“NFTs enable you to own stuff digitally and prove its scarcity, and there is utility in that,” Robbie Ferguson said.
“Boxing gloves that are authenticated as worn by Muhammad Ali are worth a million times another pair, and now a collector can also say ‘this is a skin from [online video game] Fortnite once used by [renowned gamer] Ninja’.”
Despite global NFT sales surging to $2.5 billion in the first half of 2021, up from just $13.7 million in the first half of 2020, according to Mr Ferguson the demand is being frustrated by trading that is illiquid and expensive.
For instance, to preserve its security and decentralisation, ethereum only allows “throughput” of between five and 15 transactions a second.
Immutable claims to effectively be able to increase that to 9000 transactions a second on behalf of its customers, by rolling them into a single “smart contract” using a “zero knowledge proof” approach.
Mr Ferguson said this reduced the computing and storage resources needed to validate the underlying transactions by reducing the amount of data held in a transaction, and not requiring knowledge of the entire data for it to be verified.
“NFT trading is a terrible mainstream user experience right now. It’s expensive, illiquid, and the only existing scaling solutions compromise on the most important thing – the security and user base of ethereum,” he said.
“We want businesses to create their game, marketplace, or NFT application within hours via application programming interfaces, with … no blockchain programming required.”
At least one big name in the NFT community has taken Immutable at its word, with Beeple using some of his Christie’s windfall to purchase tokens in the initial coin offering underpinning Immutable X, which closes on Wednesday.
The Ferguson brothers are serial entrepreneurs. As teens they started a hoverboard business, which was shut down by the US Postal Service when, according to Robbie Ferguson, rival brands started exploding in transit.
A platform enabling betting on online game League Of Legends was next, before a eureka moment in 2015 when the brothers were impressed by the integrity of a coin-flip gambling game built on ethereum-powered smart contracts, called ETHeroll.
“I realised that a smart contract can, in 10 lines of code, provide a level of security and certainty around a transaction that governments and banks spend millions on achieving elsewhere,” Mr Ferguson said.
He said the new funding – which included money from local venture capitalist AirTree Ventures and early Twitter and Snapchat backer Gary Vaynerchuk – would enable headcount to quickly grow from 110 to 180.
Launched in April, Immutable X is initially focused on powering two NFT-trading games developed internally by Immutable, Gods Unchained and Guild Of Guardians.
However, Mr Ferguson said Immutable X wanted to be the back-end for NFT trading well beyond the $400 billion-a-year gaming industry.
“All digital content, be they videos, songs or images, can be tokenised into provably scarce digital collectables, enabling a new type of creator-audience relationship,” he said.
“Everything which is unique and tradable, including artworks, in-game assets and title to physical goods – even diamonds, or real estate – can eventually be represented as public blockchain NFTs, and become tradable on a globally liquid market.”