Practical Business Uses of Non-Fungible Tokens (NFTs)
Many still think that Non-Fungible Tokens (NFTs) do not have any practical purpose and are only used as a beauty exercise by trust fund kids and money launderers to purchase digital art or other collectibles. Given the novelty and complexity of the subject, this is an understandable misconception. Quite to the contrary, at Cea Legal, we believe in the tokenization of everything, meaning that an NFT will represent every digital or physical asset. Before getting there, whether in a few years (likely) or in several years, bearing in mind the main features of an NFT (uniqueness, immutability, transparency, and accessibility), here are a few business purposes of NFTs that just a few years ago were not conceivable:
Coupons and loyalty programs: businesses can sell NFTs to customers, who would use them to reap the rewards once certain thresholds are reached (each NFT would have different elements embedded in the smart contracts established on the blockchain). There are multiple benefits: businesses receive income in advance and have a tool to drive new customers; the latter would get receive some benefits guaranteed by the NFT (for instance, a 10% discount); both parties would no longer have to worry about fake coupons because the authenticity is ensured by the blockchain platform, which is public, verifiable and accessible by anyone;
Digital identity: public bodies can (and will soon) issue IDs as NFTs that encapsulate the document on a blockchain and, therefore, easily demonstrate its authenticity (how officers verify identities). Passports can be forged, IDs as NFTs cannot. Similarly, education institutions can issue digital degree certificates as NFTs, thus simplifying the verification process of educational backgrounds;
Health care: NFTs can be used to store the medical history of each patient digitally, thus reducing the risks of misunderstandings and mistakes (imagine patients that are treated by doctors in different countries and when asked about their previous treatments are clueless. No need to ask, the patient NFT will say everything);
Fundraising: when a business needs fresh capital, NFTs can already offer a few interesting options: equity can be fractionalized and offered in NFTs – together with some unique perk for each NFT – or NFTs can be sold in a crowdfunding campaign that will give some benefits pre-determined by the business to those providing capital;
Charity endeavors: since NFTs proceeds can easily be tracked, a charity NFT campaign is the best way to raise money and ensure that the funds will actually be channeled towards the stated purpose;
Gaming: the exponential growth of the video game industry, which is widely considered a sport (e-sport), is naturally tied to the one of NFTs. Players are incentivized (and therefore attracted to spend more on gaming) by awarding to the winners NFTs, which can later be used on affiliated platforms. More broadly speaking, many businesses are looking into “gamification” as a way to engage their existing customers and attract new ones: for instance, some companies are creating digital monopolies with NFT awards that can be spent in different ways;
Fashion: besides witnessing that luxury brands are now selling digital garment items similarly to digital art, it is very interesting to think how fashion NFTs can be applied to the world of augmented reality. It is not difficult to envision that the same way we want jeans or a sweater, we may want digital cool apparel for our virtual reality characters;
Ticketing: Event tickets are already being (and will exclusively be) being sold as NFTs, thus serving as digital memorabilia and, more importantly, ensuring authenticity and streamlining the revenue stream between artists and organizers, as the smart contracts automatically make distributions based on the instructions received, which are the agreement between the parties.