Non-fungible tokens (NFTs) have been a considerable driving force in the adoption of blockchain and crypto. Digital collectibles and the NFT art scene have found mainstream media fame following the success of crypto artwork such as CryptoPunks and Bored Ape Yacht Club. Sales from such NFTs have seen millions of dollars worth of ETH spent on these NFT art collections, with A-list investors and celebrities from every industry seemingly wanting in on the action. However, the scope for NFT use cases stretches far beyond artwork and collectibles.
In this article, we’re going to dive deep into some of the most exciting NFT use cases beyond art investments. Also, we’ll explore the properties that make NFTs so versatile and what the future could hold for NFTs.
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What are NFTs?
Non-fungible tokens (NFTs) are cryptographic assets that serve as unique representations of physical or digital asset ownership on the blockchain. Unlike fungible assets such as Bitcoin and Ethereum, NFTs are not interchangeable. Just about anything can be “tokenized” as an NFT. Furthermore, NFTs on public blockchains like Ethereum benefit from an immutable and transparent ownership history.
A fungible asset makes an ideal medium of exchange because it is replaceable with any other identical unit. However, non-fungible tokens contain unique metadata that distinguishes them from other assets. Therefore, NFTs are ideal for offering a digitally secure representation of real-life assets, commodities, or everyday household items. Plus, the immutability of blockchain means NFTs can represent non-tangible assets. For example, this applies to online gaming, metaverse applications, music, and even experiences. As such, NFTs present a wide array of use cases in a broad selection of industries.
NFTs – Beyond Investment and Artwork
NFTs found initial success following the launch of the CryptoKitties NFT game. CryptoKitties is a crypto collectibles game originally operating on Ethereum. Players can collect, breed, and sell virtual cats with rare characteristics. The game was so popular that it notoriously crashed the Ethereum network after generating such high congestion. Since then, CryptoKitties has migrated to the NFT-tailored blockchain, Flow.
However, NFTs hit the headlines of mainstream media outlets after the success of NFT art. Specifically, Beeple’s “Everyday” NFT, as a collage of 5,000 images, sold at a Christie’s auction for just over $69 million. As a result, global news outlets caught wind of the evolving landscape of art and collectibles and began asking questions about NFTs.
Projects such as CryptoPunks and Bored Ape Yacht Club are responsible for some of the highest-selling NFTs ever. Furthermore, these projects have helped cement NFTs in the public consciousness, with a broad range of celebrities, entertainers, and musicians jumping on the NFT bandwagon.
5 Practical NFT Use Cases
Despite the popularity of NFT art, NFTs have much greater utility than this pioneering movement might suggest. Regardless of how many expensive pictures of monkeys an investor owns, it’s difficult to dispute that the benefits of NFTs stretch beyond JPEGs on the blockchain. Below, we discuss some of the lesser-known use cases for NFTs and the sectors in which they are beginning to thrive.
Gaming
After the explosion of NFT artwork, NFT collectibles played a significant role in shaping the crypto gaming landscape. Rare in-game items such as swords, potions, and shields reside on-chain using NFTs. Items can be sold according to their rarity and functionality within a game. Also, NFTs can store metadata for in-game characters and avatars.
Using NFTs for crypto gaming platforms brings additional utility to in-game currencies. Also, some gaming platforms use NFTs to add novel dynamics to existing popular gaming models. As such, NFTs have the potential to tap into a multi-billion dollar industry and increase crypto adoption at large.
NFT assets can be interoperable between games, allowing users to battle with their favorite sword on different platforms and in various environments. Also, NFTs can help users build their own in-game economies by buying, creating, and selling assets.
Real Estate
The use of virtual land and real estate has become a staple in crypto gaming and metaverse platforms. However, the tokenization of real-world property has enabled NFTs to revolutionize the world of real estate. At a time when homeownership is becoming increasingly challenging, “real estate NFTs” create the opportunity for fractional ownership of real estate and other assets.
Although house-sharing is nothing new, fractional NFT real estate ownership allows any arbitrary number of people to own a share of a property. Not only does this make it easier to get on the property ladder, but it also provides a transparent, efficient record of owners on-chain. Furthermore, fractional owners can enter into a smart contract that prevents them from acting in a way that could negatively affect other fractional owners.
Moreover, NFTs enable investors to participate in joint ventures with others without relying on trust. Anyone can purchase fractional ownership NFTs, regardless of geography. They don’t need to know each other or ever meet!
Music
Creating and selling a music NFT is as simple as uploading an audio file to an NFT marketplace. NFTs have several uses for artists, record labels, and producers. For example, artists can create unique fan engagement experiences, rare and limited-edition releases, exclusive art, and virtual concert tickets. Also, NFTs are helping to promote blockchain adoption by incentivizing diehard fans to adopt a novel format.
NFTs are reinventing the artist and creator royalty scheme. Receiving a fair share of royalties can be extremely challenging for musicians and producers. However, the use of music NFTs and blockchain streaming platforms enable contributors to get paid in real-time for every stream.
By releasing music as an NFT, artists can bypass several intermediaries and claim a larger share of royalty payments. Also, artists can raise funds for new projects by selling exclusive content in the form of rare NFTs. That said, NFTs are still somewhat of a novelty in the music industry. Established artists tend to benefit the most from NFTs, as they have built-in audiences. Despite this, NFTs have the potential to help attract new audiences for lesser-known artists and bands.
Finance
Today, most people associate NFTs with art, music, gaming, and collectibles. However, NFTs have substantial utility in the world of decentralized finance (DeFi). Several DeFi platforms offer NFT staking services and financial incentives. For example, the MOBOX crypto gaming platform allows holders to lock up their NFTs and earn staking rewards in return.
Furthermore, users of the JustLiquidity platform can earn NFTs by providing a token pair to a liquidity pool. Also, these NFTs serve as tickets that provide access to new liquidity pools. Accordingly, there is a secondary market for these NFTs as they “gamify” the DeFi staking rewards mechanism. In addition, NFTs are being used for decentralized fundraising. An example of this is the war bonds being issued as NFTs for the benefit of the Armed Forces of Ukraine.
Supply Chain
Blockchain has played a crucial role in supply chain management for several years. The ability to create an immutable, transparent ledger of real-time events is helping to optimize supply chains sector-wide. Blockchain helps to reduce counterfeiting and the wastage of perishable goods and commodities. However, NFTs take this to the next level by creating on-chain representations of unique items.
Rather than simply identifying a consignment or a driver, NFTs have the ability to trace specific items. This is particularly useful for high-value luxury items. A warehouse or distribution center can easily assign an NFT to such an item with metadata describing the product’s entire lifespan and current location. Additional data can be recorded by relevant parties at each step of the supply chain. This allows a potential purchaser to see a full history of the product and verify its authenticity before parting with their money.
Blockchain has helped to revolutionize the supply chains of some of the biggest multinational corporations, including Coca-Cola, Microsoft, and IBM. To learn more about the use of blockchain in supply chain management, check out the OriginTrail 101 course at Moralis Academy.
Potential NFT Use Cases in the Future
Although current NFT use cases may leave something to be desired, the future looks bright for this technology. For example, NFTs could play a crucial role in the healthcare industry. Significant developments have shone light on the potential benefits of distributed ledger technology (DLT) like blockchain in holding medical records. NFTs could help to secure sensitive medical data on-chain, optimizing communications between medical establishments and providing data privacy for patients. NFTs can also tokenize and monitor conditions of blood samples and transfusions. Plus, NFTs could offer provable sterilization of medical instruments prior to use.
Furthermore, NFTs could become an essential tool for educational establishments. Rather than issuing certifications and qualifications onto a centralized and siloed database, schools, colleges, and universities could provide students with a certification NFT. Not only would this help to reduce counterfeiting, but it could also speed up several processes throughout the education system. Also, education NFT certificates could greatly improve the employment application process.
Another potential use case for NFTs is in agriculture. Produce and land could be tokenized on the blockchain. Any important data such as climate and weather conditions, quality control information or production standards can be tokenized to provide a transparent and immutable record of events on the blockchain. Also, NFTs could track fuel consumption for heavy farm machinery to monitor and optimize fuel consumption and CO2 emissions.
In addition, NFTs could offer a secure, transparent mechanism for identity verification, ticketing, patents, and intellectual property. Plus, non-fungible assets could play a pivotal role in the automotive industry by tokenizing fuel consumption. The broader implications of this model could also help to reduce carbon emissions sector-wide. In the future, we can expect to see a wide variety of NFT use cases that further accelerate the adoption of blockchain and Web3 technologies.
What Needs to Improve
Despite the potential benefits of NFTs, many believe that significant advancements must be made before NFTs can truly operate to their full potential. One common problem is the lack of a common standard. The Ethereum ERC-721 and ERC-1155 NFT standards have paved the way for significant innovation. However, for NFT use cases to become more complex and also be scalable, some type of interoperable, chain-agnostic standard would be required.
Furthermore, NFTs are not yet a widely recognized asset class. This could cause some complications for investors and hinder adoption if the regulatory landscape were to shift. Also, misinformation and widespread hysteria around NFTs has an impact on the broader cryptocurrency markets. If the dust settles around NFTs and the hysteria dies down, it could cause an exodus of liquidity from the crypto markets.
Security is another common issue for NFT users. Many overlook the technical risks associated with using self-custodial blockchain wallets. For NFTs to achieve true mass adoption, some believe that the process must be streamlined and the user experience frictionless.
5 Practical NFT Use Cases – Summary
Many in the Web3 community would agree that NFT use cases are yet to achieve their full potential. Despite the monumental success of NFT artwork and the substantial returns investors have seen, there are many practical NFT use cases just around the corner. Naturally, mainstream media attention has been drawn to the most successful and expensive pieces of art on the blockchain. Furthermore, NFT art is reinventing modern art and making it more accessible than ever before.
The application of non-fungible, tokenized assets could provide utility for NFTs far beyond art investments. The scope for NFTs is colossal. Theoretically, NFTs could reimagine the notion of digital ownership altogether. From major fast-food restaurants to A-list celebrities, everyone is getting in on the NFT hype.
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