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The Perfect Match: How NFT Tickets Work

Mintology Admin Jan 9, 2023 4:43:00 PM

Tickets take people to exciting and long-awaited experiences.  It is everyone’s gateway token to their favourite events, games, and tours. But because of how valuable they can be, tickets often become targets for extortionate and fraudulent ticketing practices. And, it’s not giving the industry a good look!

In November 2022, Qatari authorities arrested three men for reselling World Cup tickets without permission. Looking at how organised their operation was and the sheer amount of tickets they had on resale, these men were clearly not reselling these tickets “because they couldn’t use them.”

Sometimes, ticket buyers genuinely can’t attend an event because of unavoidable emergencies. So, it would only be practical to resell these tickets. However, some ticket resellers like these three men have a different plan in mind.

FIFA, the sporting event’s governing body, only allows ticket reselling on their official resale platform. As last year’s World Cup host, Qatar also took this very seriously, imposing fines of up to 250,000 riyals or 66,000 US dollars for anyone involved in unauthorised ticket reselling. But, why?

Unauthorised ticket reselling or ticket scalping is a major problem in the ticketing industry not only in sports events. It’s a swelling U$15 billion parasite market that’s hurting event organisers, artists, athletes, and most of all, the fans.

Most tickets already cost a lot and are hard to get in the first place. But, ticket scalpers make them even more difficult to buy.

Buyers know how fast scalpers and their bots eat up tickets as soon as they are on sale. Scalpers take advantage of rising demand by reducing supply in the primary ticketing market. They want to create a ticket shortage that forces buyers to buy from them at ridiculous markups 50 to 7,000% higher than the original price. 

Artists and performers such as Metallica, AC/DC, and Foo Fighters have tried to stop these distasteful ticketing practices. The digital realm of esports is also no exception. Fans and players have also cried out against scalping in the recent Call of Duty League.

Yet even with entertainers and fans banding together, the current industry ticketing system still struggles to retake control of the secondary ticketing market. Ticket scalping takes away more than just money. Without addressing this issue, avid fans will continue to have a difficult experience buying tickets to their favourite events. 

Web3 and NFT technology can give the ticketing industry the chance to retake the resale market. By design, tickets are unique and non-fungible just like NFTs. Although, unlike traditional tickets, an NFT ticket or tokenized e-ticket is non-duplicatable and unchangeable. 

Tokenization is an obvious solution to this much-needed restructuring of the current ticketing system. 

Let’s take a look at how NFT ticketing can stop ticket scalping for good. And, how it is going to open a plethora of new possibilities most tickets can’t do today. 

What is an NFT Ticket?

Non-fungible tokens or NFTs are unique digital assets that cannot be exchanged for any other asset exactly like it. An example of a non-fungible asset would be Da Vinci’s Mona Lisa. It doesn’t matter how much money you have to buy it (if it ever goes on sale again), there’s no other Mona Lisa.

An NFT works the same way to represent unique real-world or digital assets, such as artwork, properties, collectables, and of course, tickets.

Built on blockchain technology, an NFT is also a foolproof certificate of authenticity. They cannot be altered or destroyed. That’s why they are also instrumental as proof of ownership since only one person can own a particular NFT at a time.

Because of their programmable and non-replicable nature, they can help the current event ticketing system prevent ticket fraud, overpricing, and loss of revenue.

By turning a ticket or “tokenizing” it into an NFT, ticket issuers can create an unchangeable ticket stored on an unfailing ledger. Like regular tickets, they will give holders access credentials to events. Except with additional features and benefits you won’t find in your usual tickets.

How NFT Ticketing Works

NFT tickets or tokenized e-tickets actually work similarly to traditional tickets. But, they work so much better in so many different ways.

Right now, tickets usually come in a coded piece of paper or an e-ticket intended to be unique and non-interchangeable with anything exactly like it. In essence, they are non-fungible just like NFTs.

Unlike tokenized e-ticketing, conventional ticketing is hard to control and regulate. Once a ticket goes through third-party distribution pipelines like ticket resellers, they are no longer within reach of original ticket issuers and resellers. That’s why ticket resellers can easily bump prices up. And, why scalpers can hoard tickets to tout people into buying tickets at higher prices.

So, how does tokenized e-ticketing work?

Through smart contracts, tokenized e-tickets can make current ticketing systems run on automatic. It will enable ticket issuers and organisers to regulate everything that happens to a ticket using pre-programmed triggers.

To tokenize an e-ticket, ticket issuers mint the exact amount of e-tickets they can realistically offer on a blockchain ledger of their choice. This eliminates the need for a middleman, a distribution third party.

After minting, event organisers can release these e-tickets on sale without excess or deficiency. Most of all, without misinformation. Some of the biggest issues companies have with paper tickets are the recurring occurrence of incomplete information, illegible prints and writing, and data errors. 

Once a ticket is sold or auctioned on the market, a smart contract trigger is set off that automatically sends all payments made by the ticket buyer to the ticket seller.

The same thing happens for the ticket buyer. After the sale, the tokenized e-ticket will instantly transmit to the buyer’s digital wallet where they can access it anytime through their computer or mobile device. All of that happens in mere seconds without the seller lifting a finger to make sure it works.

Since the ticket is on the blockchain, the ticket holder can resell their ticket anytime on official ticket marketplaces should the need ever arise. Like the previous purchase process, once someone else buys the resold ticket, payments and ticket transfers automatically happen without a hitch.

Now, how can event organisers beat ticket scalpers at their own game through tokenized e-ticketing?

The Benefits of Tokenized E-Ticketing

Event organisers can retake control of the market through the customisable and immutable aspects of tokenized e-ticketing.

1 Limiting Ticket Overpricing

With tokenized e-tickets, event organisers can regain control of primary and secondary ticket sales by limiting resale prices. Smart contracts can help limit resale price ceilings to reduce the profitability of secondary ticket selling. As a result, this will disincentivize scalping and make overpricing practically impossible. But at the same time, this will still give ticket holders a chance to resell their tickets if need be.

If reselling is not on the table, event organisers can also program tokenized e-tickets to deny any unauthorised secondary sales. However, with NFT ticketing, reselling may no longer have to be a bad thing.

2 Royalties

Through this method, event shareholders can program a profit-sharing structure in their ticketing system where they can get royalties on any subsequent ticket resales. This will give artists, athletes, and organisers, to name a few, the opportunity to benefit from a previously untapped source of revenue they were missing out on scalping.

3 Customising Event Experiences

Speaking of opportunities, tokenized e-tickets can also be programmed to give ticket holders bonus perks like exclusive meet-and-greets and limited-edition merchandise. For example, depending on their ticket price tiers. This will create more unique and immersive experiences fans have never had before. 

4 Authenticity 

Since tokenized e-tickets also serve as incontestable certificates of authenticity, ticket buyers can always guarantee their tickets are legitimate. Besides scalping, ticket fraud is also another major challenge in the event ticketing industry. By using tokenization, the industry can give both buyers and sellers a more accessible way of verifying the authenticity of their tickets.

5 Traceability

On top of that, tokenized e-ticket transactions are simply easier to follow since they are on the blockchain. Using programmed triggers on their smart contracts, event organisers can easily track NFT tickets. 

A far cry from paper tickets which are hard to trace. Once you lose a paper ticket, you are more likely to never see it again and you have to pay for a new one.

Again, because they are on the blockchain, tokenized e-tickets open a new level of traceability that traditional tickets cannot offer. It can be easy to know who holds an excess amount of tickets or which tickets are legitimate with a simple verification process with NFT tickets. 

Tickets Wherever You Go

Event tickets aren’t the only kind of tickets that can benefit from tokenization. TravelX, a blockchain-based travel distribution protocol, worked together with Spain’s third-largest airline, Air Europa in making the first NFT flight ticket possible. 

Dubbed the “NFTicket”, this one-of-a-kind ticket will fly its ticket holder from Madrid to Miami in business class and make them the owner of a unique artwork. In April 2022, the NFTicket auctioned for over $1 million USDC.

This ticket will be the first of many more to come. CEO of Air Europa, Valentín Lago says this will be “a bet on the future” that “will become a quality leap forward for all users.”

However, exorbitant utility NFT prices might be counterintuitive for encouraging mainstream adoption. These are understandably marketing stunts meant to grab the global community’s attention. 

Although this might give people the wrong impression that tokenized tickets have a high barrier to entry. When in fact, it has been increasingly easier for businesses to create loads of digital tokens gas-free.

A Future Where You Pay Less For More

If you think about it, tokenized e-ticketing isn’t that different from how traditional ticketing works. Although it has proven itself to be a more promising alternative for a number of different reasons.

For both event organisers and ticket buyers, it is easier to verify authenticity with NFT tickets. They do not make it hard for others such as resale ticket buyers to check a ticket’s authenticity. Not to mention, ticket holders can instantly prove their ownership with this type of ticket. Something you cannot do right now with traditional tickets. 

They are also easy to program triggers into to make reselling, price tiering, and profit sharing possible. Event organisers and investors will finally regain visibility and control over the secondary ticket market and get their much-deserved share of resale profits. Essentially, it’s more than just an “added benefit.”

Most of all, tokenized e-ticketing will help regulate prices in the secondary ticket market and eliminate overpricing and scalping by the roots. They will also decrease the risk of fake tickets, and make buying event tickets safer and more enjoyable for ticket buyers. 

With the advent of a more regulated event ticketing market, fans can expect a future where overpriced tickets are non-existent. In fact, tokenized e-tickets might even make the experience more memorable as event memorabilia. 

Fans, event organisers, and the talented people behind our favourite events can expect a new era of event ticketing as Web3 and blockchain technology evolves into mainstream adoption.

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