Introduction To NFT Use Cases

NFTs have created a lot of opportunities for businesses and people in the creative sector, especially digital content creators. Digital content has become a great platform for creators to showcase their talent and monetize their digital work. In this article, I talk about NFTs and explore some of their promising use cases, besides digital art.

BUT WHAT ARE NFTS?

NFTs simply stand for non-fungible tokens. They are digital assets which provide certification for the ownership of the asset that the user is purchasing. Using blockchain technology that enables people to create a digitally scarce asset without a third party, there can only be a single, non-divisible NFT per use. Fungible tokens are traded on equal terms, where value remains the same. For example, if a person trades $10 for a different $10 from another person, the value of the cash remains the same. On the other hand, non-fungible assets are unique and non-identical; i.e. they cannot be traded on equal terms. For example, a sports card of an athlete issued 10 years ago will not have the same value as a sports card of that same athlete released a few months ago. Trade cannot be initiated as the two cards possess non-tangible factors, such as the release year, the rarity, and the sports moment that merged with the card. This physical concept when converted into a digital form, it is what we call NFTs.

Since they are digital assets, NFTs can also be traded in a marketplace such as OpenSea or Nifty Gateway. They can also be traded on major exchanges (both centralised and decentralised). Because of this characteristic, many times the NFTs of rare collectibles can fetch a good value when there is high demand. This concept has also become very popular among world-renowned auction houses such as Sotheby’s, which enjoyed a record year in 2021, helped by $100million sales coming from NFTs alone! NFT BUSINESS USE CASES

Below are some interesting NFT use cases which are evolving rapidly.

1. Hospitality (Restaurants) - Ever thought of exclusive dining and making it a memorable experience? Some restaurants have made NFT ownership mandatory before getting access to dining. Restaurateurs like Gary Vee have started restaurants where NFT tokens can give access to your membership and your table. People who own the NFT may want to eat there four or five times and then sell the token for profits to the next newcomer. Holders of the token get access to the restaurant and “unlimited enjoyment of the cocktail lounge and access to private culinary experiences.” Some restaurants are exploring ideas of offering an exclusive digital art which gets unlocked at the end of each dining experience.

2. Brand Perks - Some leading brands are offering special-edition digital gift cards for owners which can be redeemed for some exclusive perks and benefits in the form of NFTs.

Taco Bell launched a gift card worth $500 by selling a rare collection of 25 NFTs on marketplaces like Rarible.

Drinking brand Glenfiddich released a new whisky by creating 15 NFT tokens, each representing a bottle of a 46 year-old Glenfiddich that spent 23 years of secondary maturation in an Armagnac cask. These bottles were sold for $18,000 per bottle, paid for with ETH. Sold out in just few seconds, some of these NFTs (which represented their ownership) were subsequently resold for increasingly higher prices. Each token also includes a special image of the bottle, which is a cool way of spreading the word of your ownership on social media. Once the token owner decides to claim their bottle from the distillery, the token is then deleted (or ‘burned’).

3. Museums, Art Galleries & Similar Institutions - Many public attractions, including museums and galleries are introducing NFTs and offering it to their visitors to boost engagement and sales in unique ways. Los Angeles-based Bright Moments, for instance, gave visitors access to mint a CryptoVenetian, with holders receiving exclusive benefits and access to drops.The State Hermitage in Saint Peterburg, Russia, the largest museum in the world by gallery space, took its first steps in the NFT world by selling five digital reproductions of its most famous masterpieces in the form of NFTs raising almost $450,000.

4. Healthcare (Genomics) - In the field of healthcare, NFTs are creating an impact as data privacy is becoming an increasingly important issue. Following the scrutiny of many genetics testing companies over privacy of users data, some companies like Nebula Genomics are coming out as trustworthy. They published DNA data of their founder George Church on the blockchain where it will live forever, unable to be removed. The NFT encodes the digital location of a user's complete genomic data, hosted on a decentralized server. Although Church’s DNA carries weight in the field of personal genomics, in the next few decades similar companies are expecting to put users DNA on the blockchain. After all, if someone wants to use your DNA, they should pay for it right?

5. Real Estate - Both virtual and real properties are getting sold via NFTs. In traditional real estate, property transfer is labor-intensive and requires title management. Proving and validating real estate ownership is time consuming and costly, as multiple parties like banks, real estate agents, negotiators and government officials are involved. Implementing NFT with a physical property allows for straightforward use - the purchasing of property and the transfer of ownership can be a direct exchange between the two parties - buyer and seller. Fun Fact, in 2021 the first physical real estate was auctioned as a NFT by Tech Crunch founder Michael Arrington.

6. Clothing and Fashion - NFTs can be redeemable for real objects like clothing or exclusive products. They can be traded just like normal objects, which can make them really valuable. We all know counterfeiting of clothes and accessories is a big problem in the fashion industry. You never know if what you are buying from someone who claims it as 100% original is always true. With NFTs, this problem is solved by verifying the ownership of the product bought by the customer. The NFT verification can include specific details such as place of manufacture, details of the previous owner and much more.

7. Gaming - Blockchain-based games allow gamers to get permanent access to their in-game assets which can be represented by NFTs. These “assets” may include cards, collectibles, skins, equipment, and characters. New models such as “play to earn” has been evolving lately. Players play games to earn NFT items that can be sold on marketplaces for higher prices. These items can often be used to achieve a higher performance in the game. One of the most prominent instances of the model is Axie Infinity, where players in this game can earn a smooth love potion (SLP) that can be sold for $0.15 per SLP. It’s gotten quite some traction in the Philippines - where people are quitting their job to play the game full-time, and merchants now accept SLP as currency.

8. The Metaverse - Rising in popularity following the latest announcements of Mark Zuckerberg to change Facebook’s name to Meta, the Metaverse has picked up rapidly. Metaverses are digital 3D universes that give users and businesses endless opportunities for porting real-world assets and services. Decentraland, for instance, is a virtual reality game where people can buy NFTs that define the ownership of land parcels representing digital real estate. These parcels give users the right over the environments and applications they create. Anyone can buy, sell, or rent land at any time. Their value is usually determined by proximity to popular areas, such as roads or plazas, and plots of land can also be split into themed communities, such as a Cyberpunk or Vegas theme. Each parcel of land goes for around $6,000. Participants can also purchase items of clothing or names.

9. Sports - Sports collectibles are becoming very popular - NBA Top Shot, a platform where people can collect NFTs of officially licensed video highlights, has taken off. Selling for $387k, the most expensive Top Shot was a clip of a LeBron James highlight where he emulates a famous Kobe Bryant dunk. Likewise, Autograph, a Tom Brady-backed startup, is an up-and-coming NFT platform that has partnered with big names, such as Tiger Woods, Naomi Osaka and Simone Biles.

10. Education - NFTs in Certificates and Licensing are useful for verifying authenticity and ownership of the certificates during a job intake or university admission process. Certificates, whether in printed form or as a digital badge, have always been difficult to verify and assess the value of their credential. Universities and educational establishments can offer certificates in the form of NFTs and This would in many ways substantiate the achievement and make it easier to validate the claim. Eventually, all forms of credentialing like diplomas, degrees, and PHDs can also be tokenized, and likely stored in some kind of digital wallet that serves as a person’s educational profile.

11. Music - In an industry where record labels and streaming services take away large cuts from musical artists, NFTs are creating a new platform for artists to become independent and monetise their work on the blockchain, without the need for intermediaries.

NFT-enabled musical works (albums, videos, audio clips, etc.) use automated smart contracts that authenticate a work and track its proof and value as it changes owners. This process which was time-consuming and prone to errors can now be secured and guaranteed by smart contracts, which removes the need for costly middlemen and gatekeepers. Original artists can now keep almost 95% of sales, including royalties represented by a percentage of every subsequent future sale. By putting more value in the hands of musicians and guaranteeing payment of blockchain music royalties NFTs make a good case for reinventing the music industry business model.

12. Supply Chain - Traditionally, supply chain networks are very complex and a delay in even one section can result in complete production halts. For eg, in cars manufacturing, hundreds of parts come from all over the world which need to be assembled together. Instead of long and complex paper trails that go along with transactional ownership and activity of a variety of items, NFTs create digital token transaction IDs which can be attached to each item throughout its lifecycle. NFTs can provide an end-to-end view of a parts location, quantity, and other useful information. This data is automatically updated in real-time via timestamping to the geolocation of a transported part, thus presenting an accurate view to all the stakeholders involved. Therefore, if a part scheduled from China is delayed, the manufacturer will know well in advance and have options to source from other locations, like Vietnam or India, thus keeping the supply chain working.

FINAL REMARKS

Although the above only provides a snapshot of some of the evolving use cases, it is now clear that the NFTs are becoming a game-changer for many industries. The growing popularity of NFTs is bridging the gap between the digital world and physical world. We are living in an era where businesses are facing increasing competition and they need to keep disrupting in order to survive and continue providing excellent value for their customers. NFTs seem to be one of the elements helping them.

This market is very adaptable and is poised for a high growth. I expect by 2030, NFTs will have taken over almost every industry, and many more proven and use cases and success stories will have evolved.

Until then, Keep Minting!