Forget Cristiano Ronaldo’s crypto court woes, NFTs are here to stay

The $1bn lawsuit against football superstar Cristiano Ronaldo would appear to be another nail in the coffin for non-fungible tokens (NFTs). On the contrary, writes Chris Blackhurst, they are here to stay so we must start to better understand them

Cristiano Ronaldo is being sued for promoting Binance, the world’s biggest crypto exchange (AP)

So, Cristiano Ronaldo joins the list of celebrities to come a cropper in the world of crypto.

The football superstar is being sued for $1bn (£790m) for promoting Binance, the world’s biggest crypto exchange. The class action lawsuit, filed in Florida this week, alleges Ronaldo “promoted, assisted in, and/or actively participated in the offer and sale of unregistered securities in coordination with Binance,” including selling non-fungible tokens (NFTs) of himself, which led to substantial financial losses for investors.

In November 2022, Ronaldo partnered with Binance to sell unique NFTs depicting “an iconic Ronaldo moment immortalized in the form of a digital statute”, the company boasted in its publicity. Ronaldo follows Madonna, Tom Brady, Kim Kardashian, Gwyneth Paltrow and others on the wrong side of legal actions centred around their endorsement of now-defunct crypto platforms and valueless digital products.

The suit would appear to be further confirmation that the phenomenon of NFTs – the digitalisation of works of art and other collectable items into unique, verifiable assets that can be traded on blockchain – is over.

A recent episode of The Simpsons indicated as much, containing numerous references to the collapse in the NFT market and their over-valuation. In the show, Marge negotiates the blockchain to rescue Bart, now a living NFT, while the city’s mayor declares that Springfield’s art gallery will be digitised. There are also plenty of appearances by poster child NFTs, like the Bored Ape Yacht Club, depicting them as nearly worthless.

This, too, comes on the back of a report by MPs in the UK calling for greater regulation. The Culture, Media and Sport Committee is urging the government to take action to protect artists and content creators from copyright infringement associated with NFTs.

Faced with this and much more of the same, you would be forgiven for supposing the technology is finished and that no one is prepared to advocate the use of NFTs. Not so. Zach Burks, CEO and founder of Mintable, argues we’re in danger of getting them wrong, of over-reacting and not appreciating that NFTs offer a variety of transformative functions.

I met Burks at this year’s International Symposium on Economic Crime in Cambridge. He was persuasive then, speaking about the security advantages NFTs afford. Post-Ronaldo and The Simpsons and the MPs’ recommendation, I caught up with him again. Has his view changed? “What people have seen and what people know, regarding NFTs and what they can do, is very limited. The stuff that has made headlines, the pictures of apes and memorabilia from superstars trading for fortunes, that market is dead.” What we don’t realise, he insists, is that NFTs “are in a transitional phase. You can use them for your car records, property records, bank settlements - anything you want to keep safe and be able to use as proof of something, like ownership.” The NFT is yours and is entirely secure, it can’t be copied or hacked.

Episodes such as the unauthorised accessing of thousands of frequent-flyer accounts, as happened with British Airways, would not occur if the personal details were held via NFTs.

His company, Mintable, is working with governments and official bodies around the world on the safe registration of documents and with businesses on payment and loyalty services. “We’re moving closer towards a fully digital economy every day. Within that, NFTs are a vital tool. They’re eco-friendly, they’re totally secure, they can provide benefits and they can be fully integrated.” On the eco point, says Burks, it’s not true that NFTs can only be generated by super-computers. “No longer. At Mintology [a subsidiary of Mintable] we’ve developed a ‘gasless’ model that reduces the energy requirement by 99 per cent.”

Burks hails from California. He worked for the US army as an ‘EOD’ or bomb squad specialist, before setting up in business. “As an entrepreneur, I’ve always been in crypto, in blockchain and now NFTs.”

Mintable, which is based in Singapore (“they’re pro-tech, pro-blockchain, with clear regulatory guidelines and very start-up friendly”), has a 20 per cent market share of NFT users, that’s 1.5 million people, on its platform. He wishes the focus would move away from the works of art and celebrity souvenirs to how NFTs can be applied elsewhere. Burks despairs of calls for regulation and worries how that may stifle their use. “If my website is used to sell books, I’m governed by the laws that are used to sell books. If I sell drugs on my website, then you don’t need new laws. I’m still just selling drugs, right?”

Far from being narrow, NFTs, he maintains, are an extremely broad technology capable of a vast array of different functions. A committee of MPs declaring they must be regulated as pieces of digital art does not assist them to gain broader acceptance. In a strange, unintended way, The Simpsons helped. Because while they poked fun at them, they brought NFTs, which had fallen from general view, back into the mainstream US culture. “Suddenly, everyone was talking about NFTs again.”

Ronaldo’s travails will only add to that. If the law case creates a wider understanding of the tech, then that can only be for the good.

Despite the setbacks, we need to understand and get used to the idea that NFTs, says Burks, are here to stay and are destined to become commonplace.