What is the Utility of NFTs?
NFTs (non-fungible tokens) are unique digital collectibles with different identification codes. Unlike cryptocurrencies, NFTs are non-fungible, i.e., they cannot be exchanged for another NFT because each one is unique with its attributes. NFTs exist on blockchains; therefore, they cannot be replicated. Kevin McCoy and Anil Dash created the first-ever NFT called Quantum in the year 2014. Other renowned NFTs sold for millions include Beeple’s Human One, Everydays, Cryptopunk, #7523, and so on. Besides this, many digital creators and blockchain enthusiasts are minting NFT collections, including Coca-Cola, NBA, Eminem, Justin Bieber, Grimes, etc. The NFT craze is still booming, and many people say it will become the next big thing after Bitcoin. However, many people do not entirely understand the utility of NFTs beyond their value as collectibles. The NFT market touched $41 billion in 2021 from $100 million in 2020. This demonstrates that NFT is not just a fad craze with an asset with real value and utility. Although they have become a new fad amongst people to spend millions on, their utility is not well known.
Despite the popular conception that NFTs have no utility except being collectible, the utility of NFTs is expanding. Due to their scarce supply and collectibility, NFTs are becoming increasingly mainstream, with many brands creating their own NFTs. In this article, we will be discussing the utility of NFTs in the real world.
NFTs in Business
The main utility of NFTs lies in their usage of blockchain technology. Blockchain is a distributed and decentralized public ledger that cannot be hacked. NFTs go beyond proving the unique ownership of a digital asset. NFTs can be used in any domain where ownership has to be confirmed. For instance, if house deeds exist as NFTs, they would become impossible to forge because NFTs can’t be altered. The same goes for many other businesses as well. This also saves time in searching for the document of ownership. Instead of finding ownership paperwork, NFTs can depict the entire ownership history of that particular item.
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NFTs can be used in any field, from creating job profiles to applications for colleges. For instance, incoming college students could create an NFT of their profile and allow colleges to then bid on them for admissions and scholarships. NFTs not just offer utility but also high security.
Secure Transaction Platform
Paper-based transactions are neither efficient nor sustainable. It requires a lot of human labor and paper documentation, which often gets misplaced. Cloud solves this problem; however, it creates new issues of authenticity, duplication, and fraud. With NFTs, users can get the best of both worlds. With an added layer of security, the NFT-based document becomes hack-proof and more efficient. Every party involved in the transaction can access NFT’s journey from creation to ownership. Thus, NFTs create a full-proof unhackable system that cannot be easily altered.
Some of the biggest names in the gaming sector, including Ubisoft, EA, and Square Enix, have announced their plans to include NFTs in their games. NFTs are natural extensions of in-app purchases, comprising around 95% of mobile gamers’ spending. The decentralization of in-app purchases ownership allows for a free exchange of in-game assets between gamers and even across different games. Game assets will empower developers and creations to make digital collectibles for everything, including their avatar, weapons, vehicles, etc.
Online and Offline Social Communities
Most people aware of NFTs would have heard of the Bored Yacht Club, an assembly of 10,000 NFTs that feature animated primates. People might be wondering why something as simple as an image of an ape would fetch $3.4 million. For once, the owners of NFTs from the Bored Ape collection get exclusive access to other like-minded individuals, including many celebrities. These people can discuss their common interests, such as investing and entrepreneurship.
As such, NFTs are VIP passes to exclusive clubs that offer unique benefits to their members. These clubs are not always virtual – they also extend to real-life physical spaces. For instance, the NFT collection VeeFriends, launched by the investor, social entrepreneur, and media tycoon Gary Vaynerchuk gives its members open access to VeeCon from 2022-2024. Additional benefits of such NFTs include direct mentoring sessions from Vaynerchuk himself. This demonstrates that the value of NFTs goes beyond unique ownership.
Many leading names, like Apple, Microsoft, and Meta, are heavily invested in building the metaverse. This immersive virtual space will grow at the rate of 13.1% annually for the next couple of years. Metaverse will be an integrated network of many virtual worlds with data continuity. This means that the new integrated Metaverse will allow its users to move their digital possessions between different virtual worlds, just like they move their physical assets while shifting to a new city. NFTs will be an essential component of the metaverse, allowing virtual assets in the digital world to be uniquely identifiable, exchangeable, and purchasable in NFT marketplaces.
Health and Real Estate
In healthcare, NFTs might be able to provide unique digital identification in rural areas. Many countries will benefit from using NFTs to generate a public register to certify medical personnel and provide birth certificates.
In real estate, people can leverage NFTs to generable verifiable proof of ownership and documentation around historic land transfer and custody. Proof of ownership is still a problem in many countries, where land grabbing and single-source documents remain pretty common. NFTs could solve the confusion around ownership.
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The Future of NFTs
The NFT market is still booming, with its real-life utilities expanding continuously. Blockchain technology which forms the core of NFTs is already changing the world, finding applications in industries like Healthcare, Supply Chain, Retail, and many more. At Unbanked Yield, we offer our Bankers NFT owners free access to our borrowing and lending protocol and 20% more rewards. Check out our blog if you are interested in learning more about NFTs and their utilities.