The craze of art NFTs over the course of the past few years is certainly well documented. This early use case for art on blockchain became a hotbed for speculative investing, with people paying thousands of dollars for everything from an image of an ape to a piece of art made by their favorite artist. However, art is far from the end goal of NFT utility, and instead should be thought of as a stepping stone to more practical use cases, which we’ll be discussing in this guide. First, let’s quickly recap what an NFT is.
What’s an NFT?
An NFT, or non-fungible token, is a token that exists on a blockchain network such as Ethereum, Solana, Cardano, and more. NFTs can’t be duplicated or replaced by another NFT because of the metadata attached to it, whether an image, video, song, or in-game accessory. The media attached isn’t what makes the NFT irreplicable, rather what makes it unique is the metadata that indicates that the NFT is in fact proven to be what it claims. You could at any time download the media content attached to an NFT and then mint a new one with the same content attached to it. However, only the original NF is the real one. The authenticity of an NFT can always be checked by using a block explorer and/or viewing the transaction history of an NFT.
NFTs work in a different way compared to something like Bitcoin or Ethereum which are fungible tokens. There is no distinct difference between two Bitcoins or two Ethers. Meaning that if you have 1 BTC or 1 ETH it can be swapped for another 1 of the same asset and there will be no change in what you’re holding. In contrast, an NFT that holds the deed to a piece of land is completely distinct from one that holds a song. NFTs have a range of uses apart from art such as games and music. Let’s jump in.
Five of the Best NFT Use Cases
Below we outline and describe five of the best use cases for NFTs, including music, real estate, event ticketing, gaming, and publication.
For each use case we’ll examine whether they’re already being used and/or ways it will be used.
Much like NFTs were able to empower visual artists, musicians can and are able to use them for their content too. Artists like Snoop Dogg, deadmau5, and Shawn Mendes have already started using NFTs for things like creating VIP tickets for fans (more on ticketing later). NFTs could also be used to create a streaming service where artists receive a higher share of revenue from streams than current platforms like Spotify.
There are other possible use cases: masters (song versions that hold rights to it) could be fractionalized and sold, paying out dividends/royalties to the holders of the NFT. You could invest in music rights to something like the current top 40 Billboard songs as an ETF-style fund and this would be created with NFTs.
There are a variety of ways in which NFTs can be used within the gaming industry, with many of them already being implemented. Blockchain based games can allow players to buy and sell in-game items for fiat or cryptocurrencies. This includes land, vehicles, weapons, skins, etc. The difference between this sort of system and the current one is that with most video games on the market, you cannot ever get value back for a purchase made. For example, if you buy a skin for one game, it’s possible they allow you to resell it for an in-game currency, but it’s highly unlikely you’ll be able to get fiat or crypto in exchange.
Buying a game itself is a total sunk cost if you buy it digitally, as you can’t resell it as you can a physical one. Making the game itself an NFT would allow gamers to buy and sell games with each other to both save and get back some money. Add onto this the potential of play-to-earn games such as Axie Infinity and you have a large potential use case for NFTs in the gaming industry. Giants such as Square Enix are already trying to find a way to implement NFTs.
While NFTs are generally associated with digital and virtual items, there remains a large market that is still yet to be digitized. This means making NFTs out of unique assets in the physical world. One example of such an asset is real estate. The variety of documents and processes within the real estate world leaves much to be desired for both buyers and sellers of property. The 2008 housing crash exemplified this as many banks lacked the proper ownership documentation of houses being foreclosed upon. This issue only complicated an already bad situation.
NFTs and blockchain technology can solve this by providing organization, tracking, and escrow services for the sale and transfer of real estate. These services can be provided by blockchain as a byproduct of how it’s built, dramatically reducing the peripheral cost of administering the sale of real estate by using the power of both NFTs and smart contracts. The seller keeps more of their money, and the buyer can save some money buying their home.
Lastly, when the ownership of a home or physical item becomes an NFT, it makes it a more liquid asset. The NFT that represents ownership over a physical item is easier to sell on a digital marketplace than a physical one.
As mentioned earlier, musicians are already using NFTs for things like VIP tickets. NFTs being implemented for ticketing means no more ticket scams. You can verify whether someone holds a real ticket by creating a system that simply requires the attendee to connect their wallet to an event specific device that can then verify if you hold the NFT ticket.
Smart contracts can be used to create a trustless marketplace where users can buy and sell tickets to events like concerts, sporting events, and more. NFT tickets could be staked and entitle holders to shares of revenue at the venue, or the VIP NFT could give you backstage access. There are so many possible use cases
NFTs also open up new monetization models for publications such as TIME releasing first-ever full magazine issue as an NFT. The issue will be airdropped (sent) to holders of the LITDAO token (LIT), an organization that created the first decentralized book on the blockchain. LIT holders may browse through the interactive NFT book and be the first to experience this new medium of consuming content. This is like a starting point for NFT publications, as there are many possibilities that have yet to be explored.
Publications could release NFT memberships to their platforms in limited numbers, creating an air of exclusivity. Those memberships could then be traded amongst consumers, with the publication taking a cut from the trade in the form of a royalty like artists do with the resales of their NFT art. Like the airdrop of the Time magazine onto LIT holders, people are incentivized to hold a membership token to ensure that they get exclusive rewards or content.
Closing Thoughts: The Possibilities Are Endless
Though this isn’t an exhaustive list of NFT use cases, it gives you a good idea of the numerous possibilities they present for our increasingly digital world.
While many scoff at NFTs because of the art craze which we seem to have already gone through, there are many uses that people have not considered. It’s only a matter of time before NFTs become a staple of digital life.