Beeple’s 10 000 days NFT made headlines this year when it was sold for 69 million dollars.
Rumoured to have been planned and bought by the same group of people, this and other hysterical market speculation surrounding NFTs gives us enough reason to dislike and distrust the NFT space completely and throw the baby out with the bathwater.
But, that would be misguided and short-sighted.
While the technology is still being developed, and many NFT projects are likely to fail, NFT technology itself is so powerful in it’s sheer utility that we are certain that it will become a part of everyone’s life in the (very) near future.
“This is not just money. It's the entire exchange, transfer and storage of value for the internet. Whole business models are about to change massively because of what this technology unlocks.” Raoul Pal, Economist & Investment Strategist and Publisher at The Global Macro Investor.
In this article, we take a look at how NFT technology can be applied to solve real-world problems in various industries.
But first, let’s understand the mechanics of NFT technology.
Understanding NFT Technology
NFTs (Non-Fungible Tokens) are built on blockchains. The blockchain system is a ledger that stores every NFT that has ever been created on it with a unique identification code. Think of it as a fingerprint. Once an NFT is created, it cannot be removed or replaced.
For these reasons, NFTs can be used to prove origin and authenticate ownership.
NFTs are minted through smart contracts that assign ownership and manage the transferability of the NFTs without a third party.
Smart contracts refer to computer protocols that digitally facilitate the verification, control, or execution of an agreement.
Simply put, “The blockchain presents a new way for us to access and trust data, communicated through the web.” Jessi Baker, Founder of Provenance.
Art, Entertainment & Collectables
NFTs become super powerful in art, luxury brand and collectible markets that are plagued with fraud and forgery as they are able to provide digital verification of their authenticity and ownership.
NFTs are also able to ensure that artists earn royalties in perpetuity meaning that if a small creator sells an NFT, they get royalties every time it’s resold.
For the media and film industries, files can be added to the blockchain to stop them from being copied or shared without owners' permission.
Identification & Documentation
As each NFT that is created has a unique key, it can be used to tokenise identity documents and certifications.
Recently, the Republic of San Marino made use of NFTs for Covid vaccine passports in order to validate the documents and mitigate forgery.
Supply Chain Logistics
In the art world, NFTs show records of the original artist or seller. They also enable us to see the selling price and how many times the artwork has been sold (and to who).
In the same way, blockchain technology can help us trace the movement of goods along a supply chain. This is useful for industries looking to track food and perishable items, luxury goods, automobile parts, and the use of recyclable and sustainable materials.
This transparency and accountability have huge ramifications for more ethical business activity.
This application is already being set in motion! Take a look at Provenance. A UK start-up setup to help businesses share information about the people, places and materials that create those products.
Using blockchain technology, supply chains become transparent!
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Opportunity For Creators
When you transform your digital work — image, music, video, or otherwise into an NFT — it’s an excellent way to mark the digital assets you’re creating and control their supply. By turning your digital art into a scarce object — no longer easily duplicated — it protects the value of your work and ensures you get paid a fair price and recognised as the rightful author.
Furthermore, in our current digital ecosystem, companies like Google and Facebook, make money from the interaction between creators and their online community.
But, this would fall away as NFTs allow a direct relationship with the creator and the community who are the token holders.
If you’re still not convinced, we have one more thing to add.
The NFT Community is a growing group of thoughtful artists, collectors, and enthusiasts committed to helping and guiding others through this space.
While many businesses and capitalists will try to exploit the market, the community will continue to moderate and etch out the space for themselves.
