Tangible Assets That We Can Record, Possess & Exchange Will Eventually be Tokenized: Unhashed #26

For the 26th part of Unhashed, I reached out to Yoon Kim, the founder of 3Space Art, a hub for digital art NFTs from up-and-coming Korean artists. Let’s dive into this value-packed discussion.

Q1. Welcome to Unhashed. What’s your story behind getting into crypto and blockchain and what led you to work on 3Space Art?

Answer: I first entered the crypto and blockchain scene in 2017 after working in shipping and logistics for almost a decade. I wanted to explore ways to facilitate intercontinental trade using distributed ledger technology, so I quit my job and applied as a product manager for a tech company to learn more about blockchain. Since then, I have been involved in various crypto projects, including layer 1 interoperability, a crypto exchange, and tokenized real estate.

I’ve always wanted to find practical use cases for blockchain that can be catered to different types of consumers. When NFTs started to pick up again in 2021, I noticed a wave of new talent entering the space and realized the idea of using blockchain to verify ownership of digital content and collectibles have become more socially accepted. I eventually met my co-founders, who are from the art industry, and started building 3space Art.

Q2. Please share your thoughts on digital tokenization of tangible assets like real estate, collectibles, etc. How feasible is this approach considering the polarized regulations in place?*

Answer: I believe tangible assets that can be recorded, possessed, and exchanged will eventually be tokenized because it is more efficient. It can relay information of an asset during the transfer of ownership, provide history on past transactions, create derivatives, and utilize distributed networks to secure liquidity.

Assets that require registration or approval by authority can be more difficult to tokenize because the information is often limited and fragmented. For example, if you are looking to tokenize a property in Korea, you need to get a copy of the register from the court, go to the Ministry of Land to find the contracts, and search for price history through another system. It is highly likely that you will have to talk to state officials for tokens to contain data of the underlying asset. **

As for regulatory concerns, policymakers are beginning to understand the implications of digitization as the industry is becoming more mature and consumer demand is rising. Yet, there haven’t been any attempts to standardize or regulate tokenization on a global scale, so it will take more time before we see any kind of coherence. Local efforts are often lagging in many countries because either 1) it is not popular enough, 2) technology is moving faster than adoption 3) lack of motivation to abandon old systems.

To move forward, market participants need to push the narrative and help policymakers understand the technology. We need to help regulators set up tailored frameworks, define new roles for new participants, and recommend adjusting existing regulations to address specific characteristics and risks unique to decentralized networks and systems.**

Q3. Inclusivity in the NFT economy is nowhere to be experienced. How is 3Space Art combating this concern and bringing more people into the revolution?

Answer: It is interesting to observe the disparity between collectors and artists who are deeply engaged in the NFT community and potential consumers who are trying to figure out what’s going on. I think the NFT market cleverly disguises itself as digital evolution, but in reality, it is a combination of technology, exclusivity, anticipation, and aesthetic innovation. This makes it difficult for people who take the traditional approach to understand the potential of NFTs and how it will be used in the future.

At 3space we try to make NFTs more relatable by associating it with digital art. Art is the perfect use case for NFTs because visual arts can be in physical and digital form. Art can also convey messages, ideas, and expressions that can shift mindsets in a more profound way than other forms of communication. We place artworks in familiar places such as office space, sideroads, and plazas so it can reduce the dismissal of revealing something that is less known.**

We think attracting a wider audience is the only way for the NFT economy to prevail, and have initiated campaigns in urban areas throughout Korea. We are consistently trying to reach different demographic groups to try and understand the pain points so we can evolve to meet customer demand. If NFTs are going to be the foundation for a digital economy, it needs to have more appeal and we are making the effort through digital art.

Q4. Do you think price speculation is a downside or an inherent quality of the NFT economy? Also, please shed light on how the conventional media is marketing NFTs as a big-dollar game.

Answer: Price speculation helped the market grow at unprecedented speed and when the dust eventually settles down, I expect to see new players enter the scene with quality NFTs and applications. I think speculation can help the market grow in the long run since capital is being injected to fund new concepts. Of course, you see groups and individuals taking advantage but If you compare it with the ICOs in 2017 and how it fostered great projects today I see it as an opportunity for the market to grow.

Many see NFTs as an opportunity to monetize digital content and it is evident when you hear it from the media. The excitement around NFTs and metaverse is so big in Korea that both presidential candidates pledged to use government funds to invest in the sector. The hype from mainstream media fueled a national trend with corporations rushing to build their own platforms. I expect to see many new NFT contents appear; from music and photography to K-pop idol merchandise, memberships and luxury goods.

Q5. How does 3Space Art manage to commercialize NFTs in offline setups considering the diverse regulatory implications in different parts of the world?

Answer: Commercializing NFTs can raise a number of legal issues from copyright, data protection, and contract law. Offering NFTs with intent to sell can also be subject to compliance and guidelines related to VASP (Virtual Asset Service Provider). NFTs are not yet addressed in legislation in most (if not all) jurisdictions so any legal analysis and commentary in respect of NFTs is usually based on fundamental principles of intellectual property, information technology, and commercial law.

When it comes to offline NFT exhibitions the biggest hurdle is dealing with copyrights (or exhibition rights). The general consensus among legislators is that acquiring ownership of an NFT does not grant copyright in the underlying work unless there is a specific contract. Either a  contract for sale, a deed of copyright license to express how copyright is dealt with in the transaction should be accompanied to obtain legal rights.

At 3space we have the ‘Art Pool’ which is a smart contract to govern and specify proprietary rights during exhibitions. An artist or a collector can stake their NFTs into a smart contract pool to delegate the commercial use and display of the artwork. In return, the NFT owner shares any commercial proceeds produced during the exhibition.

Q6. What do you think is the missing piece in the puzzle for NFTs to attract institutions and governments? How do you foresee their involvement in the growing NFT economy?

Answer: From my experience lack of regulatory clarity is the biggest reason we are seeing less involvement from institutions and governments. Its hard for organizations that have shareholders and voters to reach a consensus and invest in a technology or an asset that is not clearly defined or protected by law.

It is unclear when policymakers will start taking the necessary steps to build a framework for NFTs. There is also different interpretations of NFTs between tech, legal, and producers. The first step is to build a consensus between market participants to give legislators a clear idea of what NFTs entail.

I think it’s a matter of time before institutions and governments adopt NFTs for digital goods and services. As more people open up to the idea of digitalization, it will be important for big organizations to accommodate the demand. Tech and crypto experts should be obligated to inform others of what the technology implies and how it can achieve equal access,  self-sovereignty and scalability. I hope we are not too late.

Q7: Let’s talk about the crowd’s new favorite - metaverse. How do you perceive its future? How far away are we from an actionable metaverse? And how important of a role will NFTs play in the metaverse?

Answer: Living in South Korea, I feel like we are almost there! We’re already seeing companies building virtual offices in the metaverse to replace physical locations. There are companies developing interoperable games under the same network. Zepetto, an AR-based social platform, is where all the cool teenagers go to socialize.

I think an actionable metaverse is already here but people don’t realize it because it is already embedded into our daily lives. When I enter a group chat or play league of legends, I think of myself being in the metaverse to interact with people. There is a visualized fantasy about the metaverse, like in the movies, where you wear goggles to go inside the virtual world and your senses are plugged into a machine. For me, the metaverse is a practical and logical space where people can communicate and engage with each other. It can sometimes be more satisfying than the real world because it transcends time and space, and can create objects using your imagination.

In this regard, I believe NFTs will standardize the exchange of value inside the metaverse. The metaverse will produce social demand, and there needs to be a viable solution to induce bartering. I can’t think of another way to exchange goods and services than using NFTs unless there is an intervention of a centralized authority or intermediary. We should rather voice the need to adopt NFTs if we don’t want the metaverse to be the same as reality.

Disclaimer: The sole purpose of Unhashed is to unhash (decode) information about projects innovating using blockchain and cryptocurrencies and share it with the community. The writer does not have any vested interest in any of the projects covered herein. Not that this article shares any, but still, taking investment advice from strangers on the internet is not a wise thing to do.