By Dr Ravi Chamria
‘A JPEG just sold for $69.3 million amid the NFT craze’
‘Nike sold an NFT sneaker for $134000’
‘Rare Bored Ape Yacht club NFT sells for a record $3.4 million USD’
Unless you are living under a rock, you must have come across such captivating headlines while scrolling through your news feed or social media in the last one year. Even a host of celebrities like Eminem, Paris Hilton, Justin Bieber, Amitabh Bachchan, and Salman Khan have been sighted either launching their own NFTs or flaunting their possessions.
But, is NFT only about art or collectibles? Apes and pixels are cool, but there is much more to NFTs. Non-Fungible Tokens (NFTs) are Blockchain-based asset-backed tokens that provides clear proof of provenance and ownership of an asset, immutable audit trail of asset transactions and interoperability standards.
More than just Art – The palette of NFT use cases
According to a report released by AI-driven market intelligence platform, Report Linker, the global Non-Fungible Token market is expected to grow by $147 billion in next few years. The study says a larger portion of it, nearly half, will be driven by the growing demands for digital art and collectibles followed by games, entertainment, and business assets.
So, thinking NFTs are just digital art or game collectibles is like thinking internet is only to send emails – that’s just the tip of the iceberg! Here are some other interesting uses for NFTs that you might want to explore:
The real-estate industry is today burdened with high-ticket investments, illiquidity, cumbersome procedures, and lack of innovation. If not all, NFTs could address some of these issues.
With fractional NFTs, a property can be divided into smaller pieces and put up for sale. Now, if someone wanted to buy a $100,000 property but only had $10,000, they could purchase a 10% fractional share. Not only would they gain an appreciation of the physical property, but could also get rental income proportional to their share using smart contracts and wallets.
The mortgages will become seamless where the tokenized real estate assets can participate on the Decentralized Finance (DeFi) platforms to take loan in few clicks. It eliminates the frictions entailing tedious paperwork. The life cycle of a property can also be tracked with an NFT, making sure you know who owned it first, whether the mortgage has been paid off, and revenue records are to the point.
Tether co-founder Quigley once said in an interview, “All consumer products—that can’t be eaten—in the next 10 years will have digital twins. They will have NFTs.’’
Here’s a little addition. Even if it’s an edible product, it will have NFTs, which will help in tracking their journey through the supply chain.
For example: Let’s say a company supplies wine. They could use NFTs to track each bottle as it moves through the supply chain, all the way from factory to the customer’s doorstep. This would allow them to track aspects like where each bottle is placed at any given point in time, when it was manufactured, who worked on it, and the likes. This would ultimately lead to a more efficient and streamlined supply chain.
The financial asset management has improved significantly on the user layer with fintech revolution, but the backend legacy infrastructure is still rife with inefficiencies like larger settlement time, data traceability issues, cost of security & compliances. NFTs and DeFi have shown immense potential to disrupt the financial infrastructure.
For customer due diligence and KYC/AML compliances, the tokenized KYC using NFTs and smart contracts can solve the challenges related to redundancy, security and updation of data. This will lead to not only cost savings but also better adherence to the compliances.
For invoice discounting, the tokenized invoices in the form of NFTs will provide a complete trail of transactions behind the invoice, reducing risk and bringing much-needed transparency. It will also open up the secondary market for discounted invoices portfolio, easing liquidity for the primary lenders.
For financial bonds, a Blockchain-based platform can manage the complete asset lifecycle, from issuance of digital bonds in the form of NFTs to trading in the secondary market and distribution of yield using smart contracts. The resultant process is much more efficient, user friendly and compliant.
4.Music and Royalties
NFTs have the potential to revolutionize the way artists are compensated for their work. Currently, artists receive a small percentage of the revenue generated from music streaming platforms.
State of Crypto Report 2022 suggests, that less than 0.2% of musicians on streaming services make over $50k/ year. In 2021, Spotify paid only $7 billion to its 11 million creators, which is an average of $636 per artist.
With NFTs, artists would be able to sell their songs or albums directly to fans and receive a much larger portion of the revenue. NFTs could also be used to create exclusive experiences for fans, such as access to VIP concerts or behind-the-scenes footage.
The royalties for all different types of creative work, embedded into the smart contracts will be accrued to the creator in perpetuity, without the involvement of any intermediaries.
We’ve only scratched the surface
NFTs are still in their early days, and the possibilities for what they can do beyond art and collectibles are endless. We’re on the cusp of a whole new era of digital ownership and creator economy, and it will be exciting to see where it goes from here.
(The Author is the Co-founder & CEO of Zeeve, a Blockchain Infrastructure Automation Platform.)