NFTs aka Non Fungible Tokens have become quite popular in 2021. Whether it’s the Beeple NFT sale for 69M dollars or CryptoPunks or Bored Apes getting sold from 100k to millions of dollars, NFTs have got a lot of media coverage.
And all of this lead to a lot of people trading NFTs, eventually making the trading volume reach $17B in 2021.
But what’s the use case of an animal jpeg, which I can right-click save in the very first place? Are NFTs based on greater fool theory like Bill Gates said or does it have an ultra-sound revolutionary technology behind those monkey pictures that can impact the world?
You know NFTs get an equal amount of love and hate. NFTs are not a scam. But most NFT projects, probably are scams and cash grabs. But that’s probably another article, another day.
Now, what if I say NFTs are not just online status symbols, but also have real-life applications?
In this article, we are gonna explore the real-life use cases of NFTs. But before that, let’s understand the technology behind NFTs.
All of this started with blockchain technology. This technology gives the power to trade with anyone in the world, online, without having to rely on a third party.
Like how we can trade baseball cards on a marketplace like eBay, we can trade NFTs digitally. But what makes an NFT, an NFT?
NFTs are unique digital tokens that are stored on an immutable ledger (Blockchain). Each NFT is unique, unlike a dollar bill where I can exchange mine for yours. Why? The utility is the same.
Whereas a bird NFT of mine is not the same as a pig NFT of yours.
My bird NFT can give me access to a movie premiere where your pig NFT can be a ticket to violin classes, for which I’d never exchange mine for yours.
NFTs have uniqueness embedded into them.
Ok, but why does that matter?
In a digital world where every content piece can be duplicated and shared multiple times, NFTs brought in the concept of true ownership, digital scarcity, and uniqueness in the digital world.
Yes, you can always right-click save an NFT. You can always say that it’s yours.
But if it doesn’t exist in your wallet, you can’t access the utility. You don’t have access to go to that party or restaurant because can’t prove it.
It’s the same concept (Copied this one from Garyvee), as in if you take a selfie with a big mansion behind you, that doesn’t mean you own the mansion. So, forget about right-click saving NFTs.
Now, let’s look at some use cases.
NFTs are not just pictures of monkeys that you can buy for 100 thousand dollars only to show off. Yes, the meta is that they are the new ‘Rolex’ aka status symbols. But there is more to it.
With NFTs, you can prove the ownership of an asset. Ok, but why is it important for someone to prove that he/she has a coolcat or a cryptodickbutt NFT?
Because on a low level, NFTs gives the ability to access something. It can be a community, service, tool, SAAS application etc.
For example, if I don’t have a bored ape, I can’t go to that yacht party and chill with the other bored apes. You can’t right-click save a meetup.
If I have a bildr studio pass, I can access that no code tool for free as long as I hold it.
If you hold to the Forbes NFT membership in your Metamask wallet, you can access the website, ad-free.
Imagine if a ticket is an NFT.
You can transfer that to someone else’s wallet if you want to. You can prove that you went to that event, 5 years later because the transaction is permanent on the blockchain.
All the people that attended the event, can have a discord group where you’ll be added only if you have the ticket in your wallet, thereby forming a community.
If you don’t want to be part of the discord group anymore, you can sell it to someone who wants to be part of the discord group but doesn’t have the ticket ( and hasn’t attended the event).
A live concert performer can mint tickets and sell them to his fans directly. And on every ticket resale, the performer will get paid a royalty (based on the % he or she set on the smart contract).
In the same way, a musician can mint a song on the blockchain and directly sell it to fans via NFTs. Every time, the item gets resold, the creator gets paid a royalty. More resales, more money. Skin in the game.
Imagine all those owners are getting a % of the revenue the album makes on youtube.
You don’t own your Netflix membership. They can block your account if they want to. But they can’t take away the NFT you have in your wallet if they sold their memberships as NFTs. Decentralization.
Imagine an NFT that provides access to the ‘Beta-testing a software’. Moreover, you can see which addresses hold those and can also know the supply of those NFTs. 60 NFTs? so, 60 people are testing it. Transparency.
Imagine your debit cards, credit cards, passports, certificates, etc all of them as NFTs. I know you are not comfortable keeping your identity online and making it open for everyone to see on the blockchain.
That’s when a tech called ZK Rollups comes into place. This is a way to verify the transaction without revealing the details.
You as an owner will have the control to share only the data that you want to share with whomever you want to share. You can even monetize your data.
With ‘Zero Knowledge Proofs’, you can let an airport officer verify your passport without revealing them the other details. Again, this can be done if the verification infrastructure is built using the blockchain technology.
Ok, but how do you stop from people transferring their certificates to others? That’s when Solbound NFTs come into place. These are NFTs that can’t be transferred or traded.
Imagine getting rewarded a certificate as a Soulbound NFT for the task you did for a company. Eventually, all of these NFTs can eventually add up to your on-chain resume.
And moreover, we might eventually end up owning our personal data (and sharing it on our own terms) instead of letting big companies collect it from us for free.
Finally, I believe Solbound NFTs and ZK Rollups technology can help us build our own digital identity.
NFTs are a cultural movement. It’s just that the narrative changed from Baseball and Pokemon cards to pictures of animals.
The main utility for an NFT is the community. NFTs can do great when it comes to bring like-minded people together.
Imagine cricket NFTs where the NFT holders can form a club together and play cricket on weekends. They can use the mint funds to set up the ground and buy equipment.
Don’t have time to play cricket anymore? Sell it. Won’t be there for a week? Transfer it to your friend for a week, and then take it back from her after a week. Maybe even consider renting out on an open marketplace like reNFT, Vera, or Trava.
Someone bought a Mega Mutant (an NFT from MAYC collection which is part of BAYC) for $3.9M. My immediate reaction was ‘Why?’.
The answer to that question is a question. Why would you want a Nike? What makes you crave a Ferrari or Lambo? What makes you choose Starbucks?
NFTs are the next phase of status symbols.
Have you always wanted to open your own coffee shop, but had no funds to do that? You can raise funds by minting NFTs and selling them for a certain price.
Ok, but why would anyone buy those tokens? Well, they would if you make sure, you give them equity. The concept sounds familiar? Yes, that is a silicon valley’s venture capitalist concept.
But with NFTs, and using the power of smart contracts, you can raise funds and issue NFTs to the investors. And you can set a percentage of revenue each NFT holder will earn or get paid regularly (like a dividend).
Stocks, bonds and REITs already do this. So, why involve NFTs?
First of all, you can trade those NFTs on the blockchain in an open and permissionless way. But if you are wondering “Who cares for decentralization, anyway?”, I have some more things to point out.
You as a founder will have the skin in the game because you get paid in royalties (% of an NFT sale). For you to get paid well (or more), more trading has to occur and that will happen only if the NFT collection has demand in the first place.
If your coffee is good, more people will come. More people equals more revenue. And more revenue equals, more demand for those NFTs as everyone will try to get one to have a share of the pie (coffee shop revenue) just by holding it.
You as an investor can always change your mind and drop out of the project by selling the NFT to someone who wants to be part of the cash-generating coffee shop business.
Cool, right?
The same concept can be applied to a popular Airbnb Stay, where the stay owner can issue NFTs (for free) which will allow only the holders to book, thereby creating a demand for that NFT collection.
And the owner can provide utility (special access or a free coffee) to those who visit the place multiple times (can be a part of another NFT collection called, let’s say “Elite club”).
Nike acquired RKFT NFTs and they had a ‘phygital’ release (digital collectible + physical product). Nic Carter’s article on ‘digital twin’ or ‘phygital’ model will help you understand this concept better.
The NFT innovation is happening in the entertainment industry.
Heard of music NFTs? When an artist wins, you as a holder of that music NFT will win too.
Diplo’s ‘DON’T FORGET MY LOVE’ NFT collection is giving ownership rights to the token holders. This is how personal brands and influencers are monetizing their personal brand in the web3 world.
Heard of the Antara movie that was funded by NFTs? They gave 50% of the intellectual property to the NFT buyers.
And I believe we are just getting started.
Also Read: Top 10 NFT marketing initiatives by leading brands in 2021
If you have worked hard to earn access to a digital world, considering that it’s an NFT, you can sell it to some who want to access that digital world without having to work hard, but can pay for that.
I am talking about gaming. Sorry, it’s Play to Earn, which turned out to be a Ponzi’s. But the ability to trade gaming assets, I think will create an economy.
Remember that people buy Roblox skins.
The new meta is people are buying lands on Decentraland and Sandbox.
Digital merchandise is being sold for hundreds of thousands of dollars. Why?
Currently, nobody has a clear definition or perspective on the concept of metaverse. But what if, that’s the world (virtual world) we end up living in? Then, owning that digital T-shirt would matter?
Sharing a picture of a burger online was probably considered dumb 2 decades ago. But here we are, sharing photos on Instagram, sharing thoughts on Twitter, and me communicating with my content on my website.
I still don’t buy the metaverse idea yet, but when it’s here, we all might go shopping in the metaverse, buying both physical and digital goods.
People value likes and comments. So, maybe digital goods will be the next phase of that?
Within the token’s metadata, you can put a lot of information like what ingredients the food packet contains, from which warehouse that T-shirt comes from, etc.
Because of the immutable (Data can’t be changed) and transparent nature of blockchain, and since all the NFTs are unique, they can be used to track a particular item.
Maybe it doesn’t make sense to use NFTs to track water bottles, but imagine a jewelry brand using those. A checkmate to counterfeiting??
Currently, there is no legal mechanism to connect physical assets to NFTs. You can’t sell your house as an NFT.
But hopefully, we might have something on that soon.
Millions of land properties got stuck in courts. Imagine, minting those lands (like metaverse land parcels) as NFTs with a legal framework.
Not your NFT, not your house. It’s that simple. No lawyer. No court.
Not just land, those real-world assets can be a gold bar, a t-shirt, a business registration certificate, etc.
NFTs are still babies and eventually, we shall see them grow in ways we can’t imagine. This technology is definitely here to stay.
It all started with tech innovation and culture and eventually, NFTs will be part of our day-to-day life, like how cell phones and the internet became a part of our lives.