by: Callum Carlstrom
Up until now, the NFT spotlight has been fixed on the world of digital art. You’ve probably come across NFT projects such as CryptoPunks and Bored Ape Yacht Club. These projects gained massive popularity during the boom of NFTs and rose to incredibly high prices at record speeds. In 2021, trading volume of NFTs surpassed $17 billion with the majority of these trades being digital art. The most expensive NFT ever sold was a digital art piece called The Merge that sold for more than $90 million in 2021. Digital art is a fun and creative way to introduce the use case of NFTs to the world. But the arts and creative field are just the tip of the iceberg.
To understand the true potential of NFTs, it’s important that we distinguish between the artistic use case and the wealth of other applications this technology offers. In this article, we’ll explore a collection of potential use cases of NFTs that go well beyond the world of digital art.
In the future, NFTs could underpin everything we do. That may seem like a bold statement, but when you dive deeper into this technology you quickly realize its groundbreaking potential in all areas of life. Let’s explore some use cases that go beyond digital art.
Today’s educational system has become transactional and unrepresentative. Students attend a range of classes during their academic years and come out the other end with a diploma. Their diploma doesn’t always represent the skills and lessons they’ve learned during their academic time. NFTs could significantly enrich academics and make the experience more dynamic for students and teachers alike.
Through NFTs, we could track students' lifelong learning, take into account the educational impact of extracurricular activities, and issue verifiable rewards for extraordinary performance in the classroom. In fact, this is already being done at Pepperdine University. Professor Beau Bannan has incorporated NFT rewards for high performing students of his personal finance class. In return, his students minted an NFT for him for teaching the course. Unlike the current use case of NFTs, which is primarily investing and trading, these educational NFT’s are not intended for reselling. The goal here is to create verifiable proof of work (not to be confused with a Proof-of-Work consensus mechanism) which the students can leverage for future career opportunities and to demonstrate their academic experience. This is an incredible first step in reflecting students' true learnings from their academic degree and could have a profound impact on their professional career. Moreover, it would resolve any issues with verification and degree fraud. This could disrupt the very definition of getting a university degree as we know it.
NFTs will allow companies and brands to create communities that are incentivized by rewards. For example, a brand could create an interactive quest for their Discord community. The successful participants of the quest will be issued a rare brand NFT that’s redeemable for an exclusive product or service while also serving as rare memorabilia. The tasks of the quest involve promoting or engaging with the company in a beneficial way. This allows companies to drive more traffic to their website, generate press hype, and onboard new customers who are interested in participating in the communities.
NFTs enable customers to become more involved in marketing campaigns and brands will be incentivized to redistribute portions of their marketing budgets to the customer instead of handing it all over to the advertising platforms. This could become the web3 equivalent of Volvo’s SuperBowl hijack, also known as “The Greatest Interception Ever”.
Brands could also use NFTs to expand the impact of their global partnerships by leveraging airdrops. For example, OneWorld Alliance, the global airline alliance, could airdrop a “Globetrotter” NFT to customers who purchased from their partner airlines, such as American Airlines and British Airways, in the past 6 months. Users who got the airdrop could redeem exclusive lounge access or cabin upgrades for their NFT on their next flight. This is the next iteration of frequent flyer programs and could have a profound impact on customer loyalty. The ideas for how brands can use NFTs in marketing are endless and creativity is the only limitation (as cliché as that sounds!).
The potential of NFTs for freelancers is extraordinary. Today, freelancers aren’t necessarily aligned with their clients. They complete a few one-off jobs against a contract and get paid. The outcome of their work has very little bearing on them financially.
Freelancers in web3, particularly content creators, could use a smart contract to sell their work as an NFT. Each NFT would come with terms that determine an ongoing royalty fee as a percentage of profits directly derived from the work they delivered. For example, a designer creates a stunning LinkedIn ad and sells it as an NFT with a 10% royalty fee on profits. If the ad generates $1000 worth of business, the smart contract would automatically send the designer $100 in royalties as per the terms.
This redistribution of value means that freelancer incentives are much more aligned with their clients since they could be receiving perpetual income from a one-off project. Businesses would consequently get higher quality content and could potentially negotiate for a lower up front cost in exchange for a higher share of future profits generated from the work. Imagine what this could do for small businesses with constrained budgets. They could potentially hire an army of freelancers to create content for them without having to front the cost and without worrying about a decrease in the quality of work. This could have a tremendous impact on the globally remote workforce.
As institutional money begins flowing into web3, NFTs are becoming an increasingly liquid asset in the eyes of lenders. There are already decentralized protocols that allow you to put up your NFT as collateral such as NFTfi. Thanks to smart contracts, there is no disputing whether the terms of the loan were met or not. If the borrower repays the loan, the smart contract will send the NFT back to the borrower's wallet. If the borrower defaults, the NFT will be transferred to the lender's wallet.
In the future, this feature could extend to traditional institutions as well. For example, if you’ve put all your savings into a CryptoPunk NFT but you need to borrow money to launch your new business venture, you’d be able to go to your local Wells Fargo branch and apply for a loan using your NFT as collateral. Not only is this exciting for web3 users, but it also means that NFTs would have become a broadly accepted asset in global markets.
NFTs can represent who you are as a citizen in the web3 world and have an impact on your reputation. Based on your behavior across web3 communities, NFTs can be issued as a “proof” of that behavior.
Let’s look at an example. Pool Together is a blockchain protocol that acts as a “no-loss” lottery. In short, you deposit your crypto into a pool of tokens and the protocol awards cash prizes to a selection of winners. Users who don’t win can withdraw their funds at any time. The Pool Together protocol has recently become the defendant in a class action lawsuit. You can read more about the case here.
In response, Pool Together called upon the DeFi community for support. Users can mint an NFT from Pool Together at 3 different tiers and the proceeds will fund their legal defense. In return, users get a ‘Pooly’ which is a JPG image of a bird representing Pool Together. Users who mint a Pooly will now be able to demonstrate to the web3 and DeFi community that they are good citizens who support honest and positive DeFi protocols. Their new NFT has a reputational impact in the digital world and tells other users more about them.
To really embrace the future potential of NFTs, it’s important that we broaden our perspective and think of them as much more than an asset class. NFTs will go far beyond economic transactions and could play an increasingly large role in our lives as everyday citizens, both in the real world and in web3.
What is your take on the future of NFTs? Will increased adoption of NFTs have a positive or negative impact on the world? What other use cases do you see for NFTs? Let us know
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