Non-fungible Token Use Cases Across Industries

  • November 23, 2020
  • Jennifer Moore
Non-fungible Token Use Cases Across Industries

In recent times there happens to be a lot of buzz going around in the crypto industry. Moreover, beyond regarding non-fungible tokens or assets. Therefore, this particular variety of digital assets is predicted to initiate a lot of positive changes across sectors. Thereafter, as cryptocurrency gears up for an extended bull run. NFTs have been bringing valued assets into the blockchain periphery. This is via a wide range of industries such as real estate, gaming, art, media, and more.

How Blockchain Technology Works?

Most people have become familiar with the concept of blockchain. The foundation of crypto, NFTs, CBDCs, and likewise. Moreover, it was the launch of Bitcoin that put the spotlight on the blockchain. Thereafter, it promotes the removal of a centralized architecture, be it the government or organization, controlling an entire network through a single main server. Blockchain is the exact opposite of that structure. Here, it operates on a decentralized architecture across several computers or servers.

These computers verify and authenticate the transactions by cracking complex mathematical equations. Blockchain operates across a network or consortium model where the stakeholders have to come to a consensus to validate a transaction. Only then can it be recorded in a block, which is virtually immutable. The computers use the data from the past transaction to verify the ongoing one, which means that every transaction has identical hashes making it almost impossible to alter, modify, hack, or delete.

An Overview of Non-fungible Tokens

Every tokenized asset on a blockchain has distinguishable and unique attributes. Being different from each other non-fungible assets cannot be interchangeable, which kind of explains the term. Just like the real assets, these come with proof of authenticity and verifiable ownership records. NFTs differ from cryptos as these use varied token standards, deploying different types of smart contracts. The recent rise in popularity of NFT has initiated the development of a new kind of virtual economy that changes how realtors, gamers, and art enthusiast transact leveraging the assets.

Comparison Between Fungible and Non-Fungible Tokens

If we draw a comparison of concepts between the fungible and non-fungible tokens, then from an economic perspective, fungible assets can be interchanged with another form of asset or goods, for a similar value. For instance, gold is a fungible asset. The value of 1 kilo of 24-carat gold in one country will be the same in another. Cryptocurrencies are fungible assets.

While non-fungible assets have been in existence for a long, the non-fungible tokens have risen to prominence recently after the world became obsessed with CryptoKitties. It is an online game that allows one to collect, sell, and breed virtual kittens or cats. Each CryptoKitty has unique genetic identification that is created by the Genetic Algorithm. The rule here is that no two kittens can be similar. Crypto Kitty initiated the trend of creating NFTs in the gaming industry in the form of in-game assets. The trending of CryptoKitties followed by heavy tokenization within the gaming industry has contributed to the mass adoption of digital assets.

Gaming Industry and NFTs

The gaming industry at present has the most active use cases for non-fungible tokens. But the other industries are not far behind. They are gradually integrating tokenization of assets and blockchain within their existing architecture. As the mainstream adoption of blockchain accelerates, the use of NFTs is becoming a secondary on-ramp to the new users within the crypto domain.

Non-fungible Tokens Applications

1. Gaming Industry:

For years the gaming industry has created virtual economies within a game’s ecosystem and has been a staple in games like the Fortnite and World of Warcraft. In-game collectibles, currencies, and marketplaces are central to these games leveraging which the gamers level up and progress through the game. The prominent gaming accounts are a great commodity for those who do not want to spend time or effort to unlock the bonus gaming features. Due to that, there is an expanding unregulated market for such accounts.

Blockchain-based gaming and the use of NFTs allow the players to trade in-game collectibles securely while providing authenticity and validation to the players. It also facilitates the trading of rare items openly in exchange for fiat in a safe and secure gaming ecosystem. NFTs offer a great solution for the virtual ownership of rare and unique gaming collectibles. Therefore, allowing the generation of revenue by leveraging the user’s gaming skills.

Users can participate in the governance to make decisions on future developments in a game. Moreover, it provides users with an opportunity to create their very own virtual world, operating the same within verifiable gaming marketplaces.

2. Sports:

The sports industry suffers a lot due to counterfeit merchandise and tickets, which blockchain can help eliminate. The immutable nature of blockchain prevents counterfeit collectibles and tickets. This, is with the help of tokenized game tickets getting issued on the blockchain network. This is a great use case for non-fungible tokens. Each game ticket might be similar, but each will hold unique identifiable information connecting it with the designated owner on the blockchain. Sports NFTs receive popularity with prominent athletes becoming tokenized assets on the blockchain. Moreover, their value getting determined by how they perform. There is ongoing work on turning merchandise into NFTs allowing the owner to register and verify the official merchandise as theirs.

3. Real Estate

This is the most interesting tokenization project, where the property is getting tokenized in a blockchain platform. A single property is split into multiple assets that investors can purchase on a blockchain exchange. Thus, allowing people to own a part of a property. Tokenization of real estate allows for seamless transactions when one is buying or selling a house. Therefore, eliminating any third-party intermediary prevents conflict over the ownership of land or estate.

4. Art

Blockchain provides provenance, which is proof of ownership and origin of the art pieces. Digital artists find it increasingly difficult to copyright their artwork. Therefore, the use of NFTs can enable one to buy a work of art and showcase it within a digital space. Thus, being fully aware of the history of the asset. Moreover, it will also allow the artists to get better payment for their work through the elimination of brokers by initiating P2P payments.

In Conclusion

After reviewing it all, the non-fungible tokens are creating a strong foundation for blockchain and crypto adoption. Therefore, with a broad spectrum of use cases aiding industries to save money on counterfeit products, and copyright issues. Thereafter, while helping people safeguard their data and privacy.

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