NFT stands for Non-Fungible Token. At its core, non-fungibility implies structural uniqueness. It indicates something irreplaceable. You can borrow a $500 bill and repay your debt with five $100 bills. Although the denomination of the bills is different— as well as the number—the value of what you’ve borrowed and what you have paid back essentially remains the same.
However, if you have borrowed Van Gogh’s The Starry Night from a gallery, you cannot return The Red Vineyard simply because they are both paintings by the same artist. The same is true for NFTs as well. You cannot replace one with another. Each of them is unique.
Exploding would be the more appropriate word when it comes to describing the current momentum of the NFT market. The first two quarters of 2021 saw NFTs register quarterly sales figures of $1.2 billion and $1.3 billion, respectively.
NFT sales volume per Q3 2021
But, by the time we reached the third quarter, NFTs had learned to leverage the traction they had been getting in the media. The sales volume surged to $10.7 billion, more than eight times the volume of the previous quarter. OpenSea, one of the largest NFT marketplaces, registered a sales volume of $3.4 billion alone.
NFT buyers generally use cryptocurrency to buy NFTs. Furthermore, the gain in crypto prices and growth in its popularity played a crucial role in the NFT market’s surge. But none of this would have been possible if there were not a genuine demand for NFTs. The exponential growth in the NFT market has occurred because buyers have understood where its value lies.
The real estate market has a direct bearing on our life. People need houses to live in. They invest their lifelong savings to buy their ideal homes. Buying real estate is also an essential means of building assets whose value appreciates with time at a rate above the average. According to the latest available numbers, the size of the managed real estate market was $10.5 trillion in 2020, 1.6 times bigger than in 2010.
Purchasing real estate involves going through multiple intermediaries. There are real estate brokers, financing agencies, as well as their agents, notaries, solicitors, etc. Steering through such a crowded market, which ideally should have been a transaction between the seller and the buyer, makes real estate purchases highly expensive. The process often lacks transparency as well.
NFTs—that leverage blockchain technology and are known for decentralization and data integrity— offer a solution that enhances efficiency and brings down the cost in real estate dealings. Each home is unique. Not just in its location but also in its owner history and rights.
Such uniqueness makes real estate properties an ideal candidate for tokenization. The use of blockchain and its smart contracts help remove all the intermediaries involved in the process. Blockchain keeps all relevant records immutable and stored indefinitely. NFTs also help in fractional ownership, increasing the liquidity potential of the asset.
Collecting merchandise related to your favorite entities, such as the sports team you support or the TV series characters you adore, has always been a preferred way of associating with a brand or organization. These are ways that help institutions make their brand more accessible to their audience. NFTs have empowered this field of collectibles by adding trust, credibility, and verifiable authenticity to the uniqueness of the items.
One of the most glorious examples of NFTs in the field of merchandise and collectibles has been the NBA Top Shot. In the past, it was trading cards. But the NBA leveraged NFTs to make it more unique and enticing to fans. They tokenized video moments of their star players.
One such NFT video highlight of LeBron James won $200,000.
It proved inticing to a generation of younger people who are digital natives and believe in peer-to-peer trades.
Entertainment has been an integral part of people’s lives since the very beginning of humankind. Entertainment brings us joy and helps shape our perception of ourselves and our community. However, the world of entertainment has always been plagued with challenges that made it inaccessible to a large group of people.
For instance, in the world of arts and literature, duplicates or plagiarised copies have always been a source of concern for buyers. With blockchain’s immutable ledger technology that keeps NFTs beyond the reach of tampering or replication efforts, it is hassle-free to preserve and prove the scarcity and ownership of possession. For artists, it has been a blessing. NFTs protect them from creative theft and monetize their art in the exact way they want.
Musicians have benefitted in the same way. They can now copyright their music through immutable NFTs. This helps them receive royalties every time their music plays anywhere in the world. However, the maximum dividend of NFTs as a technology has been reaped by the massive global gaming community.
There are 2.7 billion online users in the gaming industry. These gaming experiences frequently encourage people to unlock special accessories for their characters or purchase in-game items. These sales and purchases build the economic backbone of the industry.
But, it is often difficult for gamers to check the history, authenticity, and origin of their purchases. Turning them into NFTs, making them scarce and immutable, solves this challenge for the community in a big way.
In the coming days, these properties of NFTs will surely make them more popular and frequently used in our everyday life. Who is not looking for intermediary-free purchases of original, authentic, and often scarce materials?