Non-fungible tokens (NFTs) are more commonly associated with an image or other digital art asset. However, there are five emergent areas where NFTs are set to be strong, according to Web3 expert Connor Borrego.
According to Borrego: “All of the use cases we are seeing today for monetizing NFTs are centered around using NFTs unique identifier property to track the value and ownership of scarcely available items publicly in an anonymous, but trustworthy manner. In the future, we expect the serial number technology to move to the background as a tool for software developers to manage the location of standard data structures and functions required to make their applications work, and yes some of those applications may be creating games or tools that use the NFTs that are being collected by today’s users, but by and far it will be used to manage new streams of data yet to be developed and making existing data streams available to web3 platforms.”
He adds: “Because NFTs are primarily concerned with managing the creations, sale, and usage of data online, its use cases permeate every area of the economy, because systems have increasingly relied on data driven intelligence to run their organizations.”
The top 5 hot uses for NFTs according to Borrego are:
Hot Use #1: Memberships
Borrego notes: “NFT’s are being used for membership access to both online and offline experiences for community members. Because non-fungible tokens are simply a serial number for a piece of data, like a picture, on the internet, who owns the picture from the official NFT community is registered to the blockchain and publicly verifiable. NFT communities often create gated experiences that require members to confirm that the NFT in the user’s crypto wallet is the official collectible by comparing their unique wallet number with the one recorded as holding the NFT on the blockchain, and grant that user access after they’ve verified that ownership. It sounds like a lengthy process, but in many instances it simply means typing in your password to approve the transaction from your wallet app of choice.”
Hot Use #2: Limited edition digital art or music
With collecting, Borrego says: “Collecting limited edition digital art or music is one of the most popular and well known ways that NFTs are being used to make money. For the most part these items are just collectibles that fans of the artist can purchase as a form of memorabilia to display to demonstrate how much they support their work, but some of these NFTs are coming with additional utility such as a royalty share and distribution interval on commercial licensing of the art to generate income.”
He adds in addition: “For a visual artist this can mean turning a favorite piece of theirs into print posters, notebooks, stickers, that feature the art, while a collectible song may tie itself to revenue derived from various streaming services where the song can be distributed. Most media is natively digital, or can be represented digitally with ease, and remains the lowest hanging fruit for monetizing NFTs within the data economy and we expect the majority of initial breakthrough NFT companies to come out of this space.”
Hot Use #3: Limited edition physical products
With other art related materials, Borrego finds: “In the artworld, and in other high value asset markets like real estate or diamonds, there is a concept known as provenance, which is about understanding the chain of custody for an item to its creator, it adds trust and transparency to the transaction and the integrity of the asset in question. Because of how the blockchain works, its ledger technology provides this documentation by default enabling it to be used as a trustworthy source of information for transferring ownership of high value assets.”
Spelling out the advantages, Borrego states: “Forgery, counterfeit, and fraud are not solved by the introduction of this technology as tamper proof hardware that can be physically attached to asset in a way that doesn’t materially devalue it, but NFTs do incrementally advance the record keeping process for valuable items and we expect notary services to begin offering access to the blockchain within their core offerings that extend this use to more physical assets. We expect luxury goods and items like brand merch, sneakers, handbags, and dresses to drive much of the growth in the limited edition physical product space, because there is existing demand for these types of collectible markets, which are ripe with fraud, but don’t have functional provenance systems for their goods.”
Hot Use #4: Financing Option
With fintech, Borrego says: “NFTs can be sold as collectibles, vouchers, or memberships which are great tools for communities, or brands, that don’t have well established business models because you are able to sell something of value to people who believe in your mission and that contribution can give them different levels of control over the decision making related to the money raised.”
With new companies, there is also an area of application: “For startups this is very similar to pre-selling your product and using a voucher NFT with lifetime access to your future software product, while for non-profits this sort of looks like a digital bakesale that hires a professional chef to raise funds with the best pastries, or even as an online country club. The NFT represents future ownership of specified value related to the activities of the organization that created and sold the NFTs to begin with. Communities may choose to do this, because it is a new form of engagement between organizations and the public whose ownership is a form of governance, while also generating additional streams of revenue for an organization.”
Hot Use #5: Data privacy/Content creator usage cases
Fitting NFTs with wider cyber concerns, Borrego finds: “For now the people who will get the most value out of creating NFTs are content creators of any medium or social media outlet. Even if you are unable to monetize your content today through the existing advertising platforms, it allows whatever limited fan base you have today to collect your viral moments and support your continued work online. Monetizing digital real estate like social media pages, websites, and apps has a suite of predictable sales models to choose, and so most monetize from some combination of merchandise and ads, NFTs are simply offering an additional option and a way to reward community members, subscribers and followers, potentially with a chance that their item could be more than just a valuable collectible in the future. NFTs are a tool for software developers to manage pieces of data and content, like a jpeg or a video, with a unique serial number, which is what makes it unique and thus something you can own; the future value of which is immense in our data driven economy.”
