As non-fungible tokens (NFTs) acquire mainstream popularity, many potential investors worry if they are
going to be a long-term investment. Real-world illustrations and use cases are critical in determining
their worth, long-term viability, and future in the stock market.
NFTs can theoretically be applied to any object. They offer a new way of generating income by digitizing
assets, monetizing intellectual property, and verifying the validity of real assets on the internet.
However, both buyers and sellers should approach these tokens with caution as the market develops.
The truth is, we are in the early stages of NFTs – I like to call it NFT 1.0. It reminds me of when we all first
started our journey with the internet. What was once a painful sound of a dial-up connection has
become a swift click of a button. Today, NFTs appear to bring little, tangible value to the market. The
reason these digital assets have become a hit is due solely to the perceived value that comes with a
unique graphic minted by a bored ape on Opensea.
But what does the future of NFT 2.0 look like? In the next ten to twenty years, lots of changes are
expected to come in the marketplace. Based on the trends I’ve seen, here are some ideas on how
businesses may start leveraging NFTs in the future.
What is an NFT?
In case you’re still wondering what an NFT is (like 90% of the world), let’s do a quick refresher. NFTs, or non-fungible tokens are a digital representation of tangible assets. They are blockchain-based, cryptographic assets with distinct
identification codes and metadata that separate them from each other. In other words, each one is
completely and utterly unique to the next.
The tokens can’t be duplicated, erased, or destroyed thanks to blockchain. NFTs can also be traced back
to their original owners via blockchain, which eliminates the need for third-party verification.
Furthermore, the NFT’s ownership is protected by blockchain, which grants the owner exclusive rights to
execute transactions and transfer the token.
How can businesses use NFTs?
NFTs have harnessed a lot of attention recently and have become a reality in the world of arts and
entertainment. Yet, beyond these use cases in NFT 1.0, they’re also emerging as useful incorporations
for businesses as well. Business owners and managers should consider the following use cases and see if
there is an opportunity to drive the NFT phenomenon further.
Restaurants and Brick and Mortar
NFTs have been progressively gaining traction in the restaurant sector. This is one of the first industries
to leverage digital assets to their advantage. Let’s have a look at this restaurant, Flyfish Club, which is
planned to launch soon in a yet-to-be-announced Manhattan site.
This establishment is gaining popularity before they even open their doors due to their positioning as an
‘exclusive restaurant’ with the help of NFTs. Anyone who wants to eat here is required to have a Flyfish
NFT to gain entry. That’s only to get you in the door. After that, you’re required to pay for whatever else
you might order for dinner.
Although this application of NFTs is novel, many more restaurant brands are anticipated to follow suit.
NFTs could have a broader application, similar to how Flyfish will allow people to own, lease, and sell
their memberships. In essence, this endeavor by the founder of Flyfish is pushing NFTs forward by
matching the intangible, digital asset with a tangible, exclusive membership to his establishment. That’s
Adoption increases the value and usability of a product every time. It’s pointless to have a cell phone if
you’re the only one who has one, but you’ll need a cell phone if billions of people have them and it
becomes the grounds of communication. The same is true as adoption increases with NFTs.
As adoption rates increase, public corporations could very well decide to issue NFTs instead of stocks.
Stock certificates could be replaced with NFTs that are unique to each investor’s purchase. It’s truly a
novel concept, but it’s not out of reach. It would indeed turn the stock exchange on its head, but
companies would still see tremendous value tied to the royalties tied to the NFTs in the market
representing them while investors acquire portions of ownership through the company’s digital assets.
Sports and Live Events
It’s easy to think of how NFTs could also be linked to live events. In essence, tickets very much mirror
the concept and usability of a token. Take, for instance, the Denver Broncos. They could leverage NFTs
as season tickets or even singular tickets to entry to football games. In theory, each NFT would be tied to
a specific, physical seat in the stadium. Rather than purchasing season tickets, the NFT would be used as
such enabling the owner to resell it and the Broncos maintaining royalties for the life of the NFT. That’s
Imagine the use of NFTs in the world of life insurance. Insurance firms could make smart contracts that
assign ownership and control the transferability of NFTs as a core of their product offering. Take the
example of an older individual who just found out they have one year left to live. They don’t have any
family around to act as a beneficiary to their life insurance policy, so they take the policy to a broker to
cash out. That, and all life insurance policies, hold unique characteristics that could be paired with an
NFT. That’s NFT 2.0.
Nike recently purchased a virtual shoe company that makes “NFTs and sneakers for the metaverse”.
Yep, it’s true. The concept of selling tangible retail products matched with the same digital version of the
product is catching wind. It’s not only a way to grow a product line, but it’s also a way to capture an
audience that you may not have otherwise had access to. That’s NFT 2.0.
These ideas are ideas until they manifest into reality. The world is dramatically different than it was five
years ago, it’s our job as business owners to imagine its state five years from now and meet it there.
Businesses are constantly evolving, and my hope is that as markets and industries evolve, NFTs find their
way toward more tangible assets with true benefits that you can experience in the real world. Until
then, I wouldn’t invest in NFTs unless you have a high-risk tolerance and are willing to lose the money
you put in. The greater the risk the greater the reward – it’ll be fun to watch how businesses decide to
incorporate the digital world into their operations, products, and services going forward.
If you’re looking for ways to diversify your portfolio, or simply want to get to the point where you have
money to invest in novel investment opportunities, I’m happy to point you in the right direction. Shoot
me an email or fill out our contact form here and we will happily be an informal sounding board to help
you level up in your financial pursuits.