NFTs are currently taking the digital art and collectible world by storm. NFTs are becoming more popularized, their use has broadened as well.
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NFTs are currently taking the digital art and collectible world by storm, thanks to a new crypto-audience. However, as NFTs are becoming more popularized, their use has broadened as well.
NFTs can not only be used for digital artwork or collectibles but also as a representation of ownership of any unique asset that is non-interchangeable, such as the deed to a building in both the digital and physical realm.
These non-interchangeable items, like property or a fine piece of artwork, can only have one official owner at a time. These items are secured via blockchain, so no one can modify an NFT or copy and paste another version of a pre-existing NFT into existence. With unique identification codes and metadata, these items are truly one-of-a-kind.
While deep-pocketed hedge funds are buying Bitcoins or investing in decentralized finance protocols, many curious digitalists and every day artists are looking at a scarce asset class called non-fungible tokens (NFTs). In the last few months, NFTs have outgrown all other segments of the blockchain and cryptocurrency space, showing a clear sign of their formidable popularity. The emergence of NFTs has created opportunities for new business models that didn’t exist before. As the NFT market reaches an unprecedented level, the big question is how sustainable is the NFT model?
Read our explainer: NFTs Explained
NFTs and Their Use Afar Digital Art and In-Gaming Items
Non-fungible tokens are unique items on a blockchain network that are indistinguishable and cannot be exchanged with one another. They present a new way of thinking about artistic ownership – a part of the reason NFTs have turned the artist economy on its head as various creators sold their NFTs for millions.
In the gaming industry, NFTs solve the problem of assigning, trading, transferring, or otherwise selling “in-game” items. With the advent of blockchain technology, players can now manage or transfer their digital items through a secure platform and sell them on online marketplaces, like OpenSea.
However, the concept behind NFTs isn’t only limited to games or artwork. It can be applied to any field in which there is an imbalance of power between creators and institutions (middlemen) responsible for selling the work. It essentially means that creators can capture more value while preventing intermediaries from co-opting their communities. While artists can certainly build a sustainable income using Non Fungible Tokens, the tech can be used across multiple industries.
Industries Benefiting From NFTs Moving Forward
With the emergence of NFTs, has created opportunities for new business models that didn’t exist before. Breaking away from the “art collector” angle, NFTs can be used in the following industries:
- Collectibles: Beyond artworks, the potential of NFTs goes much further because they change the rule of ownership. For example, a sports memorabilia hockey card was recently sold for $3.75 million. The Mike Trout 2009 Bowman Chrome Draft Prospects Superfractor rookie card went for $3.93 million. Jack Dorsey sold his tweet for $2.9 million. The list is endless and we are yet to see the NFT-based collectible marketplace explode as the speculation around it ends.
- Music: NFTs are creating a new idea of patronage for musicians at a time when earning royalties on music is a circuitous route and live concerts are closed due to the pandemic. Musicians can create music NFT and sell it to their fans or organize an online concert where each ticket is an Non Fungible Token.
- Domain Names: As one of the first NFTs, many enthusiasts have also invested in domain names. For example, Ethereum Name Services’ (ENS) contract has been upgraded to make it ERC-721 compatible, which enables the names to be sold and traded on secondary markets.
- Insurance Policies/Contracts: The insurance sector presents another opportunity, wherein NFTs can be used to minimize risks around digital assets and protect them against capital losses. However, NFTs insurance is still in its infancy and we are yet to see any major developments around the space.
- Virtual World and Metaverse: Art is just one part of a blockchain-based virtual world where avatars, land, buildings, names, etc., can be sold and bought as Non Fungible Tokens. Popularly known as metaverse, these environments can be wandered, buildings can be visited, and events can be attended. But, it is just the tip of the iceberg. Metaverse is poised to take almost every human experience to the virtual world.
Read our explainer: NFTs Explained
Transactions in which ownership changes hands usually depend on an intermediary to establish trust. None of this will be required in the future. Blockchain-based transactions are reliable because they are immutable. Smart contracts could replace escrow accounts or lawyers to ensure parties exchanging assets honor their respective agreements. NFTs, convert these assets into tokens so they can move within the system.
In addition to transforming the above-mentioned industries, there are many sectors that NFTs can change for the better. This new decentralized economy will be much more transparent and direct than what we are used to.
NFTs are not a flash in the pan; they are truly the future of “creators’ economy.”
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