NFTs have been in the headlines a lot over the past five years or so, and because they’re new and exciting, it’s understandable that people want to know more about them and how they can be used.
At Addition Financial, we love getting questions from our members about anything related to their finances, and that includes cryptocurrency and NFTs. If you’ve heard about NFTs in the context of one application, you might think that’s all they can do. However, that’s not the case. Here’s an overview of NFTs and 12 uses for NFTs that might surprise you.
What is the Difference Between NFTs and Cryptocurrency?
In case you’re new to NFTs, let’s start with an explanation of what they are and how they differ from cryptocurrency. While these two things use the same technology, they are not the same thing.
Cryptocurrency is digital, decentralized currency. It differs from traditional money, aka fiat currency, because it is not backed by a central authority. A unit of cryptocurrency may be called a coin or a token.
Examples of cryptocurrencies include Bitcoin, Ethereum, Litecoin, and Dogecoin. A single cryptocurrency coin of any type can be exchanged for another of the same kind without changing value, a quality known as fungibility. Simply stated, it means that all coins of the same type are equal in value.
An NFT is a token, too, but it is a non-fungible token. So, unlike cryptocurrency tokens, an NFT is unique and cannot be swapped in a like-kind exchange. No two NFTs are alike.
NFTs are representations of a digital asset. They can be used for a variety of purposes, and we’ll talk about those next.
12 Ways NFTs Can Be Used
Now, what are NFTs used for? Here are 12 uses for NFTs you should know about.
#1: Digital Art
The most widely-known use for NFTs is in the sale and purchase of digital artwork. Using an NFT marketplace such as OpenSea or Nifty Gateway, NFT creators can mint NFTs from their artwork and list them for sale. They have the option of creating an auction or simply listing a price.
The popularity of NFTs for digital art is understandable because NFT art allows for easy tracking of the ownership of digital assets. They can also be used to help artists collect royalties on their work when it is resold.
#2: Music
Many of the same advantages that apply to digital art NFTs apply to music, as well. Musicians are using NFTs to sell and protect their work, as well as securing their rights to their music and collecting royalties.
We anticipate that the use of NFTs for music will increase because it is something that protects artists and may allow them to earn more than they would if they worked with a traditional record label.
#3: Product Authentication
It can be challenging to track the authenticity of products in the real world since most of us don’t have access to paperwork and other items that would establish a chain of custody. That all has the potential to change with the arrival of NFTs and smart contracts.
NFTs can be used to track the production and sale of everything from supplements to pet food. It can be difficult to prove, for example, that a product was manufactured where the seller says it was. With NFTs, it would be easy for consumers to learn the truth.
#4: Real Estate
Real estate is one of the sectors that is most commonly mentioned as being ready to move into the NFT space. There are some real-world challenges in real estate that could be streamlined and improved by putting them on a blockchain.
Some examples include transferring land deeds, tracking changes in a property’s value and even creating smart contracts to streamline payments while protecting both parties’ financial information.
#5: Protecting Personal Information & Preventing Identity Theft
There’s no denying that moving our world online has made it challenging to protect our personal information, including everything from Social Security numbers to credit cards. One of the benefits of NFTs is that they are decentralized and therefore far more difficult to hack than any information stored in a central location.
There is speculation that NFTs could be used to store financial information, educational information, and medical information. While there is still work to do to get the public on board with the use of new technology, the advantages could be considerable.
#6: Supply Chain Management
In our global economy, supply chain management is more complex and expensive than ever before. It can be difficult and time-consuming to ensure the quality and origin of products. Companies in the business of supply chain management are already exploring potential uses for NFTs because their transparency and security makes them ideal for ensuring that data is reliable.
Other uses for NFTs in supply chain and logistics include tracking the freshness of produce, tracing the movement of products along the supply chain, and even minimizing (or eliminating) the risk of counterfeit products making it to market. Many luxury brands are interested in that last point since they are always combating counterfeiters who sell fake versions of their products.
#7: Sustainability
An issue related to supply chain management is the issue of sustainability. Today’s consumers, particularly younger people, are highly motivated to buy from socially responsible brands who prioritize sustainability and protecting our planet.
NFTs could be used to track and verify the use of recycled and sustainable materials, allowing consumers to gain a clear picture of every component or ingredient of what they buy to ensure that it meets their standards before they spend their money.
#8: Intellectual Property & Patents
Even with careful registration of patents and intellectual property, it can be hard for artists and companies to protect what they create. Copyright and patent infringement cases clog our court system and can be difficult to prove.
NFTs have the potential to allow creators at every level to prove that they own any piece of content. By minting an NFT, the ownership of any intellectual property can be documented from its inception, allowing the owner of the NFT to prove they were the original creator of the data encrypted in the NFT itself. The same logic applies to patents, allowing for quick resolution of disputes via the immutable data in the blockchain.
#9: Ticketing
As a society, we’ve already made the transition from paper tickets to electronic ones, with most of us accustomed to displaying QR codes on our phones to do everything from boarding a plane to attending a Broadway show.
Many experts predict that ticketing is about to take another leap thanks to NFTs. Instead of needing an individual code for each ticket, consumers can display a single code of encrypted information to be scanned. The same technology could be used for something as mundane as bus or train tokens, allowing public transportation to operate more efficiently than ever before.
#10: Voting
Some countries have already embraced the use of NFTs and blockchain technology for a variety of uses, including voting. A notable example is Estonia, which is considered to be the most digitally advanced country in the world.
There’s a real need to update voting technology to make it convenient to vote and to ensure the security of our elections. Using NFTs would make it possible to eliminate the need for expensive voter IDs because voters’ information could be verified instantly, meaning a potential end to voter suppression. It would also make it impossible for anybody to vote twice – and using blockchain technology to secure each vote as it is cast would make it impossible for anybody to tamper with the results.
#11: Gaming
One area where NFTs have already made a big splash is in gaming, such as the NFT game Axie Infinity. It makes sense considering that gamers tend to be tech savvy and eager to find new ways to improve their gaming experience with technology.
NFTs can be used to create assets within a game, including avatars, weapons and more. There’s the potential for NFT gaming to eventually have cross-platform offerings, with players accessing the asset they bought in one game to use in another.
#12: The Metaverse
Arguably the most intriguing potential use of NFTs is in the creation of what people are calling the Metaverse. The Metaverse is a prospective future powered by virtual reality where people interact with one another’s avatars in a virtual world. In other words, it’s a new and improved version of cyberspace.
If the word “Meta” is ringing a bell, it may be because part of Mark Zuckerberg’s rationale for rebranding Facebook as Meta is his desire to be part of building the Metaverse. We can’t say at this point what a completed Metaverse will look like – any more than the people who first conceptualized the internet could have predicted where we are today. Still, the thought is an intriguing one and points in the direction of how NFTs have the potential to fundamentally change our world.
Conclusion
NFTs are poised on the brink of what could be a revolution in the way we conduct ourselves online. The 12 uses for NFTs that we’ve listed here illustrate why the technology has been getting so much attention – and why it’s important to understand it.
Are you interested in buying NFT art or investing in NFT stocks? Addition Financial is here to help! Click here to read about the MEMBERS Financial Services Program and book an appointment with one of our Financial Professionals.
Posted on Jun 6, 2022
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