Most people first heard of NFTs after the $69.3 million sales of digital artwork at Christie’s. This drew a lot of attention not only from investors but also from other digital artists. More artists boarded the NFT train, making digital art one of the most popular NFTs people currently invest in. While this is the case, non-fungible tokens have managed to spread into other industries making their applications more diverse.

Non-fungible tokens can be defined as a digital signature that verifies ownership of an asset using blockchain technology. The main ones that have sold have been digital assets such as digital artwork, a tweet, videos, audio recordings, memes among others. However, experts are saying that the application of NFTs should go beyond the digital world and into the physical realm. It could revolutionize the way we own assets such as property or cars and anything valuable.

Digital Collectibles

Prior to NFTs, it was technically impossible to verify that you own a digital asset for example an image. How would you prove that it is the original copy yet it looks exactly the same as its duplicate? This made the value of most digital assets so low. This was because having a copy was nearly the same as having an original. So how did NFTs change this?

The technology behind the security of Bitcoin and other cryptocurrencies – Blockchain – allows NFTs to hold crucial data that prove the history and originality of the asset. The individual or company that owns the NFT would therefore be the only owner of the original asset. This creates an idea of digital scarcity that in turn drives the prices of these NFTs up. They are then seen as digital collectibles that people are willing to pay absurd amounts for.

Few examples of digital collectibles that have been sold include:

  • The woman in ‘Disaster Girl’ meme, which is a 2005 image of herself smirking in front of a burning house sold for $500,000.
  • Jack Dorsey also sold the first tweet ‘Just setting up my twttr‘ that was tweeted back in 2006, for a hefty $2.9 million.
  • ‘EVERYDAYS : THE FIRST 5000 DAYS’ digital artwork by Beeple holds the record for the most expensive NFT ever sale at 69.3 million.

Did you know there is someone out there selling audio recordings of Farts as NFT? Apparently, anything digital is being sold as NFT, as long as someone else can see value in it.

The concept of NFTs can be applied to infinity and beyond. It has so much more to offer. At the moment it might seem like an abstract idea just like when we first heard of the internet. People wondered how could we use the internet to make money? Right now, there are innumerable ways in which we make profits over the internet. The same will be for the NFT concept. Something incredible is brewing.

Possibilities of Physical Assets Tokenization

An NFT creates an immutable record of the original owner of an asset. It also gives a record of how it has exchanged hands from the creator or the original owner to the current holder of the asset. Therefore, this becomes like an electronic deed of ownership. As an assurance, the security of blockchain technology ensures the record remains unchangeable hence permanent.

Physical assets could be represented in the form of tokens as is the case for digital assets. This means that a piece of land, a car could soon be represented by a token and traded as such. Where legal frameworks already exist, it is possible to have tokens that prove the ownership or the provenance of an asset.

Tokenization would give way to a change in the way people own physical assets. It would open up opportunities where you can have total, partial, or even shared ownership. For example, you could have shared ownership of a vehicle with a friend. The smart contract could probably stipulate the time frame you own the car, say maybe weekends and your friend has it over the week for commutes.

A legal structure would allow tokens to exchange hands safely and minimize cases of fraud. There have been cases where one gets deceived into buying a piece of land that does not belong to the seller. This seller then disappears with the money and as a buyer, you end up losing. This fraud and deception could be evaded when people can refer to the NFT of the property and prove that the seller is actually the real owner of the land.

Possible Future of NFT Transactions

According to TerHaar, a lawyer and blockchain consultant, and Andreas Park, a finance professor specializing in blockchain technology, regulatory oversight of NFT transactions will be required.

TerHaar compared the current NFT situation to the introduction of money. She explained how people struggled to understand how paper money could have value after buying and selling with gold for so long. Nonetheless, people soon discovered that if society thought the paper was valuable, then it was. This might be the same outcome for NFT transactions as they become more popular.

Andreas Park claimed that the government might soon be involved. Blockchain technology has been referred to on multiple occasions in the recent 5-year plan of the Chinese government. This might be the beginning of how regulations will pop into future NFT transactions

Park also added how giant technology companies like Uber, Shopify, and Facebook have started to invest in blockchain technology. This will come to light when we start experiencing different innovations from companies that result from blockchain technology.

It is safe to say, NFTs applications are limitless. The possibilities they hold for different industries are so many, we can’t wait to see their novel applications. Some industries have already jump-started this and hopped into the tokenization of their physical assets. A great illustration is in the fashion industry through the launch of CryptoKicks by Nike.

We will need to envision and work towards the incredible things we could do with NFTs in various industries. This means going beyond what is already done and embracing the endless possibilities.

Telegram Subscribe
telegram
Previous PostNext Post
Danny Wirken is a cryptocurrency and NFT expert working with www.wsum.network. WSUM (www.wsum.network) is a project building an NFT portal. Also, it’s one of the first platforms to show that Arts and offers like Real estate can be paid for using cryptocurrencies.

Leave a Reply

Your email address will not be published. Required fields are marked *