NFT represents the first massive adoption of Web3 and Blockchain technology. Companies like Adidas and Lacoste are taking advantage of this technology's power to create a new and unique experience for their customers; I believe this is the beginning of the world taking part and utilizing the blockchain. The reality is that what they are doing is cool, but it’s just scratching the surface of what is possible with NFT technology.
Unfortunately, the average person immediately thinks that NFTs are just JPEGs of Monkey’s; but it can be so much more than that. Before I go into some concepts leveraging NFT technology, it’s essential to understand what an NFT is.
(Btw, if you haven’t read my article that covers the basics of Web3 and the Blockchain, I would recommend starting there)
What is an NFT?
NFT is short for a Non-Fungible Token which, from a high level, is a tool used for ownership and tracking of a digital asset through the blockchain, most commonly using Ethereum.
Where the ‘Non-Fungible’ comes from is that you can have two NFTs, and even though they’re built using the same technology, they aren’t valued the same. Similar to a T-shirt you buy from Walmart and one from Gucci; both are T-shirts but one is valued absurdly more than the other.
In my opinion, the coolest part of an NFT goes beyond what you can see and lies within the smart contract, this is referred to as the ‘utility.’ Smart contracts contain metadata that looks something like this:
Smart contracts can do so many things that the average person doesn’t consider and I am hoping that this article can shed some light on some of the possibilities of this emerging technology.
My 5-Favourite NFT-based Concepts
Selling and Distributing Event Tickets
One time, I showed up to a Hockey game to find out someone had already checked in using my tickets because they bought them on another marketplace which wouldn’t be a problem if tickets were on the blockchain.
The secondary market for tickets to things like concerts and sporting events is littered with scams and overinflated prices. In addition, artists don’t see any of the revenue made on the resale of the tickets.
Using an NFT and Blockchain technology, not only could you offer features like transparent pricing and verification, but within the smart contract, you could have a ‘royalty’ set up so that every time a ticket is resold, a certain percentage of that sale price goes back to the artist.
There is a project called Get Protocol that is building this out for event organizers and artists to use. Most recently, we saw this feature executed with an event called VeeCon where holders of the NFT got access to the conference.
You can even take this one step further; NFTs would allow the artist and event organizers to provide value to the attendees post-conference through AirDrops. For example, I could send a digital ‘thank you’ gift to everyone who attended the event, or I could allow these people to early-access to purchase tickets for the next event.
Administration of Land Titles
I don’t know how it is where you live, but I recently went through the process of buying a house and the amount of time it took for the government to process and transfer ownership of my land title was much longer than it should have been.
I am not going to pretend I am an expert in Real Estate Law but I do know that the concept of a land title and transferring ownership from one party to another is relatively simple in comparison to the time it took to execute.
In theory, you could put all of this information in the smart contract and use the blockchain to verify the specific details of the title and execute the transfer between the two parties. One project that is doing something along the lines of this is called Propy.
The argument against transitioning something like a land title into an NFT is that part of the process still requires some level of physical or in-person verification which is a very fair statement; but what if you could expedite the part of the process that didn’t require that?
Managing the Primary and Secondary Carbon Credit Market
This concept was originally brought into practice in the late 90’s by the United Nations are part of the Kyoto Protocol. If you don’t know what a carbon credit is, it’s a specific allotment of carbon dioxide and other greenhouse gases (GHG) an organization can emit.
There are some organizations that have to use all of their credits and others that don’t use any so organizations can sell or trade unused carbon credits. This is referred to as carbon swapping, offset trading, and I am sure there are several others that I am missing, each with their own nuances, but thankfully, this isn’t an article about carbon credits.
(Fun fact, I think this may be the most use I have gotten out of my university education in the last 5-years)
Financial Transparency Certification for Registered Charities
Have you ever wondered where the funds are allocated when you donate your money to a registered charity? Based on a quick google search, it appears to be about a 70/30 split; 70% goes towards the cause, 30% toward administration.
Wouldn’t it be nice to know what those administration expenses were going towards? Or how that 70% is being used towards their cause? In theory, an organization could put their transactions on the blockchain and the NFT acts as a certification for these organizations.
I picture something along the lines of a Certified B-Corp but for being a financially transparent company.
Raising Money for Startups
With NFT and Web3 Technology moving towards being regulated like a registered security (The case against OpenSea’s former Product Manager for Insider Trading may set legal precedence for NFTs to be treated as a registered security); they could act as an alternative, and more versatile method, to raise money for an organization. The holder or owner can be given exclusive access, voting rights, AirDrops that could be distributed similar to a dividend, and many other benefits defined in the smart contract.
Are NFTs Necessary?
The short answer: No. This is the risk when it comes to any new piece of technology.
Was the Smartphone a necessary replacement for your flip phone? No, but it sure was a better solution to the problem. There are a lot of processes that are working with current technology, but to me and many others, NFTs and Web3, is a shift towards a ‘better way’ to do things. It’s a better way to offer transparency, tracking, verification, and authentication through decentralizing data in a digital-first economy.
It’s a fascinating time to be involved in this space, despite current market conditions, and if you want to continue the conversation, let me know what you think about NFTs and Web3 on Twitter.