are likely to continue having some success. There are more business models but they are not mature enough and do not appear to be fully formed.

Lets look into each of those in more detail. So the first NFT business model is the creator

The most common NFT creators currently are artists so it is worth breaking down the steps of what they do. The NFT creator is typically an artist that creates digital art that is then minted as an NFT and sold on an NFT marketplace. The main NFT processes is to create digital art minted as an NFT. The NFT competitive advantages include having proof of irrefutable ownership and the ability to sell a unique piece of digital art. The reliability and transparency of the NFT build trust with the consumer. Furthermore a community is built around the creators’ NFTs and trust is built between the community.

The second NFT business model is the marketplace that sells them?

The NFT marketplace sells creators’ NFTs. The purchase history is transparent, so this gives useful insights that the NFT marketplace can use this to choose which artists and artwork to promote more. The competitive advantage of NFTs as part of this business model is once again the irrefutable ownership and that it gives consumers digital art they can own. As with the previous business model, a community and trust are built between the collectors.

How is the third NFT business model, “fan token” works and why is so popular?

The fan token has gained popularity with football teams offering them but there are many other applications to rewarding loyalty including in finance. A company may sell NFTs for profit, give NFTs as rewards, make payment with fan tokens (e.g. as part of a players wage), give NFT so that the person receiving it has certain utilities and rights (e.g. voting rights) and to use NFT technology to offer subsequent offers and rewards to the holder of the fan token. The competitive advantages of NFTs within this business model are that they allow fans to feel closer to their team and it builds a community and trust between the fans.

The fourth and final NFT business models is to use them in a computer game?

A computer game with NFT sales can have in-game purchases of NFTs minted virtual items, unique in game purchases and the game can also reward players for playing, known as ‘play to earn’. The competitive advantages are that it enables players to gain unique or rare items, it offers incentives to game developers to continue producing new unique and rare items, it provides an ongoing revenue stream for existing games, and it builds a community and trust between the players.

Zarifis A. & Cheng X. (2022) ‘The business models of NFTs and Fan Tokens and how they build trust’, Journal of Electronic Business & Digital Economics, vol.1, pp.1-14. Available from:

Who is Who

Dr Alex Zarifis research is on the practical applications of technology in business. He has
worked at several universities including the University of Cambridge, University of Manchester
and the University of Mannheim. He is currently a research affiliate of the Cambridge Center for
Alternative Finance (CCAF). Dr Alex has worked on large EU and UK funded research projects
at the Karlsruhe Institute of Technology (KIT) and Loughborough University. He obtained his
PhD from the University of Manchester. His research interests include Fintech business models,
Insurtech business models, trust in Fintech and Insurtech, DeFi and Central Bank Digital
Currencies (CBDC).

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