Week 35 — NFTs For Business
Do you have something unique to sell, like a car with the craziest paint job?
Or maybe you’re not selling anything, maybe you want to create a token to represent an individual’s identity and certificate, granting access rights to a service or verifiable evidence that you have been awarded a certain approval standard.
I remember having a discussion with the Pratu team a couple of weeks back and we were talking about certain customisable properties that we came across with a land developer. I brought up the idea where we could use NFTs to represent the ownership of a unique unit and I was met with laughter from Pamela, who thought I was pulling everyone’s leg.
The truth is that the understanding of NFTs from the outside world is very rudimentary. There is a false perception that NFTs = Digital art. But that’s not the case, NFTs can represent more than just art.
Like an asset that is catered solely to an individual’s intricacies and kinks, so too can your NFTs.
NFTs or Non-Fungible Tokens coupled with decentralised ledgers makes the accountability and the transferability of tokens incredibly accessible with a click of a button. This cannot be understated any further.
The advent of the ERC-721 smart contract introduced by Ethereum boosted the adoption of NFTs into different use cases. One of the first few use cases of the ERC-721 token was through Cryptokitties, where players would collect digital cats on the Ethereum network. These digital cats have a unique “DNA” which is stored on the ledger.
The ERC-721 token allows for more detailed information to be tagged onto the token. Additional information such as the data on the asset and ownership makes the token unique or special.
The information would then be able to add to the provenance of the asset, adding value and ensuring easy verification.
The ERC-20 token has way less flexibility compared to the ERC-721 token and therefore cannot support the same types of transactions. ERC-20 tokens are mainly used for fungible assets like money, rewards points and vouchers.
It is cool to know about NFTs, but as entrepreneurs, how can NFTs be best implemented into businesses? Here are some best ways that NFTs can be used!
Use Case #1 — In-Game Items
Whenever you play a game, each item that you dig up or buy is unique! It is serialised and it’s ownership can be tracked.
The best way to implement such an ability is through games! For example, I’ve been playing this crypto-game called Alien Worlds where you’re a miner mining Trilium (native token) in 6 different worlds which can then be traded in exchanges. Surrounding that main objective are the NFTs in the game, so as a miner, I have the potential to mine equipment that are represented in the form of NFTs and trade NFTs between players. You can even own certain lands in the different worlds and earn a cut from miners mining on your land.
So, these weapons, equipment and lands are unique in nature and are best represented through NFTs. Alien Worlds uses the concept of NFTs very heavily to represent digital assets.
Use Case #2 — Physical Asset Tokens
Just like in Alien Worlds where digital assets are represented by NFTs, so too can physical assets!
NFTs can be tied to a physical object like artwork, real estate and even securities. It can help facilitate part of the tokenisation of a building or a fund. It is possible to represent these ownership of these assets under the regular ERC-20 token standard, but if there are certain unique specifications to be accounted for, then using the ERC-721 token would be more appropriate.
The one caveat that I would take note of would be the issues with legal compliance. Some countries do not currently recognise the ownership representing tokens, while others require the clearance from legacy custodians to hold the tokens.
This significantly raises the barrier against adopting cryptographic tokens in general, let alone NFTs.
Use Case #3 — Identity Tokens and Certificates
If you think about it, every individual human being is in fact non-fungible. It’s a funny way to think about homo sapiens, but it’s true!
If I were to borrow your son and return with another boy, you would probably bash my head in and accuse me of kidnapping and identity theft.
The same concept can be applied in companies, where NFTs can be used to identify individual employees to manage what kind of access they can be granted and the level of clearance that they possess.
You can even do that with certificates! In Singapore, we’ve launched an initiative called Opencerts whereby our national examination certificates, diplomas and degrees are released as NFTs and are allowed for easy access through our government issued social security platform.
For any Singaporean interested in viewing a digitised version of your PSLE or O-Level certificate, go to Skillsfuture > Skills Passport. You should then be able to view your certificate.
As an employer or HR specialist, Opencerts presents an easy way to verify a candidate’s graduation claims. A recent survey records that 27% of candidates lie in their resume, which can be further mitigated with Opencerts where it helps to verify the legitimacy of a graduation certificate. Just upload the Opencerts file on the website and you can verify the claim in seconds!
Use Case #4 — Access Tokens
NFTs can also be used to manage access rights tied to a special person. Just like in the case of a concert, where concert organisers can issue tokens to grant backstage passes with free alcohol and a special gift pack, such customisable privileges can be represented by NFTs where front desk employees can verify by scanning the QR code on the concert-goer’s phone.
Use Case #5 — Transfer Tokens
In the case of a person passing away, the will usually requires the assets to be split amongst the bequeathed.
Because some of the assets are difficult to liquidate, the transfer of assets often times will take up time and resources to facilitate. NFTs can be placed to represent the ownership to a certain fraction of the assets and reduce the friction of such a process
NFTs and the future
NFTs will have a bigger role to play in the future, it will not just stop at digital art which is what it has been popularised by. With governments seriously considering e-currencies, it will push the adoption of NFTs even higher in the future.
With that said, businesses can use NFTs to position themselves for the future, but the reality is that this whole topic of tokens is still extremely nascent and there are many problems that need to be solved before we can see the proliferation of more use cases.
Next week, I’ll be bring you new content about the DeFi (Decentralised Finance) and the future of money!