A growing interest in non-fungible tokens (NFTs) has paved the way for many different use cases, prominent ones being an NFT Art and crypto collectible. But NFTs aren’t limited to these two applications. As NFTs evolve, we will likely witness more mainstream and experimental adoption of non-fungible tokens across different industries.
What are NFTs?
Before we start discussing various practical and real-world use cases of non-fungible tokens, it is essential to understand what makes NFTs popular and desirable in the first place.
Before non-fungible tokens, creating digital scarcity for assets was incredibly difficult. Although there are copyright protections in place, it's relatively easy for consumers to copy or pirate digital artwork.
All non-fungible tokens derive their value from three important factors: scarcity, demand, and uniqueness of an underlying asset.
That’s why the concept of non-fungible tokens has grown in popularity in different applications and use cases.
What is NFT Art? How do I turn my art into NFT? Can a painting be an NFT? You must have a lot of questions in mind, especially if you are an artist. Fret not. We have decided to answer all of these questions for you.
Digital art has become one of the most common use cases of non-fungible tokens today, and for a straightforward reason.
Tokenizing real-world artworks helps promote authenticity and transfers ownership to the artist or the highest bidder interested in purchasing a particular piece of art.
However, the blatant misuse of digital art by making and distributing digital copies of virtual artwork has been a long-standing problem.
The need for digitally proving the authenticity and scarcity of virtual arts is of paramount importance, something NFTs have managed to address with the help of cryptography and blockchain.
In a nutshell, crypto arts derive their value from digital authenticity and ownership. For instance, let’s consider CryptoPunk, one of the earliest NFT projects created in 2017. While anybody can download or save the image, the same can’t be said when proving ownership of a particular image.
More than the artwork itself, what makes NFTs valuable is that they belong to a single owner.
Rarible is one example of a marketplace where you can purchase digital collectibles in the form of NFT art. More and more similar platforms are originating due to increasing interest in NFTs.
Digital collectibles as NFTs
Crypto collectibles are digital items featuring unique algorithms for an added value. In a nutshell, a crypto collectible is a digital/real-world item authenticated using blockchain technology. But unlike other cryptocurrencies, crypto-collectibles are supposed to be unique and limited in quantity.
One of the prominent examples of digital collectibles is CryptoKitties. Released in 2017, CryptoKitties is essentially a blockchain-based game wherein each NFT represents a virtual cat that people can purchase. What makes these items valuable, you ask?
Interestingly, the value of each collectible is determined by a variety of factors. For instance, in CryptoKitties, it depends primarily on a combination of rare looks, features, and utility of those cute little virtual kittens.
Since the value of NFTs is driven by uniqueness, it paves the way for digitizing the collectibles market. Lest we forget, NFT collectibles encourage proof of ownership to further protect underlying digital assets from copywriting infringement.
Online gaming and NFTs
Blockchain can take gaming to the next new level, with in-game purchases tapping into NFT potential becoming popular. Blockchain gaming is becoming a new trend for a reason: the demand for unique in-game purchases in online gaming, with the price driven by rarity, uniqueness, and the value each of these items adds to your overall gaming experience.
Gamers realize the importance of these digital items sold via in-game purchases leading to a multi-billion dollar industry. Gaming is one area where non-fungible tokens can be used to their full potential.
Gaming NFTs represent art, collectibility, and utility to gamers. Let’s consider a few examples like Axie Infinity and Battle Pets -- Pokémon style games making pets and other unique items tradable in the form of non-fungible tokens that can be purchased and sold on external, peer-to-peer marketplaces.
Proving the ownership and authenticity of luxury items
The fashion industry can immensely benefit from blockchain-powered NFT technology. It will not only help consumers verify the ownership information of their items and accessories digitally, but it will also significantly eliminate the risks of counterfeiting fraud.
Apparel and accessories in the form of an NFT allow users to scan a simple QR code on the price tags and retrieve information like where the asset originated. Besides, it will also provide consumers with information about people who previously held ownership of the asset.
The textile industry can also benefit from blockchain technology in reducing carbon dioxide emissions, thereby increasing employee welfare and protecting customers. The amalgamation of NFT and blockchain can together pave the way for new supply chain applications of blockchain technology in the fashion industry.
Tokenizing course certificates and licenses
The use of NFT makes it possible to tokenize certificates and licenses, verifying their ownership and authenticity.
Many job applications and university admissions require applicants to provide specific documents and certificates to verify their competence and experience. However, at times, there are limited ways to verify the authenticity of these documents successfully. Additionally, there is also a possibility that people or companies may forge the papers.
Thanks to the use of NFT in issuing certificates, companies, and institutions can access verify certificates, thereby offering evidence of course completion.
It can also apply to driving and other types of licenses.
Tokenizing sport or concert tickets
Tokenizing tickets in the form of non-fungible tokens can benefit the sports industry. In case you are wondering, the secure nature of blockchain technology can address the critical issue of counterfeit collectibles and tickets. The sports industry, in particular, incurs vast losses due to these issues.
That said, NFT use cases can offer sports game tickets issued on blockchain to help prevent unauthorized entries at significant sporting events.
However, the use cases here are not limited to sporting events but are also applicable to any music festival. Therefore a ticket issued on blockchain in the form of a non-fungible token can help address the counterfeit issue for the companies dealing with the ticket distribution.
NFTs in real estate
Real estate is mired in a sea of bureaucracy involving layers of intermediaries from estate agents and banks to notaries and solicitors, all inflating the cost of what should be a simple transaction between two parties.
By replacing these intermediaries with smart contracts that allow for the safe and simple transfer of ownership, NFTs could greatly expedite the property-buying process. All history of ownership and rights are recorded and committed to the blockchain and instantly and easily verifiable.
NFTs could also allow for fractional ownership in properties, allowing owners to quickly unlock value from previously illiquid assets and raise funds without having to turn to a bank. The possibilities are endless and could have huge repercussions beyond the real estate industry and across the traditional financial sector.
As the popularity of NFTs continues to grow, we are likely to witness many new projects and industries joining the blockchain revolution.
NFTs still have a long way to go with plenty of room for expansion before their adoption goes mainstream.
In addition to bringing more reliability, uniformity, and interoperability to blockchain platforms, NFTs also help bridge the gap between the digital and physical worlds. It is far from being a ‘bubble,’ as some like to call it.
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