From Blockchain, Non-Fungible Tokens (NFTs) emerged. They took the worlds of art and gaming by storm.
However, the presiding thought is that these digital representations will only have limited shelf lives. For example: In a few years, the same “Apes” which collectors are paying hundreds of thousands for may wane in popularity and eventually be worth nothing. Billions of dollars may indeed be earned or lost.
Yet many have asked if NFTs have practical applications beyond these two worlds. Are they helpful in real life?
While it’s difficult to think of NFTs beyond their 2D or 3D images, they do have several practical applications. At their core, NFTs represent either digital or physical content, or even intangible property. Let’s review some of these applications.
During World War II, much of Europe’s most prized masterpieces were taken by force. In other words, their chain of custody was lost. “Fakes” replaced some of these works, while some remained lost for decades or forever.
With NFTs, the original artworks are tagged to their masters; they are tracked. Originality is ensured. One of the most traditional of settings, an auction house, has the most to gain from this new technology.
Also, physical artworks can be converted into NFTs (such as with Banksy), and vice versa. Ownership of art is thus being fractionalized (if desired by the seller), so now you can be own 1/10,000 of a Banksy as well.
Gaming uses NFTs with in-game items available for purchase, trade, and reward. NFTs can be used across platforms, allowing for longer shelf lives even if interest in a particular game decrease. This facilitates consistent revenue streams for brands or game developers.
In-game trading becomes easier between players, increasing demand, and the values of NFTs themselves. With ownership and transaction tracking, players need no longer worry on the possibility of a scam, since the trading itself is near instantaneous.
Real estate and NFTs function perfectly together. NFTs can be the digital representations of deeds that prove ownership. Title searches become obsolete since the NFT owners are the land owners, potentially cutting expenses for land transfers. Further, NFT’s timestamping capability tracks the changes of any property’s value, providing for simplified taxation.
NFTs accelerate property transfers, through the option of selling without intermediaries who often charge excessive fees.
The use of smart contracts could even facilitate decentralized rental services for various properties, automating payments and other administrative processes.
Many products throughout the world have issues identifying their origins, particularly in the food and beverage industry. Improper tracking facilitates the risk of E. coli.
Any product in theory could have an attached NFT indicating a specific identifier and accompanying information, which would be immutable and public. Supply chains are already making us of several applications.
NFTs are capable of storing medical records, but they don’t have to compromise patient confidentiality or risk malicious manipulation by unqualified sources because, as they are blockchain-based, they are validated by multiple nodes first.
Hospitals, insurance companies, and other medical organizations are exploring narrowly defined NFT use cases for improving operations, including patient verification and medical procedure recording. Confidentiality is ensured.
For example, NFT Birth Certificates are issued to newborns at delivery so to provide a lifelong and effective way of identifying the child and their linked adults. This is the evolution of the paper birth certificate.
Tickets will be in NFT form, including entry and parking passes programmed to have uniquely assigned IDs and driving rights. This reduces the risks of counterfeiting, fraud, and identity theft.
An owner will require only one token rather than multiple tickets or cards, or even cash. Transportation will be facilitated through longer journeys having multiple checkpoints.
NFTs can indicate attendance records, degrees earned, and other important information, all of which must remain immutable.
If utilized, NFTs streamline multiple administrative processes within academic institutions while championing the original essence of blockchain—permanent, verified, and immutable. Paper certificates would become only ceremonial.
Since the rampant claims of voter fraud in the USA’s 2020 election, there have been multiple calls for required IDs to be shown before voting. However, mandating IDs risks disenfranchising those who lack copies of their identification or voter registration.
Voting issues such as these can be solved by integrating NFTs. NFTs can provide identity and residence verification without physical documentation. They drastically reduce voter fraud as well.
Buyers can now be confident that their purchases are authentic. Because a blockchain permanently stores product information, confirming rarity and authenticity is always possible.
NFTs store information about harvesting, manufacturing, and fair trade. Yet this does not stop at the commercial level: several companies are using NFTs at the design and prototyping levels.
Fake drugs and medicines can be prevented with NFT tracking. For example, you scan a bottle of a drug or supplement purchased online and verify its entire journey and use-by date. Sellers who claim legitimate products but are selling counterfeits will be exposed through NFT’s inherent transparency.
Patents are well suited for NFTs, because they allow users to provide proof of ownership of nearly anything, which is not possible with traditional IP tools such as trademarks and copyrights.
The chain of history from the time of creation through every generation of ownership can be distinguished with timestamps. The immutable nature of a blockchain forever defines the original creator of an IP and makes infringement claims impossible. Any blockchain is a public ledger.
Nearly everything in the Metaverse will be in NFT form, including the virtual representation of individuals, or “avatars.” Products will be paid for with fungible tokens, but products or items themselves will be in NFT form.
NFTs will effectively be tied to your avatar, as will its reputation. You could potentially sell or rent your avatar out.
Blockchain is still young at 13 years old, and NFTs are younger still. They not only represent new explorations of art, but all collectibles or things not currency.
Likely, we will see NFTs become integral parts in our lives given their incredible security, transparency, and utility. Their potential use cases include almost anything, from intellectual property to medicine to real estate. As the Metaverse expands, this will become more and more apparent.
The author of this text, Jean Chalopin, is a global business leader with a background encompassing banking, biotech, and entertainment. Mr. Chalopin is Chairman of Deltec International Group, www.deltecbank.com.
The co-author of this text, Robin Trehan, has a bachelor’s degree in economics, a master’s in international business and finance, and an MBA in electronic business. Mr. Trehan is a Senior VP at Deltec International Group, www.deltecbank.com.
The views, thoughts, and opinions expressed in this text are solely the views of the authors, and do not necessarily reflect those of Deltec International Group, its subsidiaries, and/or its employees.
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