Only utility-based NFTs will survive in the long run

Some people fail to understand, and rather ridicule, that a JPEG monkey, ape and their mutants can sell for millions of dollars. On the other hand, there are people like me who also don’t understand why a painting by MF Hussain or Raja Ravi Verma is worth millions? The answer to both questions was beautifully articulated by Naval Ravikant in a tweet on April 05, 2021: “The promise of scarcity is a thin thread, only as strong as the social contract with the creator and interwoven with community support“. In other words, the community that supports these abstract art paintings and Ape NFTs has succeeded in creating a social contract, thereby making them scarce and driving up prices.

This phenomenon is even stronger in the case of NFTs compared to traditional art. According to Mark Cuban, these NFTs are programmable contracts that embed the ownership registry with an embedded pointer to the asset’s location. As the crypto winter has set in as of now in the year 2022, people are now shifting to utility-based NFTs.

Utility NFTs use cases beyond simple pixelated art. They provide their owners with privileges, rights and rewards that would otherwise not have been available to them. Because blockchain NFTs add a new level of security to digital transactions while increasing efficiency, many use cases are embracing them. Anyone participating in a transaction can see the NFT’s development from conception to completion in real time and can identify everyone else who participated in that development. It produces a system that is encrypted, easily deployable and virtually impossible to attack.

Industries such as events and ticketing, membership, gaming and metaverse NFTs, supply chain and logistics, domain name ownership, identification, certification and documentation, intellectual property and patents, signature and notarial services in legal documents, voting, real estate and education have already been discontinued or created by utility-based NFTs.

For example, new age ticketing is disrupting the $70 billion event ticketing industry with the use of blockchain and NFTs. With smart contracts and NFTs, it makes the ever-vibrant event industry even more beautiful and exciting for all stakeholders. These dynamic tickets make the tickets cool and collectable as well as giving the buyer the ability to buy and resell them and the promoter the opportunity to get a royalty every time the ticket changes pockets. How does it happen? Imagine that the NFT ticket itself shows a new artist or brand announcement every 24 hours. Furthermore, along with the tickets, reveals NFTs sold. These NFTs are surprises that contain epic moments of the events and are revealed after the event. Imagine owning an Oscars 2022 Reveal NFT where “furious Will Smith punches comedian Chris Rock”. All of this is changing and is likely to become extremely popular in the near future.

Similarly, membership models are rapidly being transformed by NFTs. The traditional club membership has been linked to identity until now, and membership often expires if a member moves. The membership linked to an NFT can be traded or borrowed.

Similarly, real estate is being transformed by NFTs. NFT of Real Estate deed can log all changes automatically, making closing a breeze. Not only that, but it will make the process much more secure – no one will be able to forge papers, because they cannot change the NFT. In the supply chain, NFTs help authenticate products, ensure quality and verify origin. In the food and other perishable industries, it is crucial to know where the goods have been and for how long. This is what NFT can make possible.

NFTs can help with the voting issue as they will give those without physical documents a digital identity that verifies who they are and where they are in the country, which is unlikely but technically quite possible. As NFTs will act as an official record of people who voted and also their votes, this will also help eliminate voter fraud and cheating.

Finally, NFT Sales are predicted to reach $35 billion in 2022, according to Jeffries, and $800 billion in 2024, according to Coingecko. It is determined that tool-based NFTs will surpass pixelated NFTs in the coming years for NFT sales to reach these proportions. The utility asset NFTs are already gaining tremendous traction as a result of technological advantages. State regulations and user flexibility will be future barriers.

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