Let’s be honest, 95% of the world population currently has no idea what NFTs (Non-Fungible Tokens) are, what they do, or whether they should exist at all. We hear on the news that a JPEG sold for $500,000 and we start asking ourselves, why? Why would someone pay that?!
In this article, we will tackle some basic questions and outline some realworld scenarios to help you, the reader to better grasp the potential of NFTs and blockchain as a whole as the World moves towards a more digitized future.
What is an NFT?
An NFT is a digital asset that can be bought and sold online, you might be surprised to learn they have been around since 2014. It is not the same as a crypto-currency, which is a digital currency which can be used to buy an NFT. An NFT can also represent a real-world object such as Art, Music, In-Game items and much more.
As a digital asset, an NFT introduces a new concept of ownership through the blockchain, the simplest explanation I can give is a quote from The Highlander - ‘there can be only one’. The uniqueness that extends to the purchase is what makes NFTs very interesting and enticing to investors, who see it as an exclusive ownership of an asset in the digital space (digital signatures make it impossible for an NFT to be replicated).
How does it work?
NFTs exist on a blockchain, which is basically an open public ledger that records all transactions open for viewing to all. This part makes it even more interesting to Investors as everyone can see everything - decentralization at its best!
What would a real-world application be?
There are numerous real-world applications ranging from investment into a project with a DAO (Decentralized Autonomous Organization), to ownership of real-world Land. Did you just say real-world Land? Yes, I did.
Think of it this way, you've identified a piece of land or property that you are interested in purchasing, but there are a number of forms to be filled, offices to be visited etc. If the same was under a Government-run NFT, then you could simply visit the site, see what you like and purchase online. Within minutes, the blockchain would do the transfer, charge you the fees applicable and digitally transfer the property into your name.
But, isn't there a lot of fraud and theft in the NFT space?!
Yes, this is a very new space and currently un-regulated so you must do your own research, due-diligence is the utmost requirement before you go into NFTs. It is however becoming very evident that NFTs and crypto as a whole is here to stay as the benefits keep presenting themselves day by day.
Lastly, what about insurance and NFTs? What do you see happening there?
Yes! Again, visualize an insurance broker or broking network with an NFT site, with each NFT representing a motor vehicle insurance policy with basic third-party liabilities or a travel insurance stamp applicable to a respective Country. You have now given a client the option of purchasing third-party motor insurance or travel insurances for multiple countries through a single site, verified through blockchain – Not to mention that once utilized, the Artwork still remains with them as a piece of online memorabilia.
All in all, there are undoubtedly more questions than answers currently in the NFT space but one thing is certain, it is not going away anytime soon.