In my previous article, I explained what NFTs are and potential use cases, especially for art. In this article, we will delve into other use cases.
Many games nowadays offer in-games items that can be bought or acquired by purchasing loot boxes. Steam has Community Market where in-game items can be bought and sold. But what if all of those game items were NFTs?
With an NFT, when you’re done with a game, you could sell all of your items to other players and invest in another game or earn money by playing your favourite game. As discussed in the previous article, game developers could even earn royalties for every in-game item being re-sold. This creates a more mutually beneficial business model for both players and developers from the secondary NFT market.
Even when the game is no longer maintained, all of your items belong to you and can serve as a memory of your time playing a game. Maybe if the game becomes an old-time classic, some people could showcase that they still have rare items from the game in few years.
Social Tokens are a broad category of tokens issued by individuals and communities. Social tokens enable creators and communities to have more ownership in what they are building, or they can act as a currency to buy merchandise or act as an entry to the closed Discord server.
One prominent example of a social token is $RAC , a community token by the Grammy award winning recording artist RAC , issued through Zora. Token holders get access to a private Discord group and receive early access to merch drops with more perks to be added in the future. The token was retroactively distributed to his supporters, including Bandcamp and Patreon supporters, people who had bought merch, and will eventually be distributed to all Twitch supporters. This allows creators to directly interact with and reward their early supporters.
The interesting part about social tokens is that it can represent anything the creators or community desires it to represent. It’s still a fresh topic that is still evolving, and I think it could gather more traction further down the line.
Companies selling physical products can make use of the unique, transparent, and immutable registry on a blockchain that NFTs are offering to combat counterfeit products or to secure and timestamp the authenticity of their products.
Several big companies have already explored this possibility, such as NIKE partnering with Ethereum, and New Balance with Cardano, to offer unique products that can be tracked and traced, while also being authenticated with the use of NFTs.
NFT acting as an authentication of your physical products could also act as proof of ownership. When buying a new pair of shoes or new clothes, a newly minted NFT could register you as a rightful new owner of the items you just bought.
Same thing with art. When acquiring a new piece of 🖼 you could verify its authenticity by just checking an NFT.
When Uniswap V3 launched, it changed it’s LP tokens from ERC20 to ERC721. When you add liquidity to a pool, you are awarded a freshly minted NFT representing your positions.
Another potential use case is NFT-backed loans. Let’s imagine you are the proud owner of the rare Crypto Kitty or CryptoPunk NFT. They’re still going for thousands of dollars. Holding such NFT, you could potentially put it up as collateral, and you can access a loan with the same rule set as traditional loans in DeFi.
We’re still exploring what’s possible and what makes sense as an NFT. Many new use cases can be seen in coming years that are natural to the system.
But as NFTs become more popular and more intertwined with other protocols, the complexity of such platforms increases, thus leading to higher risks and monetary attacks. It’s great to see new usages of Blockchain in general and how it could be utilized, but let’s not forget, we’re still early in all of this, and we should be careful when investing money.
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