NFT Imagination: Compilation of Nine Real-World Applications of NFTs in the Future

Aside from collecting digital monkeys, are there any other use cases for NFTs beyond the blockchain? The author of this article introduces nine possible real-world applications for NFTs in the future.

Former Google engineer Shiv Sakhuja, who has ventured into the DeFi field, has compiled his own imaginations of real-world use cases for NFTs, some of which are already commercialized, while others still have many challenges to overcome.

Are NFTs useful for anything other than owning digital apes?

Here are 9 applications of NFTs with real-world use cases 🧵 👇

[1/x] pic.twitter.com/PpTVpIf8ca

— shivsak (@shivsakhuja) April 24, 2022

NFT Overview

The NFT market grew over 200 times last year, with total NFT transactions increasing from $82.5 million in 2020 to over $17 billion. NBA Top Shots generated hundreds of millions in revenue last year, while the combined market value of BAYC and CryptoPunks exceeded $3 billion. Beeple sold an NFT artwork for $69 million last year, becoming the third most valuable living artist in history.

Most people are only familiar with art NFTs and do not understand why they hold such value. However, NFTs can be applied to more easily understandable use cases.

NFTs are unique, with no two NFTs being the same, making them suitable for representing ownership of unique assets. The characteristics of NFTs, such as transparency, verifiability, and composability with other tokens, will be a very useful technology.

Assets in the real world that NFTs are suitable for representing:

• Unique assets
• Assets that can benefit from tokenization

Why tokenize assets?

• Enable assets to be easily transferred and verified
• Allow for more derivative products utilizing composability
• Improve capital efficiency by allowing for division or collateralization
• Turn intangible assets into tangible ones. Refer to @punk6529's viewpoint

The Nine Applications of NFTs

Aside from art NFTs, there are actually nine other application scenarios:

1. Identity
2. Intellectual property rights
3. Real estate
4. Clubs
5. Tickets
6. Music
7. In-game assets
8. Documents
9. Digital assets

Identity

Over 33% of Americans have had their identities stolen, and it's not surprising when the only thing needed to steal an identity is "the nine-digit number people casually share in emails." Each person's identity should be unique, and tokenizing identities can make it easier for people to access and verify their identities, making them harder to steal. Identity NFTs can:

• Require KYC without providing detailed information
• Link document data, like vaccine certificates
• Bind assets to identities for security
• Unlock new DeFi puzzles, like uncollateralized borrowing
• Enable voting mechanisms

If everyone has a verified NFT identity, blockchain-based voting can be conducted. Trust, transparency, and immutability seem positive for democratic systems. Polygon ID is a web3 identity mechanism based on zero-knowledge proof technology.

Intellectual Property Rights

Articles, patents, and even tweets are perfect use cases for NFTs representing intellectual property. Readers may have heard the story of Twitter co-founder Jack Patrick Dorsey selling his first tweet for $2.9 million.

While it may sound strange at first, NFTs are a good way to represent intellectual property rights. NFTs make it easier to transfer patents, give buyers clear rights ownership, and are easily verifiable, possibly even installable in other smart contracts to earn royalties.

Real Estate

The author has previously written about why NFTs are suitable for representing real estate in this article.

Since each piece of real estate is unique, NFTs are a good way to represent real estate and can even divide real estate into many owners.

What people can do with real estate NFTs:

• Mortgage financing: Traditional loans often take months and require various documents and credit scores, which are often biased and unfair. However, with real estate NFTs, loans can be obtained in seconds, making the process much smoother.
• Real estate investment: Purchasing real estate requires a lot of capital, time, management, single centralized assets, and other costs. Real estate investment trusts (REITs) require trust in fund managers. Tokenizing real estate makes it easy to invest globally, reduce capital thresholds, invest in specific real estate, cities, or national index tokens.
• Optimizing rental income: In addition to easily splitting ownership among multiple owners, real estate NFTs facilitate rent collection, transferring tokens to smart contracts for automatic distribution to multiple holders of the real estate NFT.

Clubs

If you think people are paying $300,000 just to own a JPEG of a monkey, you're wrong! People are paying to join exclusive clubs, with celebrities like Mark Cuban, Stephen Curry, and Fallon.eth already making purchases.

NFTs can create great membership cards due to their digital nature, easy verification, clear ownership records, and composability.

Tickets

Traditional event tickets, like music concerts, have some issues:

• Difficult to confirm authenticity, leading to fake tickets
• Hard to resell, as buyers don't know if they can actually get the ticket
• Organizers lack a simple way to control reselling, aside from outright bans...

NFT tickets can:

• Easily verify authenticity on-chain
• Provide appropriate and secure resale methods
• Allow organizers to monitor resales, even collecting a percentage of secondary sales revenue
• Introduce new paradigm shifts, like creators airdropping new albums to past concert attendees

Music

In the current music industry, creators have little ownership between record companies, legal teams, distributors, and streaming service providers. Even among the top 0.8% of creators on Spotify, most earn less than $50,000.

Like other creative works, musicians can benefit from NFT technology:

• Limited edition NFT songs and albums can be sold at higher prices than streaming plays
• Creators can use NFTs to raise funds from fans

Changing an industry landscape is very challenging, but many platforms are still trying, including Catalog, Royal, Opulous, Arpeggi Labs, GLASS.XYZ. The author believes that while it is uncertain which model will succeed, NFTs have the potential to solve creators' problems, enabling them to sell works directly to fans and earn royalties, rather than being squeezed by record companies and streaming service providers.

In-Game Assets

People work hard to obtain that level 25 legendary sword, of which only five exist in the world.

Assets like these in games obviously have value, and NFTs can enable these assets to be traded or leased, creating opportunities in the in-game asset trading market.

Documents

Legal documents, medical records, invoices, ownership contracts, etc., many of which are easily forged and heavily relied upon. Screenshots and PDFs can be easily altered using Photoshop.

Turning these documents into NFTs can prevent tampering, make verification easy, and provide clear ownership records. For example, NFTs for vaccine certificates or invoices allow anyone to verify and check on-chain data to confirm if they are issued by the appropriate institutions.

Digital Assets

Domains, usernames are assets people already "own." They are unique, require identifiable owners, and theoretically can be transferred. This makes them good use cases for NFTs.

You can purchase .eth domains on the ENS website or .crypto, .coin, .wallet, .bitcoin domains here.

Conclusion

The author believes there are many more real-world use cases for NFTs, many of which may take years to materialize, but the market will prepare many NFTs to meet these use cases in the future.