Top 5 uses for NFT technology
With a new study from Juniper Research predicting that the global number of NFT (Non-fungible Token) transactions will rise from 24 million in 2022 to 40 million by 2027, Web3 expert Connor Borrego gives his take on how NFTs will be used in the next few years…
NFTs are being used for membership access to both online and offline experiences for community members. Because non-fungible tokens are simply a serial number for a piece of data – like a picture on the internet – who owns the picture from the official NFT community is registered to the blockchain and publicly verifiable.
2: Limited edition digital art or music
Collecting limited edition digital art or music is one of the most popular and well-known ways that NFTs are being used to make money. For the most part, these items are just collectables that fans of the artist can purchase as a form of memorabilia to display in order to demonstrate how much they support their work, but some of these NFTs come with additional utility such as a royalty share and distribution interval on commercial licensing of the art to generate income.
For a visual artist, this can mean turning a favourite piece of theirs into print posters, notebooks, stickers, that feature the art, while a collectable song may tie itself to revenue derived from various streaming services where the song can be distributed.
3: Limited edition physical products
In the art world, and in other high-value asset markets like real estate or diamonds, there is a concept known as provenance, which is about understanding the chain of custody for an item to its creator. It adds trust and transparency to the transaction and the integrity of the asset in question.
Because of how the blockchain works, its ledger technology provides this documentation by default enabling it to be used as a trustworthy source of information for transferring ownership of high-value assets.
4: Financing Option
NFTs can be sold as collectables, vouchers, or memberships which are great tools for communities. Alternatively they canbe sold to brands that don’t have well-established business models because you are able to sell something of value to people who believe in your mission and that contribution can give them different levels of control over the decision making related to the money raised.
For startups, this is very similar to pre-selling your product and using a voucher NFT with lifetime access to your future software product, while for non-profits this sort of looks like a digital bakesale that hires a professional chef to raise funds with the best pastries, or even as an online country club.
5: Data privacy/Content creator usage cases
For now the people who will get the most value out of creating NFTs are content creators of any medium or social media outlet. Even if you are unable to monetize your content today through the existing advertising platforms, it allows whatever limited fan base you have today to collect your viral moments and support your continued work online.
Monetizing digital real estate like social media pages, websites, and apps has a suite of predictable sales models to choose, and so most monetize from some combination of merchandise & ads. NFTs are simply offering an additional option and a way to reward community members, subscribers and followers, potentially with a chance that their item could be more than just a valuable collectable in the future.