NFTs seem to be the new hot craze in crypto but why are they so hot? Do people really want your tweets or random shape and picture artwork? The answer to that is maybe as there are a few rare Eskimo’s that buy ice, but what really makes NFTs value is the potential to be used for things such as intellectual property (IP) and tokenization of major items like real estate, companies, new inventions, etc.
The future key to NFTs is uniqueness and how to monetize it. This is especially great for IP and other unique large items. Some interesting concepts could include NFT based licensing for IPs buy providing NFT slices for people to utlize IP data through a validation access key with out it being stolen. Another example could be tokenized real estate tied to a unique physical property with NFT holders buying unique access rights to a property or even being able to buy designer items and know if they are real through unique identifiers. There are many more you could think of if you dig into it. These concepts show how value could be truly extracted from NFTs.
In the current world of real objects vs digital objects many of these industries such as real estate, art collecting, IP, etc are rife with concerns on fraud, theft, duplication etc. So you may ask are NFTs subject to the same and if so are they worth it? Some would say no some would say yes in the current environment and there are cases of recent concern for the later. So how do we solve this and what protocols come into play. The answer in real objects is security concepts, curated provenance to create a official certificate of authenticity, and expert reviewers. In essence something like this pic should come with the NFT to show what it represents and what it comes with a COA or a Deed like an painting or a house.
This bring up what would it look like to have an authenticated NFT market place and how would the data be validated? This is where utility tokens come into play specifically #LINK (chain-link) and #GRT (graph Protocol). LINK provides a way to valid the information being put on the chain. #GRT provides a way to pull the data associated with the NFT off the chain. This works in a fashion of a buyer using GRT to find the NFT they want. Indexers on the Graph can tag the NFT and validation elements so the system can basically create an NFT package detailing the token, validation documents, right associated and any authentication or insurance issued with the token. Curators would collect these elements and a package would be delivered to buyers running a search utilizing the network through one of the many chains it operates across. Graph is perfect for gathering a file or provenance so a certificate of authenticity and any insurance or rights documents could be issued through a dApp with the associated NFT at purchase for security and piece of mind for the buyer.
So what aren’t NFTs just digital art you may say how does this affect the common people. I will provide some examples. Imaging being able to close on a large real estate transaction in less the 3 days. Current real estate transactions take around 30 days but if a seller tokenizes a property and packages the data a buyers could access everything get a loan through a crypto such as #AAVE and it could be done almost instantly with little to no added sales or closing cost which offers a great advantage over the current real world process where closing cost almost 5% to 10% added to the cost for the buyer due to all the data validation challenges the can be solved through packaging as an NFT and running through a curated market place for a sale. This is a real estate example but you could apply the same theory to art, cars, IP or other large ticket sale item. For these industries this system solves many of the challenges associated with lost revenue and unfair practices associated do to more solid data structuring provided by the blockchain; efficiency of transactions through curation and packaging through proper indexing; and better security thorough hard validation associated with the unique structure of the NFT package which could be provided through NuCypher which i will discuss in a separate article.
Please note this article is not and should not be considered investment advice in any way.
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