Some people fail to understand, and rather ridicule, that an JPEG ape, monkey, and their mutants can sell for millions of dollars. On the other hand, there are people like me who also fail to understand why a painting of MF Hussain or Raja Ravi Verma is worth millions? The answer to both the questions was beautifully articulated by Mr Naval Ravikant in a tweet on 05 April 2021: “The Promise of scarcity is a slender thread, only as strong as the social contract with the creator and interwoven with the backing of the community“. In other words, the community backing that these abstract art paintings and Ape NFTs enjoy have been successful in creating a social contract, thus making them scarce and propelling their prices.
This phenomenon is even stronger in the case of NFTs as compared to traditional art. According to Mark Cuban, these NFTs are programmable contracts embedding the record of ownership with an inbuilt pointer to the asset location. As the Crypto winter has set in as of now in the year 2022, people are now shifting towards utility based NFTs.
Utility NFTs use cases beyond simple pixelated art. They grant their owner privileges, rights, and rewards which have otherwise not been accessible to them. Because blockchain NFTs add a new level of security to digital transactions while also enhancing efficiency, numerous use cases are embracing them. Anyone engaging in a transaction can view the NFT’s evolution from conception to completion in real-time and can identify everyone else who participated in that evolution. It produces a system that is encrypted, easily distributable, and virtually impossible to attack.
Industries like events and ticketing, memberships, gaming and metaverse NFTs, supply chain and logistics, domain name ownership, identification, certification, and documentation, intellectual property and patents, signature and notarial services in legal documents, voting, real estate, and education are Already being disrupted or created by utility based NFTs.
For instance, new age ticketing is disrupting the USD 70 Bn ticketing events industry with use of blockchain and NFTs. With smart contracts and NFTs, it is making an ever vibrant event industry even more beautiful and exciting for all stakeholders. These dynamic tickets make the tickets cool and collectible in addition to providing the buyer with the ability to buy and resell them and the organiser with the opportunity to get a royalty each time the ticket changes pockets. How does that happen? Imagine that the NFT ticket itself displays a fresh Artist or Brand announcement every 24 hours. Further, bundled with the tickets, reveal NFTs are sold. These NFTs are surprises containing epic moments of the events and are revealed post the event. Imagine owning an Oscars 2022 Reveal NFT in which ‘enraged Will Smith slaps comedian Chris Rock’. All of this is game changing and is likely to become extremely popular in near future.
Similarly, membership models are being rapidly transformed by NFTs. The traditional club membership has been tied to identity up until now, and membership often expires if a member moves. The Membership associated with an NFT can be traded or borrowed.
Similarly, real estate is being transformed by NFTs. NFT of Real Estate deed can log all changes automatically, making closing a breeze. Not only that, but it will make the process much more secure — nobody will be able to forge papers, because they cannot alter the NFT. In the supply chain, NFTs help in authenticating products, ensuring their quality, and verifying their origin. In the food and other perishable industries, knowing where the goods have been and for how much time is crucial. This is what NFT can make possible.
NFTs can help with the voting issue since they would give those without physical documents a digital identity that verifies who they are and where they are in the country, which is improbable but technically quite possible. As NFTs will act as an official record of people who voted and also their votes, this will also aid in the elimination of voter fraud and cheating.
Finally, it is predicted that NFT Sales would reach USD 35 billion in 2022, according to Jeffries, and USD 800 billion in 2024, according to Coingecko. It is determined that utility based NFTs will surpass pixelated NFTs in the upcoming years for NFT Sales to reach these proportions. The NFTs of utility-based assets are already gaining tremendous traction as a result of technological advantages. Government rules and user flexibility will be future barriers.
Views expressed above are the author’s own.
END OF ARTICLE