The blockchain and cryptocurrency have collected no small amount of attention over the past few years, with another trend arising—that of the non-fungible token, or NFT. Could this trend be one that businesses could benefit from?
Let’s examine what an NFT is, in actuality.
According to Investopedia, NFTs are “cryptographic assets on a blockchain with unique identification codes and metadata that distinguish them from each other.”
So, whereas a cryptocurrency has a set value that each and every one of them equals—meaning they can be used for commercial transactions—an NFT is an entirely different animal. While one Bitcoin equals one Bitcoin and one Dogecoin equals one Dogecoin, NFTs are all different and cannot be replicated.
This has led to NFTs being used as receipts for real-world transactions in art or real estate, a certificate of ownership being recorded and tracked via the blockchain. However, NFTs have largely been turned into upscale collectibles. The NBA has turned big moments into NFT cards, and Twitter’s founder Jack Dorsey turned his first-ever tweet (“just setting up my twttr") into an NFT. The unique nature of Cryptokitties and the Bored Ape Yacht Club is due to the fact that they are NFTs.
Almost all of the above, by the way, have seen transactions totaling in the millions of dollars. One Cryptokitty in particular, nicknamed “Dragon”, sold for 600 ETH (Ethereum, the currency of the Ethereum blockchain), which equaled about $1.3M at the time.
Does this all sound pretty silly? Yes, especially when you consider how volatile blockchain operations are where power consumption and environmental impacts are concerned, along with the recent crash of the NFT market. Having said that, it would be unfair if we didn’t acknowledge some of the other use cases of these NFTs.
Like we said before, NFTs can also be used to establish ownership over physical assets—namely big-ticket items, like the aforementioned art and real estate. Using NFTs in this context not only helps to make the appropriate marketplace more transparent and streamlined, they also make it easier for ownership to be shared. The digital tokens could also be used to track goods along the supply chain. NFTs have also been suggested as a means of identity management.
In short, NFTs are far more than bragging rights over some digital art, as you might have originally thought. Time will only tell if they find their way into other business use cases.
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