Non-fungible tokens have taken the art world by storm. While the technology has already been around for a number of years, NFTs had their ‘moment’ earlier in 2021 when a number of high-profile artists made headlines with multi-million dollar NFT sales.
The NFT ownership model, which does not necessarily involve owning any physical objects or intellectual property, was a brand-new way of thinking about artistic ownership. Monica Eaton-Cardone, Co-Founder and COO of Chargebacks911, told Finance Magnates that: “in a way, the traditional fine art marketplace has always been a manmade bubble because we assign value based on abstract benefits, such as prestige, rarity and ascetics and not on anything concrete.”
Looking Forward to Meeting You at iFX EXPO Dubai May 2021 – Making It Happen!
“Two paintings could look almost identical, but one is worth millions and the other pennies. What the crypto-players have done is develop a methodology where prestige, rarity and ascetics can be transferred to the digital world. It’s actually very clever.”
There have certainly been some big questions about the long-term viability of NFTs as investments. However, since NFTs have exploded in popularity in the art world, a number of other use cases for non-fungible token tech have sprung up across the board.
NFTs beyond the Art World
Dodo, a liquidity provider in the Decentralized Finance (DeFi) space, told Finance Magnates that NFT technology can be applied to any field in which there is an imbalance of power between creators and the (centralized) institutions that mediate the sale of their work. Dodo’s DodoNFT allows NFTs to be split across multiple owners.
“NFTs are opening up an entirely new asset class,” Dodo explained to Finance Magnates. The technology is “democratizing an area that has traditionally benefited the intermediaries, which are the gatekeepers that stand between creators and their audiences.”
“As a technology, NFTs are nothing short of transformative, since they shift the balance of power from the few to the many. In the long-term, this means that creators can capture more of the value they create and prevent others from co-opting their communities. And, as the technology evolves, solutions that fractionalize ownership will dramatically rebalance the economics of the creator economy and make its gains more accessible to all.”
However, expanding NFTs beyond the art world means that ‘creators’ are not the only ones that can benefit from the technology. While artists, musicians and writers can certainly use NFTs as a means of building sustainable income, NFT tech can be used across a number of different industries.
Non-fungible Tokens in the Travel Industry
For example, Raullen Chai, CEO of IoTeX, a company that is developing the Internet of Things through blockchain technology, explained to Finance Magnates that non-fungible tokens could be used in the travel industry.
“Imagine being rewarded for completing a specific itinerary from your favourite travel blogger,” Chai told FM. This is possible with “PebbleGo, which uses Pebble Tracker data for ‘proof of presence,’” a concept that IoTeX has developed. “In other words, the device knows that you were present and can reward you for completing that real-world action. Since the data can’t be faked (like GPS data), it’s much more reliable.”
“This can have all kinds of use cases, beyond the travel blogger enticing her community with rewards,” Chai said.
For example, NFTs could be used to develop connections between the travel industry and artistic creators “A city could partner with local artists to promote specific locations; a local artist could reward travellers with a unique digital asset for visiting the studio; events organizers could create a massive multi-player scavenger hunt for digital assets.”
“The possibilities are endless, and that’s the potential for connecting NFT-based digital assets to real-world actions,” Chai explained.
Identity, Licensing, and Certification
Because non-fungible tokens are totally unique digital objects, NFT use cases have been recognized in terms of digital identity.
Harriet Chan, Market Officer at software development firm, CocoFinder, explained that NFTs can be used to “tokenize crucial documents,” including “identity cards, birth certificates, qualifications and licences, and other documents that can’t be interchanged.”
Ankit Bhatia, the CEO and Co-Founder of Ethereum-based social network, Sapien, added that in essence, “NFTs can serve as an immutable ledger for accomplishment across contexts, whether it’s community-driven or centred around educational credentials.”
“I can forge a diploma or certificate, but an NFT-based certification cannot be imitated, especially when you can track it back to a source like a university or e-learning platform and make the token non-transferable,” he said.
Certifications of Authenticity and Ownership
In addition to human identity and qualification certification, non-fungible tokens can be used to develop certificates of authenticity or ownership for any digital or physical object.
Matt Zarracina, CEO of True Tickets, told Finance Magnates that: “many of the promising use cases of NFTs involve unique asset ownership.”
These include NFT-based “real estate titles or patents,” which IBM recently announced.
Asaf Naim, CEO, and Co-Founder of Kirobo, told Finance Magnates that: “you can use the NFT model as a contract or authorization to create an unequivocal right of ownership.” Kirobo is developing a transaction reversal tool for the ERC-721 token standard that would allow consumers to undo NFT transactions.
“So, potentially, you can sell anything (digital or not digital) if you incorporate the NFT factor into it: land, real estate, automobiles and anything with a unique value.”
NFTs in Gaming
“Other areas where the scarcity and uniqueness of digital content create value, like in gaming, are some of the largest opportunities for NFTs in the near term,” Zarracina continued. “Gaming and esports are two of the fastest-growing adopters of NFTs, using the technology to protect virtual assets acquired while playing or competing.”
Finance Magnates recently reported that in a wide variety of gaming ecosystems, players have the ability to unlock special accessories that can be added to their characters or to the worlds that they live in. In certain games, these digital items can even be sold for real-world cash and large amounts of it.
Previously, these in-game were platform-dependent: errors, hacks or discontinuation of a game could essentially erase the ownership of valuable digital items. However, with NFTs, digital ownership can span beyond a single gaming ecosystem.
Indeed, Zarracina explained that: “with NFTs, gamers can sell virtual assets back and forth securely, while taking their in-game currency with them when they leave, a practice that is currently being done in a number of games.”
Eaton-Cardone told Finance Magnates that the use of NFTs in gaming has the potential to create entire virtual economies.
“Even pre-pandemic, the video game industry had already surpassed the motion picture industry, and since then, it’s not even close,” she said. “The gamer universe is huge. For millions of Americans and many more people globally the video game world is just as immersive as the ‘real world.’ They’d rather invest their time and money in upgrading their avatars than their apartments.”
“NFTs allow you to display prestige and individuality. As video games get increasingly better at blurring the lines between fiction and truth, the psychological appeal of NFTs will likely continue to grow. And for gamers who spend most of their free time in a hypnotically immersive, deeply digital world, perhaps it’s understandable that they’d rather spend their money upgrading their avatar’s home than their own.”
NFTs in Live Events and Experiences
Zarracina added that beyond gaming, NFT technology can be used as a way to “link back to or unlock future unique experiences.” Zarracina’s company, True Tickets, focuses on blockchain ticketing for live entertainment venues.
“In our work, helping live entertainment venues go digital for all of their tickets, we understand that consumers lament the loss of the paper ticket stub,” he said.
“That said, the question is whether someone laments the loss of the ticket stub or its ability to evoke a specific memory or experience. Rarely, is it the former, and NFTs are in a unique position to serve a similar function, albeit digitally, and evoke these memories and sentiments.” In other words, NFT-based ticket stubs can serve as digital collectables themselves.
Additionally, “NFTs also can serve a role in unlocking future unique experiences,” he added. “For example, a sports team could incentivize season ticket holders to attend every home game in a season. Their attendance would then unlock a unique NFT and access to a particular experience that was available to only people that attended every home game.”
“In these types of use cases, NFTs are no longer a standalone collectable, but a part of a larger experience between an organization and its fans. The long-term possibilities of NFTs to engage fans and patrons in these ways are very exciting.”
Additionally, on a very basic level, NFTs could be used to make event ticketing more secure. Stefan von Imhof, the Co-Founder of the Alternative Assets Club, told Finance Magnates that: “counterfeit tickets are a large issue and since NFT ownership is verifiable on a blockchain, the authenticity of an NFT ticket is always guaranteed.”
“Current online ticket marketplaces also charge high fees to facilitate trades, which could be removed completely with a decentralized NFT ticket market. People could buy directly from each other, while still knowing they were getting a real ticket. This use case is starting to be explored by companies like NFT Kred, but so far use has been mostly in NFT focused conferences.”
Crowdfunding with NFTs
Edgar Fernandez, the Co-Founder of EOS Costa Rica, told Finance Magnates that his platform is working on creating non-fungible tokens that can be used for crowdfunding. “We’re currently developing a platform called gGoods that enables non-profits to create NFTs to crowdfund their causes,” he said. Using this platform, “the user can use these NFTs as collectables to play games or in other apps.”
CoinTelegraph reported on the use of NFTs in crowdfunding late in 2020 when a game development studio called ‘Dacoco’ raised $250,000 through the sale of an NFT ‘card pack’ associated with their game, Alien Worlds.
At the time, Cointelegraph wrote that: “traditional crowdfunding efforts for videogames allow early believers to pledge their money in exchange for rewards like in-game characters named after them or invitations to launch parties, NFT-backed games potentially turn the same concept into a real investment.”
NFTs Are Redefining the Concept of “Value”
While there are questions about the long-term viability of any of these NFT use cases, Eaton-Cardone explained to Finance Magnates that as the technology moves forward, the answers to important questions about the meaning of value will be answered.
She asked, “How do we define value and scarcity in a digital world? It’s an extraordinarily complex question, and the marketplace is still trying to sort it out. There is no unanimity. There will be considerable volatility, with value-assessments of digital properties fluctuating wildly.”
“But, if you believe in the theory of supply and demand, then you have to take NFTs seriously. Sure, it’s easy to make fun of NFTs for being frivolous, silly or even a short-term fad, but ask yourself: Are electronic collectables any less frivolous than, say, collecting comic books, paintings or baseball cards? Why should an old cardboard picture of Honus Wagner be worth millions? The answer, of course, is supply and demand.”
Tell us your thoughts on the future of NFT technology in the comments below.
bestadmin
