Non-fungible tokens (NFTs for short) have witnessed an exponential rise over the past few years and have become the new attraction in the cryptocurrency and blockchain industry.
The future of NFT’s is bright thanks to its potential applications in several industries. Though much focus has been placed on crypto art and digital collectibles thus far, the promise of NFTs doesn’t end there.
In this article, we are going to walk you through the innovation NFTs, how they contribute value, its different use-cases and how it’s beyond simple art investment or selling for revenue.Are you new to crypto and some of these crypto words sound unfamiliar? Check out the Glossary of Words at the end of this article for further clarity.
Use case 1 – Gaming
The gaming industry has witnessed massive growth since the introduction of NFT’s few years back. With the existence of different gaming models, playing games has evolved from Play-to-Win, Pay-to-Win to own-to-play and today, Play-to-Earn.
“Play-to-earn” gaming platform often requires players to buy items with cryptocurrency in order to play the game and collect unique, in-game items. These rare in-game items such as swords, potions, and shields reside on-chain using NFTs. Items can be sold according to their rarity and functionality within a game.
Examples:
- Axie Infinity, MIR4, Sorare, Zed.Run, MyCryptoHeroes, GodsUnchained, Splinterlands
Use case 2 – Domain Name Management
Just like how traditional domains work, where you can access content residing at an address [news.yahoo.com] in your browser. Domain Name powered by NFTs lives on a public blockchain and gives users complete ownership of their stored data.
Don’t know what that implies yet?
It simply means that with NFT domains, we can:
- Simplify crypto transactions by replacing wallet addresses with the domain name
- Login to apps with your domain name as your universal web3 username
- Easily create and host websites, ranging from personal websites to NFT galleries
Sounds cool right? Yes! NFTs open up a whole new realm of possibilities.
Examples:
Ethereum Naming Service(ENS), Klaytn Naming Service (KNS), Unstoppable Domains
So when you see something like brantley.eth, vitalik.crypto, or pampam.klay you should be sure to call it an NFT Domain.
Use case 3 – Music & Entertainment
Do you think NFTs would have real life use cases in this industry? Well let’s find out!
Music NFTs allow fans to invest in their favourite artists. Doing this i.e creating and selling a music NFT is as simple as uploading an audio file to an NFT marketplace or Music NFT platform. NFTs have several uses for artists, record labels, and producers.
Fans can buy NFTs of their artist’s songs. This does not only provide the artist with funds to support his/her music, but helps the fans to receive financial gains in return. When an NFT of a song is bought and the value of the song rises, fans of the artists get rewards in return.
In short, NFT platforms offer artists a more engaging and intuitive way to interact with their fans. These platforms offer better monetization opportunities by eliminating intermediaries in the traditional music distribution system.
Examples:
Soundxyz, BeatFoundry, Mintbase, DAORecords
Use case 4 – Real Estates
The tokenization of any assets makes it possible for physical/virtual land or property to be represented on a blockchain as an NFT.
The introduction of NFT is instrumental in the real estate industry, for it can be used to represent:
- Physical Real Estate: A physical house in the real world tokenized i.e made an NFT.
- Virtual Real Estate: Digital plots of land in the metaverse such as Sandbox, Decentraland
You would want to ask how a physical house is tokenized?
As explained earlier on, NFTs allow us to store unique information about an asset on the blockchain. This specific feature can be used to store location, price, and measurements of physical/virtual houses or properties on the blockchain. The immutability of blockchain makes it difficult for land ownership to be tampered with by malicious actors.
Physical real estate can be tokenized either as an:
- Entire asset: The whole asset tokenized; or
- Fractional ownership: An arbitrary number of people own a share of a property.
With these things in mind, we can still explore the possibility of accessing NFT-backed Loans. As long as the real estate NFT and its underlying asset provide sufficient value, it can be used to back a loan.
Use case 5 – DeFi NFTs
NFTs in decentralized finance (defi) only ushers in a new wave of possibilities. For instance a Bored Ape (BAYC) can be valued as high as $100,000 or even more. Once you get and verify the ownership of your Bored Ape assets, you can borrow a loan against it as collateral.
This is what happens under the hood:
- You need liquidity and you do not want to sell your NFTs?
- You provide your NFTs as collateral to lenders, who in return provide you with the liquidity you need.
- You repay the loan within terms of agreement.
- Lender returns NFTs to you.
Example of NFT Lending Platform:
NFTfi, Arcade, Nexo
Not just Nft-backed loans are possible. Several DeFi platforms offer NFT staking services and financial incentives. For example, the MOBOX crypto gaming platform allows holders to lock up their NFTs and earn staking rewards in return.
Use case 6 – Fashion and Wearables
From Dolce & Gabbana to Gucci, Louis Vuitton, Adidas, Givenchy, Burberry, and Diesel, luxury brands are taking the forefront by actively investing their time venturing into the digital space. These brands are exploring ways to introduce NFTs to their different products and marketing efforts.
So what is an NFT in fashion? NFT in fashion can be categorized as:
- Virtual wears that customers can wear within virtual environments (Decentraland, Sandbox, Roblox)
- Digital content that owners can interact with; or digital twins of physical creations.
The main outburst of NFT in the fashion industry was as a result of cancellation of fashion shows and closed stores during the pandemic. Fashion brands have since then devised means to connect with customers and also generate revenue by leveraging on the possibility of the digital world (Augmented Reality Clothing, Metaverse Fashion, Virtual Store etc)
NFT’s significance in the future of fashion cannot be overemphasized, particularly as the metaverse expands to offer new platforms for consumers to showcase their digital purchases. Why? Because Gen Z shoppers crave digitalisation and personalisation.
Use case 7 – Certification & Academic Credentials
On-chain verification of participation in a training or completion of a course by a student whether in physical schools, bootcamp or virtual universities are the next big thing. This poses another method of verifying academic achievements.
NFTs are also a good way to store information about a training, its validity period and its owner in a distributed database (blockchain). NFTs can provide proof of attendance, degree earned, and other important information which will be stored on the blockchain that cannot be altered or hacked into.
In the future, issuing a paper certificate will no longer be a thing. NFTs will be used as a record of academic achievement and used to certify that an individual partook in a course/training.
A practical example is University of Nicosia : the first university to issue NFT Certificates. You can check on Opensea by clicking this link.
Use case 8 – Concerts and Ticketing
The events and ticketing industry cannot be left out of the possibilities NFTs hold. We have witnessed a trend in the industry where tickets have moved from paper, to digital ticketing – scanning QR Code. Now, with the advent of NFTs, the industry is believed to take a new form from here.
Currently, the traditional ticketing system is faced with challenges ranging from black market sales, counterfeit and fraud. Hence, NFTs have arrived to help event organizers:
- Mint the required number of NFT tickets on their choice of a blockchain platform.
- Prevent fake tickets and scams
- Reduce cost
- Make more money
All of these things happen without intermediaries, eliminating unnecessary fees that can make the tickets prices increase unreasonably.
Examples of Ticketing platform: DigiTix, Ticketmaster
Use case 9 – Sports Nfts
NFTs revolutionizes the concept of sports memorabilia – memories and noteworthy experience. Fans are allowed to own their favorite players’ cards and even game video clips. As a result of this, sports clubs and teams cultivate long-term relationships with fans and also increase revenue.
Sports NFTs offer new ways for fans to support their favorite teams and interact with them. One of the most popular collections is NBA Top Shot: a basketball collectible marketplace. This platform allows fans to trade moments, digital collectibles of NBA and WNBA plays and players. For instance, a video clip showing LeBron James emulating the famous Kobe Bryant dunk was sold for almost $400,000 in an auction in April 2021.
The range of NFT applications in the sports industry is said to increase overtime, and this trend is likely to continue. This trend would likely skyrocket the number of Nft transaction in the industry as a report predicts that Sport NFTs could generate more than $2 billion in transactions in 2022.
Examples of Sports NFTs Platform: Sorare, NBA Top Shot
Use case 10 – Supply Chain
For supply chain, NFTs enable participants to access the same immutable record on the blockchain reducing and potentially eliminating variance in information flow between parties. As a result of the inherent features of blockchain – Transparency and Immutability, this only increases reliability and authenticity of supply chain data.
As such, NFTs can increase efficiencies and reduce costs incurred in the process of sourcing and acquiring goods and services a company needs. NFTs also produce an end-to-end view of a parts location, quantity and other useful information.
The uniqueness of each NFT is specifically defined by the information stored within the NFT’s metadata – pointing to valuable digital resources that are updated in real-time on the blockchain. The transparency of the supply chain through the use of blockchain benefits end consumers, by giving them the ability to know that the products are safe, fresh, free of GMOs and unwanted additives.
With the inherent features of the blockchain – NFTs, organisations have started using NFT for tracing their product’s journey through the supply chain from point of origin to the customer.
Closing Thoughts
NFTs have been driving radical changes across various industries. This is clearly evident in the increase in real world use cases and its significance across various industries. As the world evolves and people’s online habits become more prevalent, digital innovation is now more highly regarded in numerous industries.
In the same way, NFTs have expanded beyond the realm of arts investment and are now beneficial in a number of industries throughout the world.
With all solutions needed to build your Metaverse use cases, Klaytn: Metaverse Blockchain for All provides performance, decentralization, scalability, and interoperability needed to drive the trust layer of the metaverse. At Klaytn we combine:
- Open Source Dev Infra Package: L2 Solutions, SDKs, Smart Contract Library, Wallets, Oracles, Bridges
- High Performing Mainnet: High throughput / TPS, Immediate finality (~1 second)
- Community Co-building: Launchpads, Alliance with global player
- Management and Financial Support: Treasury Advisory, Klaytn Growth Fund
to give developers and as well projects the best experience.
If you are looking to build your NFT use cases, Klaytn is home for all. Learn more about our platform here
Glossary of Words
- Digital Collectible: A digital collectible is a unique or limited-edition copy of a virtual item. This could be a digital art, a video clip, or a digital trading card etc.
- Defi: Short for Decentralized Finance. Is referred to as financial applications built on blockchain technologies.
- Metaverse: Is a new wave of the internet where one’s 3D digital representation can communicate, share, work, and play with those of other people and machines.
- Augmented Reality (AR): is the integration of digital information with the user’s environment in real time.
- Virtual Store: A virtual store is an ecommerce experience powered by VR and AR technologies
