What Are NFTs Used For?

A unique and programmable token that can irrefutably establish digital ownership?

ERRBODY got time fo dat!

NFTs’ popularity may have started with animal illustrations and pixelated avatars but users quickly found other popular use cases.

Art

By tokenizing an art product on a blockchain, artists can “sign” their work to prove that they own it.

They can then cut middlemen and sell their work to a wider audience via global NFT exchanges.

They can also establish transfer parameters through smart contracts so that they’ll have more power over their product’s margins and distribution.

Artists can earn a small income each time their NFTs are exchanged instead of just earning from the initial sale.

Similarly, big brands can tokenize their content for easier licensing activities, and major and minor celebrities can issue NFTs to sell exclusive merchandise to their followers.

Meanwhile, art collectors can enjoy proving ownership of rare physical or digital items without worrying that they’re holding fakes.

Gaming

Why bother spending on your online game character’s potions, skills, and fancy armor upgrades when you could permanently get locked out of your account at the drop of a hat?

Thankfully, online games are warming up to blockchain technology, which allows players to earn/buy in-game assets that they directly own and can sell to other players.

Some gaming NFTs may even be traded or ported to other games!

Fractional Ownership

NFTs by themselves cannot be split into parts as those parts will be fungible in nature.

However, owners can lock NFTs into a smart contract that will yield a specific number of “Fractionalized NFTs (F-NFTs).”

These fractional shares are useful for people who want to “own” or sell an expensive, real-life product.A 14-bedroom mansion, for example, would sell quicker if multiple people agree to partially own it.

F-NFT technology can likely facilitate that scenario and make future verification and sale much more efficient in the future than current processes.

Small businesses could potentially get additional funding by offering some of their “shards” (partial ownership of the business through NFTs) to the public, similar to how corporations sell shares of the company in the public stock market to raise capital.

Identity Management

Proving ownership of a data point and storing it on a secure blockchain will come in handy for those who are looking to establish identity information.

NFT technology can give people ready access to their birth certificates, passports, verified medical history, and education credentials.

Not only that, but they’ll be able to share only the relevant information with other parties as needed.Nobody can claim to have your birth certificate AND you won’t have to fill out 37 forms every time you go to a different clinic or travel out of the country!

Meanwhile, manufacturing businesses that use NFTs can confirm where their raw materials originated.

They can then track their products’ progress through the supply chain and verify the authenticity of their products to their customers.

Last but not least, NFTs can help sports and concert organizers prevent counterfeit ticket sales and help organizers control attendance at conventions.

Social Tokens

Social tokens are a broad category of NFTs issued by individuals and communities.

Launching numbered batches of NFTs opens the door to membership “clubs” that offer an exclusive experience.

For example, Bored Ape Yacht Club (BAYC) offers members-only access to its art space called Bathroom.

Other clubs can sell NFTs as membership tokens and offer other privileges. Artists can launch official fan clubs and lawyers and florists can sell tokens for their services.

Token sellers can even track the NFT owners’ activities and offer rewards for engagement or loyalty!Imagine winning a five-minute chat with your K-pop idol as they have irrefutable proof through your membership that you’ve watched their latest video 318 times in the last 24 hours…because who does that?

Collateral

NFTs may not function as cryptocurrencies but they do have value that can be leveraged to get cryptocurrency or fiat-denominated loans.

Once the borrower and lender have agreed on the NFT’s value and loan parameters, then using NFTs as collateral may not be too different from using art to get loans.

Due to increasing demand, DeFi and CeFi applications are making progress in establishing NFT appraisal and collateral loan standards.