Blockchain technology has brought several new and innovative applications that aim to introduce advancement to the digital world. Beyond cryptocurrencies and decentralized finance, distributed ledger technology is being used for creating digital identities of both digital and real-world assets. This is what we are seeing nowadays with NFTs or Non-Fungible Tokens.
Although NFTs are mostly associated with digital artwork and gaming items, the truth is the asset class can be used for anything that is rare and valuable. In this blog post, we dig deep into various areas where NFTs can be used to bring value to the world:
Music, Fans, and Followers
The music industry is probably one of the oldest industries that are still crippled by intermediaries who take a huge cut from artists and their fans. Think of it like this – In order to sell the work to listeners, a singer has to pay a middleman fee to anyone responsible for the sale. The same goes for composers and rappers. Everyone must pay a fee to connect with their audience.
NFTs are going to change this whole narrative. First, NFTs are on blockchains, which means no intermediary is required for the maintenance of the system because everything is done in a decentralized manner. The community members take care of the ecosystem in exchange for the fee that is rewarded each time someone buys an NFT. So, musicians can create an NFT of their album, put it on a marketplace like UnicoNFT, and sell it directly to their fans.
But, it goes beyond that!
Artists can create an NFT of their personal time through which their fans can connect with them directly. They can organize an online concert and sell tickets as an NFT. A composer can compose a tune and put it as an NFT – it can be the only tune they will ever produce which brings scarcity and thus, more value. The opportunities are endless! All you need to think of is a way to provide value to the followers and fans.
Games, Metaverse, and Other Virtual Worlds
The gaming industry will probably be disrupted mostly by NFTs. The strong reason to believe this statement is the humongous growth of gaming platforms like Axie, Decentraland, x, etc., in the past few months. While play-to-earn games are more popular currently, the introduction of NFTs via in-gaming assets is the real game-changer. Players who have long been holding rare items like avatars, swords, dresses, etc., can now trade them on NFT marketplaces for a good amount.
That’s not all – NFTs penetrate everything that lives in a virtual world, like Metaverse. In essence, the metaverse is a fictional world where everything is digital and doesn’t exist in reality. With Covid continuing to leave the real world stranded, we might see some revolutionary concepts being formulated that can entertain users virtually and without requiring them to step out.
A lot of this is already happening as metaverse has started to allow users virtual events in a VR setting. NFTs are being used to put the price on the content with proof of ownership that is being used in the metaverse. This has opened up a world of opportunities for everyone. Brands can create virtual representations of their products to offer an online experience for their customers. Games can be played using unique avatars that are represented by NFTs.
Wearables and Apparels – All Thing Fashion
“An NFT of a Gucci bag was sold for more money than its tangible form”, was recent news which only further strengthened the belief that the virtual world will be more valuable than the real world in the near future. It’s true! Users are buying more virtual goods than the real ones even when the price of the latter is less.
A part of the reason for this huge shift is the ongoing pandemic, which has pushed most of our social interactions online. For the fashion industry, NFTs have added a powerful collectibility layer in the minds of wearers. Not just Gucci, but a whole lot of brands are creating 3D items that can be shown digitally and can be sold via NFTs.
The blockchain technology under the whole ecosystem provides proof that the digital items are indeed created by the brand itself and that the buyer is receiving an authentic item.
NFTs in Decentralized Finance
Beyond the virtual world, NFTs have been seen being used in decentralized finance. For example, you can use your valuable NFT as collateral to take a loan if you don’t want to sell it or have plans to hodl it.
The best part of DeFi is that all the transactions in borrowing loans are void of intermediaries. It means you pay near-zero interest rates and avoid all the hassle of the traditional financial world. Smart contracts, on the other hand, ensure you pay the borrowed amount in full if you want your NFT back. If you default, your NFT is liquidated to compensate the lenders.
But, NFTs in DeFi have better solutions to offer to the community. For example, it could drive secondary markets, or, derivative markets. For example, an in-game item can be sold on a derivative market, and through some mechanism, funds can be transferred when the trade is completed.
Furthermore, fractionalization of assets through NFTs can act as quasi securities, which might shortly become finance-y enough to get interested in lending them.
Online Identity Verification
Currently, the use cases of NFTs capture and claim ownership of digital assets, including songs, tweets, artwork, virtual land, and collectibles. The beauty of blockchain technology is that its NFT application can also be applied to people. Seems impossible? Welcome to Web 3!
Some countries have long been trying to eliminate anonymity for decades. As much as we love privacy, we know that many social media platforms are already collecting our details even if you are using a private browser or VPNs. NFTs might be the answer we are looking for to end online anonymity. However, there are only a few benefits for a completely verified network, like reducing fraud crime or negative comments.
With NFTs, you can choose what all you want to showcase and who can access your data. In some cases, users are also getting paid each time their personal data switches hands.
Additionally, NFTs could be the key that unlocks the door for a self-sovereign identity. For example, ENS (Ethereum Name Services), is a protocol for crypto addresses and decentralized domain names, which you can use to link your social media accounts. You cannot sell it, but use it to prove that you own something. NFTs of college degrees is another example in the same vein.
Future with NFTs
The world is digitizing. We are spending most of our time online, and this trend is most likely to accelerate in the coming months. This will bring in a lot of digital goods, and nothing better than NFTs has been created so far that can best represent them.
Health, advertising, fantasy sports, and a lot of other industries can benefit from using NFTs for everything that is unique. For example, the health details of a patient can be tied to blockchain using NFTs. A popular copy work can be turned into an NFT, like, the punchline of Nike, “Just Do It”, can be put online for trade by the writer.
If these ideas tell us anything, in particular, it is that NFTs can be tied to anything that is unique and valuable in the eyes of collectors. We are already seeing multiple use cases of NFTs that are disrupting various industries, and we have just started. It’s going to be a whole decade of NFTs with new and better use cases.