Five ways NFTs can be used beyond art

NFTs have pro­pelled them­selves into the main­stream. How­ev­er, while most of us are famil­iar with art­work like Bored Apes, the new tech­nol­o­gy has much big­ger impli­ca­tions.  

NFTs are entries on blockchain, a dis­trib­uted data­base of records that assigns val­ue to items. The mar­ket for NFTs – or non-fun­gi­ble tokens — has essen­tial­ly come out of nowhere. The vol­ume of NFT sales surged from $82m in 2020 to $17.6bn in 2021, accord­ing to L’Atelier BNP Paribas, a fore­sight con­sul­tan­cy. The num­ber of peo­ple buy­ing NFTs rose over the same peri­od from 75,000 to 2.3 mil­lion. 

Nadya Ivano­va is chief oper­at­ing offi­cer and fore­sight lead at L’Atelier BNP Paribas. She says 2021 was “a break­through year for NFTs in terms of the vol­ume and val­ue of trans­ac­tions, the inter­est of main­stream brands, the emer­gence of new dig­i­tal com­mu­ni­ties, and the tens of bil­lions of dol­lars of fund­ing that went into projects”. 

But if NFTs entered the cul­tur­al con­ver­sa­tion last year through art projects, they now seem poised to grow beyond their artis­tic roots. The real­i­ty is NFTs can be applied in any num­ber of areas and used to rep­re­sent any­thing – not just art­work. Here are five new use cas­es for the tech­nol­o­gy.

1. Building communities

NFTs are part of the Web3 con­cept, a new vision for the future of the inter­net built on the idea of com­mu­ni­ty. Web3 envi­sions a decen­tralised inter­net, where no one per­son or com­pa­ny holds undue pow­er over the oth­ers. It’s meant to be egal­i­tar­i­an and com­mu­ni­ty-mind­ed. Because NFTs are built on the blockchain that helps decen­tralise the inter­net, they sig­ni­fy that sense of com­mu­ni­ty.

“The most impor­tant poten­tial future use of NFTs is to use it as a com­mu­ni­ty token,” says Andres Guadamuz, a read­er in intel­lec­tu­al prop­er­ty law at the Uni­ver­si­ty of Sus­sex who has stud­ied NFTs. “It acts as an iden­ti­fi­ca­tion point for com­mu­ni­ties.” 

There are already some exam­ples of this con­cept. While they’re close­ly tied to the NFT art sec­tor, they could become more wide­spread. Guadamuz points to the Bored Ape Yacht Club, per­haps the most famous NFT art col­lec­tion of all, which boasts celebri­ty col­lec­tors includ­ing Jim­my Fal­lon and Paris Hilton. 

Own­ers pos­sess the rights to the art­work, yes, but they real­ly own the asso­ci­at­ed token. This has a deep­er mean­ing. “It’s a token that serves as an invi­ta­tion to enter spaces that oth­er­wise would be closed,” Guadamuz says. “I find that aspect – for com­mu­ni­ty man­age­ment and iden­ti­fi­ca­tion man­age­ment – has a lot of poten­tial.”

2. Asset management 

NFTs could be used to evi­dence own­er­ship of an item, an idea that has “been talked about quite a lot,” Guadamuz says. This could help the tech­nol­o­gy gain even more main­stream accep­tance in the com­ing years. 

So-called asset man­age­ment is already being used in video games. Play­ers gain an NFT asso­ci­at­ed with an item that they pur­chase in one game, which they can port over to anoth­er ver­sion of the game or a sequel. Such tech­nol­o­gy could soon be the norm in the wider world. 

“It could be used as some form of evi­dence of prop­er­ty or dig­i­tal assets in the meta­verse, if it actu­al­ly takes off,” says Guadamuz. If the meta­verse is to deliv­er on the aspi­ra­tions of pro­po­nents like Facebook’s Mark Zucker­berg, this could be key. A bil­lion of us could end up in the meta­verse by the end of the decade, in Zuckerberg’s vision of the future: know­ing who owns what in a dig­i­tal, vir­tu­al real­i­ty envi­ron­ment will be more impor­tant than ever.

3. Trying before buying

NFTs could be vital for asset man­age­ment in the meta­verse. But what about those tricky moments before you decide to buy? 

“There is huge poten­tial for NFTs in the fash­ion and beau­ty indus­try, espe­cial­ly when we con­sid­er that every­day con­sumers will soon pos­sess dig­i­tal per­sonas and iden­ti­ties,” says Alice Chang, CEO and founder of fash­ion tech firm Per­fect Corp. “Con­sumers will lever­age these dig­i­tal per­sonas to explore and expe­ri­ence the meta­verse. They will want these dig­i­tal avatars to accu­rate­ly rep­re­sent their style and per­son­al­i­ty.” Beau­ty and fash­ion NFTs will play a role here, she says, along with aug­ment­ed real­i­ty (AR) tech­nol­o­gy. 

The oppor­tu­ni­ty to try before you buy items such as make-up or cloth­ing will be a boon for NFTs. The tech­nol­o­gy could enable cus­tomers to vir­tu­al­ly try on items they could then pur­chase in the real world, along­side a dig­i­tal copy to wear in the meta­verse. Both would be linked by an NFT, which would help con­nect the online and offline ver­sions. 

“This inno­v­a­tive solu­tion intro­duces a new dimen­sion of inter­ac­tiv­i­ty and engage­ment in the NFT space, by allow­ing con­sumers to not only buy the NFT, but also try on and expe­ri­ence the prod­uct in an excit­ing new way,” says Chang.

4. Ticketing

Scalpers and the sec­ondary mar­ket are a major headache for the events and enter­tain­ment indus­try, tak­ing a sig­nif­i­cant chunk of the poten­tial prof­its for a live event. To address the prob­lem, con­cert organ­is­ers have turned to tech­nol­o­gy. For exam­ple, smart­phone apps and tick­et­ing are asso­ci­at­ed with indi­vid­u­als, ham­per­ing the abil­i­ty for tick­ets to be resold. 

How­ev­er, even this tech­nol­o­gy is fal­li­ble. NFTs could empow­er the indus­try to final­ly beat the touts.

“It’s plain to see how fraud could be negat­ed: if all orig­i­nal tick­ets were to be record­ed on a blockchain, that would real­ly min­imise the num­ber of fake tick­ets on the mar­ket,” says Luke Jack­son, senior asso­ciate at law firm Walk­er Mor­ris, who mon­i­tors tech­nol­o­gy and dig­i­tal inno­va­tion. “In turn, less reliance would be placed on third-par­ty inter­me­di­aries to facil­i­tate resales of tick­ets.” 

It’s pos­si­ble to com­bine some of the tout-bust­ing ben­e­fits with the oth­er strengths of NFTs, like the abil­i­ty to build a com­mu­ni­ty. “There are excit­ing pos­si­bil­i­ties for the artists or sports clubs host­ing the events to engage with their fans,” says Jack­son. “If every show has a cor­re­spond­ing ‘tick­et stub NFT’, the event hold­ers can reward those that attend reg­u­lar­ly or have sup­port­ed them in the ear­ly days or through dif­fi­cult times.”

5. Music

“Music has always been utilised and adopt­ed by tech and new hard­ware,” says Miles Leonard, co-founder of Token­Traxx, a Web3 start­up. “Music is once again at the heart of the explo­sion of Web3 and NFTs.” 

In the past, exclu­sive album tracks were includ­ed for fan clubs, or money-can’t‑buy mer­chan­dise. NFTs can be used in a sim­i­lar way. For exam­ple, fans who buy them could gain access to bands or artists back­stage, drinks in a DJ booth, or a per­son­al writ­ing camp with a song­writer. This ben­e­fits the fans, but also the artists. “Where NFTs have real­ly shift­ed the par­a­digm in music is with emerg­ing artists who are not receiv­ing a work­able income through their stream­ing plat­forms, despite the thou­sands or mil­lions of streams they receive,” says Leonard. 

This would help address the long­stand­ing chal­lenge of mak­ing mon­ey from music. “Through their NFT drops, artists are now tak­ing 80% of the val­ue in their offer­ing, not 10%,” Leonard says.