For technology to thrive, it must find a sustainable, long-term application tied to generating real-world value. This was true for the smartphone, internet, Artificial Intelligence and all other technologies when they were being introduced. Of course, fancy tech comes with much short-term hype, just like the dot.com bubble in the 2000s, but the true utility often always comes when all the hoopla has settled (you might want to check out the Gartner Hype Curve for more on this). Thus, NFTs will be no different – how will NFT technology really add sustainable economic value to society?
In fact, there are many. We have broken down several areas where there is tangible mid-term potential.
Let’s start with an application that is currently being actively implemented; NFTs for ticketing and event management. NFTs can serve as access credentials for events as both the event manager and the user have access to authentic copies of the credentials. Furthermore, these NFTs can be allowed to trade (if deemed alright), perhaps on a marketplace. Moreover, the programmable nature of NFTs means they can be programmed with exact behaviors, for example incentives, loyalty schemes, and even gamification. However, if these are not to the event manager’s preferences, they can be programmed to be used only for one user. And to top it off, the creator can embed the story behind their event into the NFT as an image or video!
So in summary, the control enabled by such a system has significant disruption potential for reducing the disbursement and setup cost, as well as the ability to increase user engagement. Despite being one of the first real-world NFT applications, ticketing and IDs still only constitute ~12% of total NFT ownership, according to Crypto.com’s survey of its users.
Regardless of the general contempt towards anyone tracking or requiring IDs, we have to acknowledge that there are instances where this is necessary, primarily for security reasons. NFTs can solve this by acting as a sort of ‘universal’ ID to enable people to have a single online identity. You wouldn’t be required to have many logins and passwords. This will be crucial in allowing verification especially where KYC is a priority. It is nearly impossible for a closed, centralized system to earn the trust of users to handle worldwide identification so inherently, a decentralized, open-source platform is required. Furthermore, a well programmed NFT ID can enforce better data protection and privacy via laws such as the General Data Protection Regulation (GDPR) as the user will have the ability to see who is accessing the data, where and at what time (although the data itself will be privately held inside the NFT).
Most of the hype around NFTs has been about owning an asset but this has remained diverged from the right to recreate the asset or IP. One of the latest innovations is to use NFTs to legally enforce the transfer of IP. An IP has real-world benefits in that it grants exclusivity for an owner to create a particular product (or get paid a royalty). This means having the legal framework recognise NFTs as valid implementations of IP, and the NFTs themselves having the ability to show proof of agreement (e.g. actually including the contract in an encrypted manner). Such a mechanism can significantly increase the commercialization of patents and reduce the associated costs. Moreover, NFTs can also enable fractional ownership, allowing the sharing of IP rights among different buyers.
All the attributes offered by NFTs can be used for securely storing key medical information on the blockchain. However, medical information is confidential, but as smart contract functionality allows this, they can be configured as private NFTs, ensuring underlying data and transactions are not exposed to everyone. A good example of this is genomics. A few biotech firms are now experimenting with using NFTs to secure genomic data. Nebula Genomics enabled 15,000 people to have their sequenced genomes accessible to 3rd party vendors such as pharmaceutical companies to help research links in genes and diseases.
One of the most promising applications of NFTs is in supply chain management. With the issues experienced in 2021 from supply chain bottlenecks, the potential for this technology becomes clear. While there are many (centralized) systems currently available for supply chain management, integration between different vendors is tedious, time-consuming, and expensive. Once again having tracking IDs in the form of NFTs greatly increases the efficiency of this process. NFTs, in conjunction with IoT technology, can enable product traceability and provenance. This will be crucial for effectively transporting perishable goods such as food and medicines.
The above are a few key areas ripe for disruption from NFTs in our view, but are by no means exhaustive. Do also remember that the industry-specific advantages can easily compound when multiple different industries rely vertically on each other. Thus, NFTs have significant potential to become the communication and management platform to “rule-them-all”.
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