Non-fungible tokens, or NFTs, have witnessed a meteoric rise in popularity in the last couple of years. It first made headlines when digital artist Beeple’s “Everydays: The First 5000 Days
” artwork was sold for a record-breaking $69.3 million at Christie’s auction house. According to market tracker DappRadar, sales of NFTs reached almost $25 billion
in 2021, which proves this speculative asset class has outgrown all other segments of the blockchain and crypto space.NFTs and digital art: a match made in heaven?
The blockchain-based NFTs have changed the art world, which is known to be one of the early adopters of this disruptive technology. NFTs have enabled artists, musicians, and other content creators to sell or trade their digital artwork and create financial value. For example, artists can get paid every time their artwork changes hands, not simply once when they sell it initially. Indeed, NFTs and digital art are made for each other. Unsurprisingly, a bigger portion (around a quarter) of the NFT sales volume in 2021 came from digital artworks and collectibles. Now, this raised a question in many minds: “are NFTs limited to digital artworks?” Certainly not!
The concept behind NFT technology can be utilized across multiple industries and diverse business models to create new opportunities for businesses that never existed before. In fact, using NFTs only for digital art or collectibles is like using the internet only to send emails — that’s just the tip of the iceberg!
But before we discuss how NFTs are much bigger than just an art fad, it would help to have a better understanding of what NFTs are.What are non-fungible tokens, or NFTs?
For the uninitiated, an NFT is a unit of data stored on a blockchain network in the form of a uniquely identifiable ‘digital token’. It cannot be copied, replicated, or duplicated. While cryptocurrencies like Bitcoin and Ethereum are fungible, meaning one bitcoin can be directly exchanged for another bitcoin – NFTs are the exact opposite. They can be used as a representation of ownership of an asset that is non-interchangeable and can have only one official owner at a time.
Let’s decrypt this into everyday language for better understanding. At most hotels, you use a programmed token: your room key. This key is non-fungible
as it will open only your room’s lock. That means this key is a programmable, non-fungible token for access to your room, and you are the only official owner of that room during your stay. If yours is a luxury suite, then your room key may also come with additional advantages such as access to exquisite furniture, a world-class view, free spa service, and so on. An NFT can also be similarly programmed to hold rights and documentation for all types of assets.
In fact, today’s NFTs are a step ahead. While your room key does not hold any details regarding who stayed (owned) in the room before you or how much they paid for it, each digital NFT holds the complete, unchangeable history of who created it, and to whom it was sold, when and the price.
NFTs have some compelling attributes that are attractive to buyers and collectors both. Let’s take a quick look:·
– NFTs help certify the authenticity and ownership of an original without implying extra costs.·
– NFTs are lines of code that run automatically when all the terms are met, so there is no need for a regulatory authority.·
– Each NFT contains metadata recorded on the blockchain, which is virtually impossible to forge or alter.
NFTs are permeating the business world far beyond digital art
No more a testing ground for digital art, NFTs have gone beyond the “art collector” tag and are penetrating the mainstream industries such as music, gaming, entertainment, sports, finance, and investments. The possibilities with NFTs are virtually endless but let’s take a look at the major use cases of NFTs:#1 Supply Chain
Blockchain technology is used within supply chain management across various industries like pharma, food and fashion for its immutability and transparency. The use of NFTs allows representing unique items as ‘tokens’ on the blockchain, which help easily track products from the origin to the final destination. NFTs also help in dealing with the problem of counterfeiting across the supply chain by tracking the authenticity and quality of a product by viewing its metadata since it’s impossible for anyone to tamper with the NFT stored on the blockchain.
For example, you can track if a luxury watch was manufactured at a watchmaking center in Switzerland using NFTs. First, the watch gets an NFT which can be quickly scanned on its packaging box. The NFT contains timestamped metadata with details like when and where the luxury watch was manufactured. As the watch goes through the supply chain, new metadata with details such as time of arrival or departure, warehouse location, etc. is added to the digital NFT. You can also add “stolen” as status to the NFT. Doing so, the lost/stolen watch loses its value and becomes superfluous in the luxury market. Each year, around 70,000 watches are stolen out of which only 5% are recovered.
Once the luxury watch is received by a retailer or its new owner, they can scan the NFT and mark it as 'received'. A complete history of this high-end watch can also be viewed to verify its authenticity and logistics journey.#2 Real Estate
The real estate industry is one of the most NFT-ready sectors and advocates believe NFTs will soon become a standard in the industry.
When buying a house or piece of land, it is important to know all its attributes, such as size, location, and price, and if it is free of legal claims and debts. NFTs could play a key role in a smooth transfer of land deeds and providing proof of ownership thanks to an NFT containing an immutable record of all the property information.
Real-estate documents like ownership deed and other buyer-seller agreements can be converted into NFTs to prevent confusion and conflicts later. Imagine knowing everything about the property you are looking to buy including details like when it was built, who owned it first, when was it last renovated, and so on. Timestamped NFTs could be fairly helpful in keeping track of changes in property value over time.
Tokenization of real estate using NFTs, which calls for fractional ownership of the property can also come in handy for buyers and sellers.#3 Digital Identity
Identity is our most valuable asset and yet becoming increasingly difficult to safeguard in physical and virtual worlds. In today’s data-driven world where identity theft is on the rise, NFTs have the potential to provide a new level of security and identification to prove one’s identity online.
NFTs interact with identity verification systems through authentication to ensure the customers are onboarding with legit identities. With smart encryption and validation technology, NFTs uplift the identification and security of public as well as private blockchain databases by imprinting digital signatures to each asset or transaction. This makes it impossible for hackers to replicate and link to other virtual assets.
Use of NFTs in digital identities arena will allow people to actually take control of their personal information. Verifying one’s digital identity via blockchain-based NFTs allow people to control with what personal data and with whom is being shared and could even open up the pathway for data monetization. NFT use cases of digital identity can make a difference in different sectors from healthcare to social media to democratic voting.
Imagine a day when you will need to verify your online identity with an NFT attached to an online license to sign into a web browser to surf the web, just like how you need a government-approved driver’s license to drive a car. Application of NFTs in digital identity management systems is bringing you closer to that day
already!#4 Intellectual property
Managing traditional intellectual property tools like copyrights and trademarks can be difficult, however, you can claim ownership of any piece of content if you are the owner of its NFT. The immutable information stored in a digital token makes it easy for the NFT owner to prove they are the original creator/owner of the asset, anytime anywhere. Similarly, you can protect your idea or claim ownership of an invention by certifying and protecting their patents through NFTs. The application of NFTs reduces the need for 'middlemen', saving you both time and money.#5 Ticketing
Since NFTs provide a form of digital signature that cannot be replicated, blockchain experts are considering their use as a bridge between physical & digital ticketing for concerts, sporting events, or even plane tickets.
Being non-fungible and easily trackable via blockchain, NFTs can make a worthy solution for eliminating physical stubs and providing folks with an easily trackable, digital ticket that can be accessed through a mobile phone or any other device. With smart contract capabilities in place, NFT-based tickets can perfectly align with the terms & conditions, date of expiry, or any unique perks for the events.
NFT ticketing enhances the experience for both attendees and organizers. Both parties can validate the authenticity of the ticket and securely track the ticket ownership as all the details from the initial sale to resale are recorded on the blockchain. This helps prevent fake tickets and scalping – another predatory threat to the ticketing industry.#6 Gaming
NFTs in the video gaming universe are hot right now. Previously, virtual assets earned or bought by players to style their game identity remained in the possession of the gaming company. Now NFTs are revolutionizing it by transferring ownership of these in-game assets, like outfits, or accessories for avatars to the actual players. Gamers can sell, transfer or trade those in-game items with other players with better control and economic certainty. For instance, players could win and collect NFTs through different levels of a game and later sell them to other players for a profit or transfer their purchases from one game to another as they have ‘provable’ ownership.
NFTs have also created room for the Play-to-Earn (P2E) style of gaming. The success of blockchain-based games like Axie Infinity and Splinterlands, where players earn NFTs for playing and later sell them for actual currency to other players. Such play-to-earn opportunities with the entertainment element have made blockchain video games impossible to ignore.Bonus: Metaverse
The metaverse, an omnipresent buzzword in the crypto community is often called the successor of the internet. While it is hard to imagine the full scope of the future metaverse today, it is clear that this dynamic 3D virtual space will be poised to take almost every human experience to a virtual world.
While Mark Zuckerberg seized his opportunity to rebrand Facebook to Meta to get the first-mover advantage, be mindful that there will be hundreds of such metaverses, and each will have assets like avatars, land, buildings, events, etc., which will be bought and sold as NFTs. For example, your avatar in the metaverse will be an NFT – your actual identity within the space that no one can steal from you. Just like video games, you will be able to monetize and trade your creations in the metaverse, often in the form of NFTs. Also, people may even buy NFTs of virtual properties like convention halls, which they could rent out to others to make some profit.Conclusion
KORE Technologies helps luxury brands to fight against fakes and counterfeits and protect high-value physical goods using NFT-based digital certificates. These digital NFTs promise transparency, traceability, and security across a product's lifecycle. They also help brands to build a direct and long-lasting relationship with the owner of their luxury products and enhance the overall customer experience.
Considering the vast potential of NFTs, we can conveniently say that we are sitting on the very beginning of what is possible. Note that the fast-growing NFT technology is showing no signs of slowing down, and be sure that there will be use cases in the future we haven't even attempted or thought of as yet.