NFTs… people are still trying to figure out what they are, what they mean and what they’re used for. A non-fungible token (NFT) is a record on a blockchain which is associated with a particular digital or physical asset. It’s a one-of-a-kind digital asset that you can own.
NFTs in the news are usually related to a digital piece of artwork. But, it turns out that NFTs can be used in multiple ways and for multiple reasons.
“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,” says Web3 expert Connor Borrego.
Here are Connor’s top 5 hot uses for NFTs that we’ll see in the near future:
Hot Use #1: Memberships
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.
Hot Use #2: Limited edition digital art or music
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. 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.
Hot Use #3: Limited edition physical products
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.
Hot Use #4: Financing Option
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. 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.
Hot Use #5: Data privacy/Content creator usage cases
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 & 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.