Why NFTs Tied to Physical Assets Are Key to Growth
NFTs (non-fungible tokens) are undoubtedly the most popular blockchain products of 2021. These unique tokens present a more decentralized way for creators to share their art with fans and collectors.
NFTs can represent ownership of physical and digital assets. The most popular NFT projects often involve digital assets like artwork, music, films, and other multimedia files. Now, new projects are embracing NFTs that include physical assets. This trend has the potential to spur the NFT space into more mainstream applications. Top projects that offer physical items to NFT owners include Motion Altered, VeeFriends,Tom Fry Artwork, and Artifact Technology.
Benefits of Physical Asset-Based NFTs
NFTs achieve their scarcity through the underlying token standards, which ensure that each token minted is easily identifiable as unique apart from the rest. This means that NFTs are not interchangeable. Now they can include physical non-fungible assets — that is, items that are not easily interchangeable. These include rare paintings, diamonds, or parcels of land. Deploying NFTs to represent ownership of these physical items has the following benefits:
Additional Layer of Rarity: Minting NFTs for physical assets adds to their scarcity in the digital environment, making the physical items more valuable than others. For instance Veefriends perspective pigeon NFT token holders were rewarded with unique Jeff Staples x Veefriends collaboration merch. Another example is Tom Fry studios where minting a NFT gave the holder the chance to purchase the 1/1 physical piece of the artwork at a discount. In Artifact Technologies case each membership NFT mint will deliver to the holder the Artifact NFT Keychain which will have a unique QR code connected to the users profile showcasing their one of a kind galleries.
Proofed Against Fraud: NFT token standards like Ethereum’s ERC-721 and ERC-1155 simplify verification of asset owners as they track the movements and ownership of each token. Buyers can easily identify and authenticate original physical items before making a purchase. Take limited-edition sneakers, for example. Manufacturing companies can mint an NFT for each pair and connect its ownership to the initial buyer. So, the buyers on the resell market can quickly verify if the sneakers are original.
Indestructible: Unlike physical items like baseball cards, property or automobile deeds and titles, and other receipts, NFTs cannot be lost or damaged. Using NFTs to represent ownership of physical items provides secure storage for proofs of ownership. These tokens are stored securely on cryptographically encrypted blockchains that keep them tamper-proof.
Why Is This Trend Important?
NFT has massive untapped potential for application in the physical world. Beyond enabling peer-to-peer interactions for fans and their favorite creators, NFTs can be efficiently deployed for physical assets to streamline asset representation and authentication.
Projects like entrepreneur Gary Vaynerchuk’s VeeFriends NFTs, which are based on his hand-drawn artwork (which recently went up for auction at world renowned auction house Christies), will help push for mainstream adoption of NFTs in sectors that deal with non-fungible physical assets. This will allow for the technology advance and give users access to a more convenient way of trading rare items without worrying about counterfeits or other fraudulent activities.
NFTs are rethinking asset ownership, and leveraging the technology in representing ownership of physical assets presents a significant opportunity for the growth of this technology.