Non-fungible tokens (NFTs) are assets that have been tokenized using a blockchain and are distinguished by a unique identification code and metadata. Like currency which is interchangeable, NFTs have their own unique identity, just as a Picasso painting or a Bugatti Divo (only 40 in the world) share a high value and define their rarity among the public.
Let us first understand from where one can purchase these NFTs. There are numerous Web apps through which the creators of those NFTs deploy their smart contracts on these platforms where different users can trade, essentially acting as an intermediary, such as Opensea, Rarible, Binance, SuperRare, Nifty Gateway, and many more. But the exciting part is that, as the term Web 3.0 is commonly used nowadays, a user can control its metadata over a decentralized blockchain on which the data of those tokens is stored, implying that no single entity can store or control our data as Instagram, WhatsApp, and Google do. You must first link the NFT Platform to Web 3 wallets: Metamask, Trust Wallet, Coinbase Wallet, Rainbow, Exodus, and many more. Then you must transfer your crypto to these wallets as the medium of exchange here is a cryptocurrency, or some platforms also allow the use of Debit and Credit cards.
Now that we've covered the fundamentals of NFTs, let's look at an example of their applications and use in real-world scenarios:
As creators own brand of currency
If you want to attend a Weeknd concert in Mumbai, you will immediately look for tickets on online booking sites like Bookmyshow or Paytm Insider so you can attend the concert without any hassle, but what if you are unable to go or no longer wish to go? In this case, the organizers can become creators by minting concert tickets on any NFT platform. A single entry pass, now an NFT, stores all of the metadata on the blockchain, which is irreplaceable, non-editable, and proves its authenticity. They only released a limited number of tickets at a set price with a 5% royalty, which means that whenever someone from its Web 3 wallet purchases a token (NFT), it is directly stored in its wallet, and the creators, as well as the general public, can identify the owner of the token. Because of the high demand and limited number of unique tokens available, whenever a person purchases any NFT, they can resell it to others. Suppose I buy a ticket for ₹1000, the Creator will earn ₹980, and the 2?e will go to the platform where the NFT was created. Then, because this ticket is in high demand, I can resell it to another person for around ₹1200, and on that, I will get 93% of the ₹1200, which is ₹1116 as out of this 2% is platform fees and 5% is the royalty fees of the creator on any subsequent sell of the token. If we look at this scenario, the creator, user, and the platform are all making a reasonable sum of money here.
As a medium of exchange in the virtual world
Numerous NFT use cases actually make sense. The most well-known of these NFT projects are the Crytopunks and the Bored Ape Yacht Club, where anyone who owns an NFT has direct access to exclusive parties. We can provide memberships for brands, purchase e-books, movie tickets, cricket match tickets, Disneyland tickets, airplane tickets, and even real estate in virtual worlds like Decentraland and Sandbox, where they have their own cryptocurrency 'MANA,’ 'SAND' to trade within it, like Yen for Japan or Rupee for India. We only have to visit one of the NFT platforms where these lands parcels are listed upon; with the help of VR sets, we can experience these worlds by interacting with other people’s Avatars and even lease out our land to other companies due to our location advantage or heavy traffic, advertising agencies can use it for billboard advertising, which integrates the concept of Metaverse.
As a virtual safe for government records
In the real world, many lands are disputed with unidentified owners because of forged documents and paperwork. The government can create the NFT for these lands and securely store all of the data on the blockchain while freezing the metadata, then allocate it to landowners into their Web 3 wallet, and every purchase and sell history will be recorded in the Blockchain, which is non-editable once completed, provides authenticity to the owner and visible publicly, depending upon the consensus decision.
There are numerous ways to transform the use case of anything we buy or sell online, but the thing lacking here is authenticity and past records. And as technology advances, we will soon adopt these because they have the potential to eliminate other platforms that charge a premium and control private data. Therefore, it is extremely important to shift the narrative around NFTs to bring real-world utility & empower individuals around the world.
About the author,
A student from the batch of 2022-24. A curious mind from Udaipur who loves things related to finance, technology, blockchain, fitness and movies. An adventure enthusiast who loves to read, travel & make friends. Ted talks lightens me up. Wish to share the stage someday!