Before non-exchangeable tokens, it was very difficult to create digital uniqueness of assets. While copyright protection exists, it is relatively easy for consumers to copy or pirate digital works.
The growth of NFT has brought us the art of crypto and digital collections, but there is more to it. From real estate to logistics, you can use NFT to prove the authenticity of many unique and collection items.
The article was originally written and published at Binance Academy
Although the NFT ecosystem is still young, there are many exciting projects to see, some of which are already of great value to creators and consumers.
Non-exchangeable tokens have helped solve long-standing problems with the uniqueness of digital art. How do you make a virtual graphic unique when you can just copy it? Although there are fake works of art in the real world, we can usually confirm their authenticity.
The art of cryptocurrency derives much of its value from digital verification that confirms its authenticity and ownership. Although anyone can see CryptoPunk in the Ethereum blockchain and upload or save the image, only the owner can prove that he has the original.
For example, an anonymous digital artist under the pseudonym Pak created an NFT series in which everyone except the name is the same. Giving the titles “Cheap”, “Expensive” and “Unsold”, Pak gave a different rating to each title. The collection evokes thoughts about the value of works of art. As for NFT, the value does not necessarily come from the work of art added to the work. Sometimes it is more important to prove ownership of the asset. This makes the art of cryptocurrency one of the most popular uses of NFT.
Demand for digital collections is at an all-time high, whether it’s PancakeSwap Bunny or Binance Anniversary NFT. This use is even widespread thanks to NBA NFT collector cards called NBA Top Shot. In addition to digital art, these invaluable tokens make up a significant portion of sales in NFT markets such as Opensea, BakerySwap and Treasureland. They often overlap with digital artwork, so it’s not uncommon for NFT to be both a work of art and a collector’s item. These two programs are the most comprehensive and advanced. Jack Dorsey’s first tweet is a perfect example of collector NFT. While CryptoPunk is collectible and visually artistic, Dorsey’s NFT is valuable because it can only be collected.
Dorsey sold NFT using the Valuables platform, which symbolizes tweets. You can send your suggestion to any tweet. Anyone can offer the opposite and be superior to you. It is then up to the tweet author (s) to accept the offer. If he accepts this, he will create a tweet blockchain and create a unique NFT with his autograph. Each NFT is signed by the approved Twitter creator @handle, meaning that only the original creator can make their tweets as NFT. This process creates a unique digital collection item that can be sold or stored. Selling a tweet may seem strange at first glance and may be a little difficult to understand, but it is a great example of how NFT has become a collection. This is basically a digital version of the autograph.
It’s easy to forget that not all NFTs are worth being a song, painting, or collector’s item. In decentralized finance (DeFi), NFTs also provide exceptional financial benefits. Most will have some works of art, but their value will come from their usefulness.
For example, JustLiquidity offers the NFT stack model. The user can collect a pair of tokens in the pool for a certain period of time and receive NFT to access the next pool. NFT acts as an entry ticket and is destroyed when you enter the new pool. This model creates an after-sales market for these NFTs based on the input they provide.
Another example is NFT meal combinations at BakerySwap, which also give owners increased staking rewards. By including BAKE, you will get an NFT combo that provides a variable amount of staking power. Users speculate on these combinations, selling them on the secondary market or using them to stack. This combination of NFT gaming and DeFi creates another interesting program for tokens that cannot be exchanged.
There is a great demand in the gaming world for unique items that can be bought and sold. Their rarity has a direct impact on their price, and players are already familiar with the idea of valuable digital items. Microtransactions and in-game purchases have created a multi-billion dollar industry that could benefit from NFT and blockchain technology.
This is also an interesting area for NFT. Video game icons combine aspects of art, collection and usability for players. However, when it comes to high-budget video games, the introduction of NFT still looks like a distant future.
Other projects are actively incorporating blockchain technology into their games. Axie Infinity and Battle Pets are Pokemon-type games where we can trade our pets and belongings. It is also possible to buy and sell these tokens in foreign markets (peer-to-peer sales).
NFTs can be cosmetic in games, but many of them are also used. Each Axie pet has its own set of fighting skills. These abilities also affect its value during trading. CryptoKitty can even be extremely valuable for its desirable breeding characteristics. Determining the value of any pet depends on the combination of its appearance, characteristics and usefulness. In the following example, we see many, not just a few.
As with a photo or video, you can also add audio to NFT to create a piece of music that can be collected. Think of it as a digital “first edition” of the disc. Adding a song to NFT is very similar to graphics, but there are other uses.
Today, the big problem for musicians is to get a fair share of royalties. However, there are ways to make a steady profit: blockchain-based streaming platforms and blockchain license fees. Competing with Amazon Music or YouTube for streaming is a hard nut to crack for small blockchain projects. Even when a giant like Spotify received a blockchain-based fee solution called MediaChain in 2017, there was no real benefit to the artists.
Small projects mainly collaborate with independent artists. Rocki in Binance Smart Chain gives the little creator a platform to sell royalties and broadcast their music. Their first NFT royalty sale on the platform raised the ERC721 standard token to 40 ETH for 50% of the fee.
Whether this model becomes more popular will depend on whether it is adopted by larger streaming services. Combining music with NFT is a great idea to take advantage of this technology, but it can be difficult to succeed without the support of music labels.
Combining real assets with NFT can digitize us to prove we have something. For example, in the case of real estate, there are usually physical acts. Creating tokenized digital versions of these files can transfer highly illiquid items (such as home or land) to the blockchain. As for this program, we have not seen much support from regulators so far. It is still in development, but it must be remembered for the future. In April 2021, Shane Dulgeroff created NFT, which represents property sold in California. Cryptographic graphics have also been added to the token. The winner of the auction will receive oil and property. However, the exact legal position of the sale and the rights of the buyer or seller are unclear.
When it comes to smaller items such as jewelry, NFTs can help prove their ownership when reselling. For example, a real diamond usually comes with a certificate of authenticity. This certificate is also a way to prove that you are its owner. Without such a certificate, anyone trying to resell an item cannot verify its authenticity and may have difficulty convincing buyers that it is their rightful owner.
Blockchain technology can also be useful in the logistics industry, especially because of its consistency and transparency. These aspects ensure that supply chain information is accurate and reliable. For food, goods and other perishable goods, it is important to know where and for how long they are.
NFTs also have the advantage of representing unique items. We can use NFT to track a product, including metadata about its origin, travel, and storage location. For example:
A factory in Italy produces high-end luxury shoes. They are assigned an NFT that can be quickly scanned from the package.
Time-stamped metadata contains information about when and where the shoes were taken.
As the product moves through the supply chain, NFT is scanned and a new time-sealed metadata is added. The information may include the location of the warehouses and the time of arrival or departure.
Once the shoes arrive at the destination, the store can scan them and mark them as collected. It is available to verify the exact date of their travel so that the authenticity of these shoes can be confirmed.
There are many potential ways to apply NFT to the supply chain. However, they all require the use of the same infrastructure at each stage of the chain. With so many different actors and stakeholders in the world, it can be difficult to apply these systems in real life. For this reason, there is currently little use of NFT in logistics.
Currently, MAERSK’s TradeLens system and IBM’s Foot Trust blockchain are two examples of large logistics solutions. Both use Hyperledger Fabric, an IFM blockchain that supports NFT. However, we do not know whether NFTs play a role in their activities.
As NFT’s popularity grows, there is a good chance that we will see more ideas and applications in the future. Currently, not every NFT application has enough time to go beyond an idea or a small project. Some of them may be impractical or unpopular. However, in more basic and simple matters, such as the rarity of works of art and collectibles, NFTs undoubtedly have a major impact on the market.
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