Right now, you should be no stranger to non-fungible tokens (NFTs) after its spectacular 2021 market introduction which resulted in a multi-billion industry. Not only is the growing interest in NFTs attracting more players into the NFT ecosystem, it is paving the way for many different interesting uses of adopting and interacting with NFT technology.
As NFTs evolve, we will see the mainstream adopting more of such use cases in various industries. Join us as we explore the advantages of using NFTs and introduce upcoming NFT use cases to keep a lookout for!
The case for using NFTs
NFTs allow anyone to own unique assets on a blockchain and prove their ownership through tokenization. The inherent properties of NFTs: ownership, uniqueness and authenticity allow NFTs to represent the value of unique real-world or digital assets. Through the use of NFTs, you can own and transfer a given value in the digital world, while creating digital scarcity for these assets, making it possible to handle and trade digitized assets online.
As NFT data is embedded on the blockchain, NFTs enjoy the advantages that blockchain technology provides: speed, automation, transparency and security. This allows people to verify the NFT assets’ origins and authenticity, and makes it pretty much impossible to tamper with the data.
#1 Ownership of a unique asset
As its name suggests, every NFT asset is “non-fungible” being a one-and-only item that cannot be duplicated. NFTs can be used as a proof of ownership of any unique asset, either from the physical or digital world. In other words, if you own an NFT in your wallet, you can be absolutely sure that you are the only person who owns that NFT asset.
#2 Provenance proves authenticity
NFTs can be used to record the provenance of an asset tokenized on the blockchain. The creation of the NFT asset, as well as the transactions that have taken place over time are well documented. The blockchain addresses of the creator (and subsequent owners) can be retrieved easily, with the blockchain acting as the public digital ledger.
So why is provenance important, you may ask? In the case of art where forgeries may take place, having a verifiable history of transactions authenticates the artwork’s origin. Just think of an artwork that has passed through many hands – with NFT data that records its provenance – we can conclude that it came from the original artist in the first place. Having this record of provenance on the blockchain makes it secure, and therefore reduces fraudulent claims.
#3 Decentralized transactions on the blockchain
NFT transactions are conducted on the blockchain. They are decentralized and therefore remove intermediaries (for example, agents and banks) and other peripherals. Mostly executed via smart contracts, NFT transactions are way more efficient - settlements are almost immediate and the process is simplified. Any two people with digital wallets will be able to transfer the ownership of the NFT easily.
NFT use cases to watch out for
Speaking of NFTs, digital art pieces containing ubiquitous apes from Bored Apes Yacht Club and pixelated avatars from CryptoPunks quickly come to mind. But having digital collectibles is not the only NFT application that places emphasis on ownership, uniqueness and authenticity – here are a few more use cases that are disrupting industries, one NFT at a time.
Use Case #1 – Digital Collectibles
Digital art dates back to the 1960s but it has been difficult to assign provenance and value to the medium due to the ease of piracy and duplication. With NFTs, collectors are now able to verify the owner and authenticity of digital artworks easily. This shook up the fine art scene where Christie’s marked an industry first by being the first major auction house to offer the first purely digital artwork sold as an NFT, Beeple’s Everydays: The First 5000 Days.
With the recording of provenance, NFTs make it difficult for art forgers to falsify information. This definitely applies to traditional, physical art works. The Artory Registry allows artists to register their physical art pieces on the blockchain. Famously, they worked with Christie’s, to offer the first work of art with an embedded NFT, Robert Alice’s Block 21.
In the world of wine collection, cases of wine have been minted as NFTs. This makes it easy for investors to trade and transfer ownership of the wine. Provenance has always been important in proving a wine’s value; traditionally it has been limited to tedious paperwork, but NFTs have simplified the process as the wine’s properties stored on the blockchain can now be easily retrieved for verification.
Use Case #2 – Events
NFTs come in really useful for events, being an industry that has to deal with forgeries and fraud, through the authentication of real-world tickets. As ticket transactions can be tracked using NFTs, this solves the associated problems of secondary sales or scalpers on black markets. For online events, event attendance will be a straightforward experience as all you need is to connect your wallet to verify that you own the ticket (in the form of NFTs).
You may even receive additional perks from the event organizer for current and future events, such as memorabilia attached to the NFT that you can keep.
Use Case #3 – Supply Chain
Another industry that requires accurate information and the tracking of historic processes will be the supply chain industry. As NFTs, data relating its identity and origin are attached to the physical shipment. The condition and the location of the shipment can also be updated as they move along the chain. For example, at KoineArth, the information is transparent to all parties including banks, insurance companies and suppliers. Machine learning can also be incorporated to predict future shipments, which allows stakeholders to plan and forecast better. As a buyer, you can be more confident that the likelihood of counterfeit and theft are reduced.
Use Case #4 – Gaming
Online gaming takes place in the digital world, so the transition to using NFTs is naturally seamless. Virtual reality (VR) and gaming platforms like Decentraland and The Sandbox allow their users to buy and sell plots of land and avatars’ wearables as NFTs.
Imagine you have spent money on in-app purchases for a game, and have decided to stop playing it one day. What happens normally is all the value of those purchases will be lost. However, with NFTs, the purchases and accrued winnings can be sold and transferred to other players. There is a chance that you can make a profit from the sales if the items are rare and of demand. You may also be able to sell your high-performing online game profile!
Use Case #5 – Real Estate
Real estate can be transacted using NFTs. Propy is a real estate company that has revolutionized real estate transactions by automating the processes using smart contracts. By minting the ownership of the entity as an NFT, the overall process is simplified and made more efficient. NFTs can record all necessary details like ownership, construction plans and the location, thereby omitting the need for physical paperwork. NFTs will certify the ownership of the property and make a record of the past owners.
Use Case #6 – Intellectual Property
If you are a creator who sells your work as an NFT, you can cut out the need for an agent or an intermediate company. Not only does your work reach a wider audience, NFTs can serve as a marketing tool for your brand. Besides owning your creations, you are also able to stake the claim of the intellectual property’s creation.
Besides, you may indicate a percentage of the sale price that goes to you, when the NFT is sold on the marketplace each time; this is known as royalty. These royalty payments are coded into the smart contract on the blockchain, and executed automatically each time the NFT is sold to the next person.
In the future, trademarks, copyrights and patents may also be stored as NFTs. Clearly there is alignment between them and the claiming of ownership of intangible assets.
Use Case #7 – Token-Gating Communities
The NFT community shows how groups of people come together based on their shared interest in NFTs. Often enough, these people connect on online platforms to discuss their NFTs and collaborate to expand on these NFT projects.
To create a safe space for holders of their NFT collections, projects use NFTs as a form of membership, also known as “token-gating”, to let holders enter community platforms. The NFTs provide access to events, merchandise, discounts or exclusive digital content. For example, Adidas launched Into the Metaverse. Holders of the NFTs in the collection had access to virtual land, and could receive related physical merchandise at no extra charge.
The idea of creating exclusive clubs is not new, but NFTs have allowed companies to expand their options of membership models by offering unique digital membership with added features. In fact, we are seeing more brands, organizations and celebrities using NFTs to increase engagement by reaching out to their fans and supporters directly.
NFTs and beyond
NFTs usher in a new age of digital technology – by allowing us to prove the authenticity and ownership of a digital asset, which was not possible before. The introduction of NFTs brings about technological potential and infrastructure to build new use cases for the online world - and this is all powered by the fact that we can now derive value from unique digital assets through ownership verification, digital scarcity and trade of an underlying asset in demand.
You can now manage your assets digitally in the form of NFTs and validate the authenticity of assets before purchasing them from someone else directly. As NFTs make it easier for people to claim ownership of digital assets, it is clear that NFTs are set to play a greater role in the future Web3 economy. Just as in-app purchases changed the way we buy and sell just 20 years ago, NFTs could very well signal the start of the new wave of digital experiences – ranging from commerce to finance.
We believe that such use cases will only continue to grow as more people transition into Web3 and we invite you to explore the endless possible applications of NFTs with us!
This article is part of our Gomu Learn series where we introduce and break down emerging topics on NFTs, Web3 and blockchain technology for everyone to learn and get onboard onto Web3.