Are NFTs useful for anything other than owning digital apes? Here are 9 applications of NFTs with real-world use cases 🧵 👇 [1/x]
First, a quick overview of the NFT market... The NFT market grew by more than 200x in 2021. The total value of all NFT transactions went from $82.5 million in 2020 to more than $17 billion in 2021. (Source @FortuneMagazine)
• @NBA's Top Shots alone had hundreds of millions of $ worth of sales last year. • The @BoredApeYC and @cryptopunksnfts collections combined have more than $3B worth of NFTs.
• @beeple sold a digital piece of art as an NFT for $69M last year through @ChristiesInc. This made @beeple the 3rd highest valued living artist in history.
Most people only know about these digital art NFTs. And it can be difficult to understand why they are so valuable. But NFTs can be used for so many more practical and easy-to-understand applications. Let's explore...
NFTs (Non-Fungible Tokens) are tokens that are perfectly unique (no 2 NFTs are the same) Therefore they best used to represent ownership of a unique asset.
Combine this with the other valuable properties of tokenization, like transparency, verifiability, composability, etc and you get a really useful technology. If you don't understand NFTs, check out this explainer video I made last year. https://youtu.be/RAQx-2BrrAk
NFTs are great for representing real world assets that are: • unique • benefit from tokenization.
Why tokenize an asset: • Transferrable & Verifiable • Allows for derivative products (composable) • Capital efficiency of assets (fractionalize, collateralize, etc) • Turn intangible into tangible (see @punk6529's interview 👇) +++ https://twitter.com/shivsakhuja/status/1513229934562447361?s=20
@ethereum's official website has a great page on why NFTs are useful https://ethereum.org/en/nft/
Okay, so what are some applications of NFTs outside of Digital Art? 1. 🙋♂️ Identity 2. 🧠 Intellectual Property 3. 🏡 Real Estate 4. 🗝 Membership Clubs 5. 🎫 Ticketing 6. 🎸 Music 7. 🗡 In-Game Assets 8. 📑 Documents 9. ＠ Domains & Usernames
1. Identity More than 33% of US citizens have experienced identity theft... Not surprising when the only thing needed to steal an identity is a 9-digit number that you pass around in emails.
Your identity is perfectly unique. Digital tokenized identity will make your identity easily verifiable and difficult to steal or forge.
Identity NFTs can allow you to: • KYC without giving details • Connect your identity to documents (example: vaccination certificate) • Bind assets to your identity NFT for security • Unlock new types of DeFi rails like non-collateralized borrowing, credit scores, etc +++
This can also unlock many other doors. For example: Voting. If everyone has a verified NFT identity, voting can be done through a blockchain based app. Trust, transparency and tamper-proof voting seems like a no brainer for any democratic process, right?
Here is an interesting identity NFT project I stumbled upon https://photochromic.io/
@0xPolygon is apparently also working on a web3 identity using Zero-Knowledge technology. https://blog.polygon.technology/introducing-polygon-id-zero-knowledge-own-your-identity-for-web3/
2. Intellectual Property Ownership 🧠 Ownership of IP like essays, patents or even tweets is a perfectly valid use case for NFTs.
You might have heard that @jack sold his first tweet as an NFT for $2.9M.
While that may sound strange at first, NFTs are a great way to represent IP. An NFT patent would be easily transferrable, with clearly defined ownership. It would be easily verifiable, and could potentially even be plugged into other smart contracts to earn royalties.
3. Real Estate Tokens I’ve written before about why NFTs are an excellent way to represent real estate. https://twitter.com/shivsakhuja/status/1489569464181948417?s=21
Quick Plug: Follow me @shivsakhuja if you're interested in thought experiments like this, and more threads about DeFi and web3.
4. Membership Clubs If you think people are paying $300k+ to own an Ape JPEG, you're wrong.
They're paying for access to a members-only club (@BoredApeYC) that includes: • @mcuban • @StephenCurry30 • @jimmyfallon • @ParisHilton • @PostMalone • @neymarjr • @SnoopDogg • @Madonna • @justinbieber and dozens of other famous celebrities..
NFTs make for great membership cards, because they are: • Digital • Easily Verifiable IRL or Online • Great for ownership records • Composable
5. Ticketing Event tickets (ex: concert) have some problems: • Difficult to verify authenticity • Resale is tricky - you don't know if you're getting a real ticket, etc. • Organizers don't have an easy way to control resales except by banning them entirely.
With NFT tickets, they can be: • Easily authenticated through on-chain records • There's a proper channel for safe resales • Organizers can monitor resales, and continue earning revenue by taking a % of secondary sales.
It could also open up new paradigms. For example, artists could airdrop their new album to everyone who attended a past concert.
6. Music The music industry is universally known to be a shit show. Between record labels, lawyers, distributors and streaming services, artists are left with nothing. Even among Spotify's top 0.8% of artists, most earn < $50,000 in streaming revenue. https://musictech.com/news/most-of-spotifys-top-0-8-of-artists-earn-less-than-50k-in-streaming-revenue/
Like other forms of art, Music can also benefit from representation as NFTs. For example: • Limited edition NFT songs or albums can be sold for much higher $ than streaming to masses. • Artists can use NFTs to raise money from fans in exchange for a portion of royalties.
It's very tough to disrupt an industry like this but many are trying. • @catalogworks • @join_royal • @opulousapp • @arpeggi_labs • @glassprotocol
I don't know what model will work, but it's possible that NFTs can solve the artist's problems by letting them sell ownership & partial royalty rights directly to fans instead of being squeezed by record labels & streaming companies.. https://www.coindesk.com/learn/what-are-music-nfts/
7. In-Game Collectibles You worked hard to acquire that Level 25 Mythical Sword. There are only 5 like it in the world. In-game assets like this clearly have value. NFTs can make them tradable or rentable, and create opportunities for inter-game marketplaces.
8. Documents Legal documents, medical records, invoices, ownership contracts, etc. Many of these are easily forged and have a lot riding on them. As NFTs, these could be tamper proof, easily authenticated and would benefit from digitization, and clear ownership records.
Example: An NFT of a vaccination certificate or an invoice is something that anyone can verify by checking the on-chain record to see if it was issued by the appropriate authority. Screenshots and PDFs on the other hand, can be very easily photoshopped.
9. Digital Property Domain Names, Usernames, etc are digital property that we already "own". They are unique, must have a single identifiable owner, and ideally should be transferrable. Sounds like a great use case for NFTs.
You can already buy .eth domain names at https://ens.domains/ You can also buy .crypto, .coin, .wallet, .bitcoin domains among others at https://unstoppabledomains.com/
There are many, many other use cases for NFTs that I can think of. I'd love to hear what others see as good, practical use cases for NFTs.
Many of these use cases will take years to materialize, but I do believe the future holds a lot of NFTs in store for us..
In the mean time, you can check out my past threads here: https://twitter.com/shivsakhuja/status/1470898910218440708?s=20