A Deep Dive on Practical Use Cases of NFTs

NFTs are currently some of the most discussed topics in the crypto and blockchain world. In the last quarter of 2021 alone, NFTs saw a trading volume of over 10 billion dollars. On any given day, thousands of NFTs are sold across various platforms.

From digital art to tweets and memes, just about anything could possibly be turned to an NFT and sold online. That brings us to the question of what NFTs exactly are, and their use cases. The answer to the first question about what NFTs are, can be found here (in a blog we wrote recently).

Now this blog you’re currently reading takes on the next question– what the use cases of NFTs are. Considering how digital art is being sold for millions in the form of NFTs, it is common to assume that most of NFTs use cases are around digital art. But that is not the case. There is more. Before we jump into the use cases, though, it is best to quickly revisit the definition of an NFT.

Short for non-fungible tokens, NFTs are cryptographic assets that are tied to a blockchain and have at least one attribute (such as location, identity, or pattern) that is unique.

To the use cases, now.

Digital Art

Keeping virtual artwork rare is a problem that has been plaguing digital art for a while now. NFTs, due to their ability to be unique, make the process of proving ownership and authenticity of digital art seamless. Since digital art can be copied or duplicated easily, an artist can mint an NFT-based file that will give buyers complete guarantee that they own an original, unique piece of digital art. NFTs also earn commissions to owners from secondary sales of their digital art as well. For reasons such as these, and more, digital art has hugely adopted NFTs.

Digital artist Beeple, for instance, sold his NFT digital art for close to $70 million at Christie’s auction last year.

Certifications

Be it certifications or licenses, both are offered in digital as well as analogue forms. Consider an education degree that says a certain candidate has completed an undergraduate program in computer science. When this candidate goes to apply for a job, his potential employer has to undergo a tedious process to verify the authenticity of the certificate supplied by the candidate.

But if the university issues a certificate which is linked to an NFT hosted on a blockchain, it becomes easier for just about anyone to verify the authenticity of the certificate. It can also be validated if the issuing authority is credible or not. The same logic applies to ticketing as well. Tickets, when sold as NFTs, can be validated effortlessly. What’s more, any reproduction or further sale of the ticket can also be tracked when it is an NFT.

Real-World Assets

While this use case may be a far fetched one, it is still worth discussing. Sale and purchase of real-world assets such as real estate is done through physical deeds. If these physical deeds are converted into digital assets like NFTs, the entire sale history as well as ownership of the property is transparent and recorded on the blockchain forever. Although this use case didn’t receive any regulatory support from any government, someone called Shane Dulgeroff created an NFT for a property sale. This NFT had a piece of art attached to it, and was auctioned off. It was said at that time that the winners would get both the NFT and the house.

Gaming

In-game transactions have been around since time immemorial, and gamers know the value of digital assets more than others. With the help of NFTs, it becomes easier to create in-game items that are unique, non-duplicable, and can be sold in a marketplace. Because in essence, NFTs offer a package of collectibility and utility together, making them a viable choice for in-game assets and transactions.

Converting in-game assets to NFTs is only one end of the equation. On the other end, we also have projects such as Axie Infinity that have built games while deeply integrating them with blockchain. As a result, these games offer tradeable items and tokens, which can again be sold on other external, peer-to-peer platforms.

Loans

NFT-backed loans are now becoming a thing. You can, for instance, put an NFT you own as collateral and borrow money. Likewise, you can also take someone’s NFT as collateral and loan them a certain sum of money. Unlike traditional loans lent by banks, these NFT-backed loans are free of intermediaries, decentralized, automated, and completely transparent. Moreover, such NFT-backed lending makes the whole process peer-to-peer and high trust, while consuming low fees.

Music

Similar to how paintings or any other art can be converted into an NFT, a music file can also be attached and turned into an NFT. This can be done so to make it a collectible piece of music; say for a first-edition of a record. If we take things further, we can even discuss blockchain-based streaming platforms for music. These would perhaps compete with Spotify or Apple Music, which at this point can be hard for small blockchain projects to do. That being said, platforms such as BNC give independent musicians the opportunity to stream their music and earn royalties.

Logistics

NFTs are immutable and transparent by nature, which is of immense use for the logistics industry. Through blockchain technology, perishable goods can be assigned a unique NFT to track when they’ve been packed and how long they can last. Starting from when a certain product has been packed to what all warehouses it has been to, and where it has been, everything can be tracked through the use of NFTs and blockchain. As of now, the possibilities are only increasing, and we already have major players such as IBM’s Foot Trust and MAERSK’s TradeLens system utilizing blockchain-based logistics technology.

Ethereum Name Service (ENS)

With the help of blockchain, crypto addresses can be represented through NFTs. While addresses contain several characters and may be hard to memorize, NFTs can be easy to recollect, reproduce, and remember. A bunch of crypto enthusiasts have started a service called “Unstoppable Domains” providing the aforementioned service. Now users can sell their crypto addresses in a marketplace as they’re tied to NFTs. Fancy addresses and popular names tend to attract a higher value in the NFT marketplace, making them a growing market. But the use cases of ENS doesn’t stop just here.

Originally, Ethereum Name Service was proposed as an alternative to Domain Name Service (DNS). Learn more about ENS here.

Coupons

Digital coupons are a part and parcel of our lives at this point. Whether it is for a five percent discount on shopping or free fries at McDonalds, everybody likes to collect coupons. So how do NFTs help? They can be used as coupons that can be stored in a digital wallet. It is worth noting that this idea is a long-shot one, because if all coupons are NFTs, they can be traced back to and organized in a single digital wallet. NFT-based coupons, moreover, can be sold easily in a marketplace.

What we have above are some of the many use cases of NFTS. And with growing time, these use cases also tend to multiply. An underlying aspect to keep in mind is that all use cases of NFTs tend to originate from their core attributes– authenticity, immutability, scarcity, and transparency.

Check out our previous blogs on NFTs 👇

About Arcana Network

Arcana is the Web3 Infra to manage your data layer. Web3 App and wallet developers use Arcana’s SDK to authenticate users by generating wallets with Social and Passwordless Auth, Store Encrypted Data, and Manage Access. Built for Ethereum and EVM based chains, with Arcana’s privacy stack, developers can build secure and privacy-preserving apps with a seamless user experience.

Arcana has raised 2.7Mn USD from some of the leading investors and founders in the ecosystem such as Balaji Srinivasan, Founders of Polygon, Woodstock, Republic Crypto, and Digital Currency Group.

Watch out for Arcana’s upcoming Testnet and Mainnet in 2022.

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