Virtually anything can be encoded these days – and many companies have already started converting physical items into non-perishable tokens.
Perhaps one of the biggest and most compelling use cases to emerge so far is related to property. If you’ve ever bought a place, you’ll know how difficult and time-consuming this process can be—with reams upon reams of paperwork and outdated systems.
NFTs are being promoted as a way to modernize how things are done, with ownership being duly recorded on the blockchain. This can speed things up, reduce disputes, and help reduce fraud, too.
This also opens the door to home purchases made with cryptocurrency rather than fiat currency — and a number of companies, particularly in Miami, have emerged in recent months to make this happen.
Could this help modernize the lucrative world of collectibles?
Yes – potentially increasing the level of safety in the process.
Sports memorabilia continues to be very popular – Pokemon cards have also enjoyed something of a renaissance in recent years.
NFTs can be used to create digital representations of items in the real world. This can help crack down on counterfeiting and create a crystal clear record of ownership.
Some cryptocurrency companies have been set up that even offer custody services for premium collectibles – ensuring that they are kept safe and in good condition. While this may seem counterintuitive at first, this can be especially compelling if you consider memorabilia as an investment opportunity.
It can also streamline the auction process in secondary markets.
Are there any big brands involved in physical NFTs?
Yes – and this is despite the bear market, which saw volumes cool. More big companies will inevitably join in the future.
Nike has dominated the rankings when it comes to mainstream brands generating revenue from NFTs. Recent research shows that the sportswear giant generated a whopping $185 million in revenue after venturing into the world of digital sneakers — in part thanks to the shrewd acquisition of Web3 studio RTFKT.
But Nike’s efforts aren’t just about ensuring that Metaverse avatars look good in evolving virtual threads. He’s also been dabbling in NFT kits that pair digital designs with a real version of the sneakers they buy. This could spell a new wave for the fashion industry – and the innovation doesn’t stop there.
Another particularly desirable souvenir for music lovers is their ticket stubs after they’ve attended a concert – a permanent memory they can stick on their wall that says “I was there.” Ticketmaster is now in the business of creating NFT tickets that can serve as commemorations of memorable gigs, immortalized forever on the blockchain. Other forms of technology, known as Proof of Presence Protocols (POAPs), can take this concept even further.
What safeguards are in place to prevent fraud?
It is crucial to ensure that the authenticity, origin, condition and title of the asset can be verified – giving buyers confidence in what they are buying.
Standards across the NFT industry can help here. Whenever NFT-enabled physical items go into a vault, it’s crucial to be crystal clear about who will have the right to take them out again. External auditors can also be tasked with evaluating the background behind a transaction, and information about an item’s condition can be incorporated into metadata.
More than anything else, it is crucial that NFT platforms earn the reputation of being trustworthy and credible. Not only is word of mouth a powerful marketing tool, but it can also reassure consumers that they will be in safe hands if they purchase a kit through one of these platforms.
What happens if something goes wrong?
Disputes usually end up in the courts – but this can have mixed success.
It’s easy to forget that NFT technologies remain a nascent technology, meaning that legal systems still lack an understanding of how they work. This may mean that the nuances surrounding digital assets may be overlooked during civil proceedings…but those in the lawsuit still have to deal with huge legal bills.
Mattereum — a new protocol that provides transferable evidence of digital ownership — aims to do things differently. It offers its clients the legal technical ability to create trusted NFTs for their physical assets, and legally binding dispute resolution mechanisms that can be enforced in more than 160 jurisdictions around the world. Such smart contracts establish a link between ownership of the NFT and ownership of a physical asset, be it six bottles of red wine, a luxury car, or a rare gadget.
While this approach may seem more time consuming at first, it can have advantages. Providing valid documents of authenticity can greatly increase the value of an asset – and increase the likelihood of a sale. It also creates