NFTs Beyond Art and Collectibles: The Widening Horizon
Proquantic Software
Empowering SMBs, Start-ups & Businesses Digitally | "On-Demand" Hiring: Web, Mob, DevOps, UI/UX, AI, Blockchain
NFT (Non-fungible token) has come a long way since the first NFT, Quantum, was designed and tokenized by Kevin McKoy in 2014, minted on Ethereum, and later sold in 2021. The idea was to bring recognition to artists by giving them a way to track and own their work. NFTs went mainstream in 2021 with Beeple's "Everyday: The First 5000 Days," which fetched a massive price tag of $69.3 million at Christie, catapulting Mike Winkelmann to instant fame.
Soon after, the buzz around NFTs reached a crescendo, bringing it into wider discussion when British street artist Banksy's art called the "Morons" was burned and streamed online and turned into a digital token fetching $380,000. With NFT art going global, there are now bustling marketplaces like Rarible, OpenSea, Mintable, and KnownOrigin, where art lovers can trade digital collectibles.
NFTs are all over today, moving well beyond their intended purpose and finding a place as NFT solutions for enterprises across industries.
What is an NFT?
What do we mean when we say something has been tokenized? It means an item, asset, or data, like a piece of art in the real world, has been converted into a digital token via a distributed ledger system like blockchain. This digital token can be stored, transferred, or managed securely, reducing the risk of fraud.
When you own an NFT, you hold a digital certificate proving ownership of something one-of-a-kind, recorded permanently on the blockchain. While blockchain is the most popular distributed ledger system, others also exist. Once tokenized, an NFT can be traded or exchanged for money, cryptocurrencies, or other NFTs.
NFT Vs. Cryptocurrency
Not to be confused with cryptocurrencies, which are also tokens but are fungible. It means two units of the same cryptocurrency, such as bitcoin, are interchangeable as they are always the same in value. In contrast, NFTs are non-fungible, meaning each one is unique and cannot be exchanged on a one-to-one basis with another NFT, making it popular among art collectors and owners.
The expanding horizon of NFTs
NFTs are much more than images with price tags attached. NFT went beyond art, expanding to find innovative applications across various industries, from sports, healthcare, and real estate to supply chain management, opening avenues for engagement, brand marketing and loyalty, ownership, and monetization in the digital world.
Buenos Aires-based Flybondi's customers can activate NFT versions of their tickets, while Air Europa offers Nftickets, the world's first series of NFT air tickets, collaborating with TravelX and Algorand.
Globally recognized lifestyle company Adidas went big with "Into the Metaverse," launching virtual wearables via some 30,000 NFTs that buyers can use in the Metaverse while geared in their wears, bagging 22 million in sales quickly.
By 2030, NFTs as a market will be worth $231 billion.
Why are enterprises taking up NFT development services?
Businesses are opening up to the idea and using it for strategic reasons. Enterprises are rooting for NFTs or enterprise NFTs (ENFTs) not merely as a trend but as a transformative technology that offers proven dividends when executed well across multiple dimensions of business operations.
They are leveraging blockchain's security to future-proof key areas, such as enhancing customer engagement and creating new revenue streams, in a shape-shifting market influenced by breakthrough technologies and consuming patterns.
At Proquantic, we believe the quick adaptation of NFT and the transition from art to enterprise holds the promise yet to be leveraged by many enterprises. If developed and implemented correctly, it will fit into the operational workflow.
Use cases of NFTs in enterprise applications.
The NFT landscape has made a remarkable shift for good. The initial craze has given way to diversification in NFT use. NFT solutions for enterprises are helping businesses go beyond the curve and gain customer trust. Let’s look into the use cases.
The supply chain industry has been one of the early adopters of blockchain technology. From faint beginnings in 2015, it came full circle with IBM and Walmart collaborating to develop a blockchain system for food traceability, successfully reducing trace times from days to seconds in some cases. NFT integration in supply chain management reduces counterfeiting by recording every phase in the product’s journey.
At the heart of an NFT application for the supply chain is a smart contract that includes metadata specific to each product’s journey, like timestamps, geographic location, and quality certifications.
When the exact origins, material, and authenticity of a product can be verified through a simple scan of a code, business trust and transparency among consumers increases, which is the biggest benefit for inherently complex systems like supply chain management.
For example, MediLedger, a supply chain platform supported by companies like Pfizer and Genentech, uses blockchain technology to track prescription drugs through the supply chain, ensuring their authenticity and preventing counterfeit products from entering the market.
Real estate is a high-value industry where trust and transparency are key to business success. No wonder blockchain-enabled NFT applications, with their tamper-proof character, became a natural choice for transparency, security, and ownership rights in the real estate industry. It has opened up a sea of possibilities for both investors and property owners.
When real-world assets are tokenized into NFTs, buying, selling, or transferring properties becomes easy. The seller receives payment in tokens via a crypto marketplace, while for the buyer, it's an NFT in the digital wallet, which represents a real estate object.
Interestingly, in Gulfport, Florida, a four-bedroom house was auctioned for $653,163 of ether, a good example of real estate ownership via an NFT. There are two types of tokenization you can opt for in real estate - entire asset (EA) and fractional ownership (FO). The latter is simpler to execute and allows investors to buy shares. NFT in real estate is still a developing concept; there's more to come.
When implementing an NFT application, real estate businesses must carefully consider which assets they want to tokenize. Key requirements include a blockchain platform, such as Ethereum or Algorand, for a secure foundation.
You would need smart contract development tools, like Solidity, to handle asset tokenization and transactions. Add to it NFT marketplaces, such as Propy and RealT, along with digital wallets, that provide the necessary infrastructure for secure transactions and asset management.
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It's worth noting that immutability is the defining character of blockchain-based NFT applications, making it a favored choice for sectors that require high-trust transactions. NFTs are revolutionizing intellectual property (IP) and licensing by providing a secure, transparent way to manage ownership and usage rights in the digital space.
A good example is IPWe's spirited effort to transform the IP system. It deployed some 25 million patent NFTs on the hybrid Casper Blockchain and Hyperledger fabric network. Embedding legal terms, licensing agreements, and royalty conditions directly within a smart contract ensures that creator rights are protected and automatically enforced.
In art, music, and publishing, NFTs can track how often and where a work is used, taking care of the royalty concerns. Furthermore, fractional ownership opens up exciting opportunities for collaborative investments and licensing. Using NFTs enables businesses to accommodate micro-transactions such as small-volume patent licensing deals, saving transaction costs.
Recently, NFTs have caught the attention of travel and tourism businesses in the hospitality sector, creating an excellent opportunity to woo customers through NFT-enabled loyalty programs. It's exciting for customers to treat themselves to novel digital experiences through a revamped loyalty program that goes beyond traditional reward systems.
The flight miles, for example, are now a bunch of digital tokens that can later be exchanged for discounts or other rewards such as discounts, event access, or limited-edition items. Further customization is a good way to create a personalized offer where each NFT can be customized to reflect a customer's loyalty tier, achievements, or spending patterns.
Take, for example, The Starbucks Odyssey, which takes brand loyalty and engagement to the next level for the massively popular coffee chain brand. Customers can buy and collect digital collectible stamps and use them to deliver rewards and immersive experiences.
The idea of NFTs for customer loyalty programs binds the customer in a way that makes them feel appreciated and allows them to become a part of a narrative where they participate, collaborate, and find deeper connections with a brand.
Other interesting use cases across sectors
These are only some of the immensely promising avenues NFT has opened up for investors and enterprises. There’s gaming, where players can own unique in-game assets such as characters, skins, and virtual real estate.
Musicians are selling their work directly to their massive fan base without worrying about ownership rights. Aphex Twin, Shawn Mendes, Grimes, and Kings of Leon have issued their NFTs. These can be used for virtual concert tickets, granting access to exclusive performances or experiences like early access to new releases or meet-and-greets with artists.
In healthcare, NFT is helping secure the management of patient records. As the data is tokenized, healthcare providers have more control over it.
Beyond the initial purpose, NFT has moved swiftly to modernize other business areas.
5 essential points to consider before building an NFT application
NFT offers businesses an excellent opportunity to create unique, engaging experiences for their audience while unlocking new revenue streams. But before you jump on the bandwagon and develop an NFT application, we recommend you consider the following points.
1. Define a clear objective
Define the purpose of your NFT application—whether it's asset tokenization, customer engagement, or trading. Collaborate with experienced NFT developers to ensure your vision aligns with your business goals.
2. Choosing the right blockchain
The criteria for choosing the right blockchain for your requirements should be scalability, transaction speed, and cost-effectiveness. Collaborate with a reliable blockchain development company that will help you choose from a host of options today, such as Ethereum, Solana, or Polygon.
3. Smart contract development
Partner with skilled developers to create robust smart contracts that define your NFTs' functionality, like royalties, metadata storage, and secure ownership transfers.
4. User experience and integration
Ensure the application has an intuitive design and integrates seamlessly with digital wallets and NFT marketplaces, making it easy for users to mint, trade, or transfer NFTs.
5. Security and compliance
Engage an expert blockchain development company to implement top-notch security features, like multi-signature wallets and encrypted transactions, while ensuring the application complies with relevant regulations.
The way forward
NFTs are no longer confined to art and collectibles—they're revolutionizing industries with innovation and utility. From streamlining supply chains to transforming real estate and loyalty programs, their potential is vast and dynamic. As businesses embrace these digital assets, the future of NFTs promises to redefine how we interact, trade, and build trust in the digital age.