The Value of NFTs and Their Impact on Blockchain
Non-fungible tokens, or NFTs, haven’t changed the blockchain industry at its core. However, they’ve had quite a positive impact on bringing more visibility to blockchain and its many uses.
Many people not involved in the blockchain industry have been introduced to NFT crypto-assets in the form of digital art. Although collectible art is certainly one use for these assets and their unique attributes, it’s just one representation of the vast array of ways thatNFT and blockchainsolutions could change modern life.
For example,NFT ticketswould help cut down on counterfeit sales for sporting events, concerts, conventions, and more. Because NFTs can’t be duplicated, the originals would be simple to verify. Plus, each NFT ticket could be programmed via a smart contract to entitle the legitimate ticket holder to special perks like free merchandise or exclusive gatherings.
NFTs are also heating up the video game industry, which shouldn’t be a surprise. Many players would like to own the digital assets they purchase or earn while moving through a game. Using an NFT-in-game premise, those players could retain ownership of any assets beyond the confines of the game. This would enable them to market or sell those assets for a profit later.
Real estate is yet another growth space for the NFT industry.Saving land contracts on NFTs can reduce crimes related to fabricated documents. Perhaps one day,NFTs for landinformation will lessen the need for costly legal intervention in cases of proving who owns which parcel.
The Multifaceted Value Proposition of Blockchain and NFTs
Of course, many people still aren’t sure what makes NFTs particularly valuable. Even those who understand NFTs generally have a little trouble seeing their real-world applications.
So what is the value of an NFT? Below are some of the major reasons NFT and blockchaintechnology stir up so much discussion surrounding profitability and inherent value.
1. NFTs offer provenance and ownership.
Because the token (a.k.a., the NFT) on a blockchain can’t be forged or 100% duplicated, it becomes its own authority. Someone who owns an original NFT doesn’t need to go through a central authority to show the NFT’s authenticity. Removing the need for someone in the middle to legitimize an NFT makes ownership and trading less cumbersome. Accordingly, the value saved is transferred to the value of the NFT.
2. The NFT industry is fostering buyer-seller efficiencies.
More and more, NFT holders can tap into global marketplaces when they want to sell their NFTs. Because NFTs have more liquidity than traditional assets, their holders can recoup investments more readily. Additionally, NFTs support fractional ownership, giving smaller investors access to larger investments by enabling them to own a “slice” rather than an entire asset.
3. Smart contracts can follow NFTs for life.
NFTs can be programmed with smart contracts. Consider the situation of a digital artist who programs an NFT with a smart contract. The smart contract may give the artist a percentage of any sales of the NFT. Consequently, every time the NFT changes hands, the smart contract terms would be enforced immediately.
4. Blockchain and NFTs offer decentralization with security.
By its very nature, blockchain requires none of the centralized entities controlling the markets and marketplaces the world currently relies on. Rather, blockchain and NFTsfoster decentralization and transparency. At the same time, they offer incredible levels of security that would have seemed unfathomable before the advent of blockchain ledgers.
5. NFTs build trust that’s often missing in transactional relationships.
Blockchain ensures a single version of the truth. Period. As a result, systems and assets like NFTs that are built on blockchain are trustworthy. Any transference of blockchain items can be handled with a high degree of trust. And again, there’s no need for a centralized authority to step in to fuel the trust factor. It just exists.
To be sure, NFTs — and blockchain, for that matter — are going through what can only be called the “hype” cycle. Very high expectations are being set for what blockchain and NFTtechnology can and will do. No doubt, some people will be disillusioned along the way to blockchain’s maturity. Nevertheless, blockchain and NFTs are positioned to have a significant and transformative effect on many industries beyond those that have tested the waters so far.