Why NFTs are much more than funny-looking jpegs.
A deep dive into the future real-world value of web3 collectibles.
If you are part of the web3 community and NFTs I am sure you’ve heard of the right-click save joke and have seen loads of funny memes about it.
If you have no idea what I am talking about — don’t worry.
Let me explain.
The right-click save argument is made by people who do not believe in the value of non-fungible tokens a.k.a. NFTs.
They often joke about how worthless those collectibles are because they can simply download the image and „right-click save“ it as their own.
And technically they’re not wrong.
They can right-click save the NFT.
They can look at that NFT and use it online.
But what they fail to understand is that they are not the rightful owner of that collectible and they also cannot use its underlying utility.
I know what you might be thinking now.
What kind of utility do those little jpegs have aside from looking kind of funny and maybe — if you’re lucky — making you some money.
That, my dear friend, is a fantastic question that we will get to the bottom of in this article.
How NFTs could make our life easier in the future
Commercial Real Estate
Wait?!
You want to sell me your house as an NFT?
Nice try.
If I spend hundreds of thousands of dollars on a piece of property I want to own the real deal and not just a picture of it.
That was my first reaction after hearing about people wanting to sell real estate as NFTs.
But after doing some research on this topic it actually made sense.
Real estate is known as an illiquid asset because it cannot be sold instantaneously. There is a lot of paperwork involved when buying and selling property, which means it takes a lot of time.
In the current real estate market, property deeds function as the legal document to transfer the ownership of a property from one person to another. For this process, it is often advised to hire lawyers to authenticate deeds and take care of the procedure.
Now …
Hiring lawyers, authenticating deeds, and searching for encumbrances in public title records doesn’t sound like a lot of fun. And it sure isn’t something that is done quickly.
That’s where NFTs could come in and save the day in the future.
Turning your real-world property into an NFT means you would be able to own and sell them almost immediately with the use of smart contracts.
By holding your property as a web3 collectible you could potentially bypass those intermediaries with the aid of the blockchain, on which all your information is stored. You will be able to verify the ownership, identify title encumbrances, and settle transactions via this technology.
Fun Fact:
TechCrunch founder, Michael Arrington, listed his apartment in Kyiv, Ukraine, as a real estate-backed NFT. The property sold for over $93,000.
On April 12, 2022, another property in Hyde Park, Tampa, was sold as an NFT for $215,000.
Medical Records and Identity Verification
How did we get from buying and selling quirky monkey pictures to owning medical records as an NFT?
Well, we didn’t fully get there, yet.
But it just goes to show how versatile the use of NFTs and web3 technology could get in the future.
One of the most important things to understand in the web3 and NFT space is how tamper-proof blockchain technology is.
Let me explain it as simply as possible.
A blockchain is a chain of blocks, that contains information. This information, once it is stored on the blockchain, is extremely difficult to alter.
Why is that you ask?
Great question.
As mentioned above, each block contains some data, its so-called hash, and the hash of the previous block. The hash identifies a block and all of its content. It is always unique, similar to a fingerprint.
Once a block is created, its hash has to be calculated. Changing something inside the block will cause the hash to change, too.
Each block also contains the hash of the previous block which effectively creates a chain — the blockchain.
Now let’s say we tamper with the second block of the chain.
This will cause the hash of the block to change as well, which consequently makes block three and all the following ones invalid because they no longer store a valid hash of the previous block.
Sounds pretty secure already, right?
To make it even safer, blockchains work with something called proof-of-work which — to put it in the simplest terms — is a mechanism that slows down the creation of new blocks.
This mechanism makes it very hard to tamper with the blocks because if you do, you’ll need to recalculate the proof-of-work for all the following blocks as well.
The third reason why blockchain is so incredibly secure is its use of a peer-to-peer network that allows everybody to join.
When someone joins this network he or she gets a full copy of the blockchain.
Now, if someone creates a new block, this new block is sent to everyone on the network. Each node then verifies the block to make sure it hasn’t been tampered with. If everything is fine, each node adds this block to its blockchain. Blocks that are altered will be rejected by other nodes in the network.
This means, that if you want to successfully tamper with a blockchain, you’ll need to tamper with all the blocks on the chain, redo the proof-of-work for each block and take control of more than 50% of the peer-to-peer network.
Only then will the altered block be accepted by everyone else, which is almost impossible to do.
Whew, okay!
Now let’s get back to NFTs and medical records.
As we just learned, NFT ledgers can store a person’s medical record without compromising confidentiality or the risk of tampering due to blockchain technology.
One example of a medical record being used as an NFT would be NFT birth certificates that can be issued to newborn babies.
It would function as a means of lifelong identity on the blockchain.
Okay, not bad.
Apart from simplifying the administrative tasks that go hand in hand with the issuance of certificates and setting up medical records, owning an NFT of the medical data has additional benefits for the patients.
While each patient’s data would still be stored in an encrypted database, the NFT would act as a gatekeeper, because working with blockchain technology means everything is traceable.
Every transaction, every requested access to files, and every data change is monitored and can be traced back to the person initiating it.
So far so good.
Let’s look at it from another standpoint.
I am sure you’ve heard of those DNA testing kits like 23andMe that can give you information about your heritage or help you create the perfect nutrition plan according to your DNA sample.
What you may or may not know is that those companies might sell your genetic data to third parties for research purposes.
By selling your and other people’s data those companies could be making millions of dollars without you knowing. What’s even more frustrating is that they will never share their gains with you.
Not a very nice move.
What if your genetic data, however, was minted as an NFT?
Being an NFT and working on the blockchain means all of your data can be traced. You can keep track of where your information ends up and prosecute those who use it without your permission since you are the sole owner of said data.
Moreover, you as the owner can decide to monetise your data and sell them as an NFT which would make you money and even pay you in royalties, every time your data gets sold in the future.
We love a good win-win situation.
In the very beginning, NFTs were just a hobby for me.
They were something new and interesting.
Something I could educate myself on.
And an investment opportunity, to hopefully make some money with.
But now I look at NFTs as something with the potential of changing — and more importantly — simplifying our busy day-to-day life.
We are still in the very early stages of web3 and blockchain technology. Nothing is set in stone yet and we are all learning and developing along the way.
But maybe.
Just maybe.
We’re onto something great.
