"The future of NFTs" A visual exploration of the REAL use cases of NFTs... 👇 🧵

"The future of NFTs" A visual exploration of the REAL use cases of NFTs... 👇 🧵

This thread took me weeks to research, illustrate and write – if you end up enjoying it, please consider liking & retweeting the first post & following me @shivsakhuja. You can also find this thread as a blog post on @0x_illuminati's website.

The real use cases of NFTs are certainly limited right now, but there's a lot of untapped potential. It's not uncommon for new technologies to go through hype cycles before their true use cases materialize. (s/o to @packym & @notboringco)

Shiv@shivsakhuja · Jul 25, 2022

Have you heard of the Gartner Hype Cycle? It suggests that disruptive technologies go through 5 key phases... 👇 🧵

We've already seen 1-2 of these hype cycles for NFTs.

Shiv@shivsakhuja · Jul 25, 2022

In the speculative NFT bubble of 2021, @beeple sold a collage of his artwork called "Everydays: the First 5000 Days" for $69 MILLION. Similarly, @nbatopshot sold hundreds of millions of $ of video-collectible moments. This was probably the peak of inflated expectations.

Most people think that's all NFTs are - a speculative bubble with degens and rich people buying "worthless" JPEGs

You might also have seen NFT profile pictures on Twitter For example: my profile picture is an NFT I minted using @skogard's factoria app, which helps separate my account from fake accounts.

Naval@naval · Sep 3, 2021

NFT avatars are the new blue checkmarks.

But this is just the beginning. NFTs are a way to represent proof-of-ownership. It's easy (though perhaps not as useful) to prove ownership of digital assets than physical assets. This is why artwork and pfps are the most obvious first use cases.

But they can be useful for a lot more. NFTs can be used to represent anything that is: • Unique • Has an owner • Requires or benefits from a digital proof of ownership.

Example: Domains & Usernames. @unstoppableweb, @ensdomains & @rarible let you buy NFT domains.

One of the big benefits of NFT domains is that they are transferrable and tradeable. Domains on Godaddy and other web2 providers are not easy to transfer or sell. In many cases, you're just leasing the domain instead of buying them.

Similarly, concert tickets and other event passes are also well suited to be represented by NFTs. There's a finite number of them, and access to the event requires proof. NFTs can eliminate the problem of forgery and make it easy to verify authenticity and ownership.

NFT tickets are also tradeable on secondary markets, which unlocks a few things: 1. Standardized marketplaces with buyer & seller protection. Currently, tickets are traded on inefficient markets like FB & craigslist, where buyers don't get any guarantees. 2. Free market pricing

3. Royalties for the original creator (more on this below) 4. Historical ownership data of tickets means performers can airdrop future passes, discounts, giveaways, etc to fans. 5. NFT passes can also serve as a badge to showcase your fandom.

The online ticketing market is estimated to be worth $30B+... and it's growing fast. A few projects I've seen working on NFT-based ticketing: • @GetProtocol • @SeatlabNFT • @YellowHeartNFT • @GUTStickets • @WicketEvents

In-game assets benefit from NFTs for many of the same reasons. Imagine that someone spent 2 years of their life accumulating a rare in-game collectible sword. That collectible clearly has value for gamers. That means it can be traded for $ or swapped for other game assets.

The gaming industry is expected to make $200 BILLION in revenue this year, a significant portion of which comes from in-game purchases. Royalties on secondary market trading of these gaming assets provide an incentive for gaming companies to create NFT-based ecosystems.

But digital assets only capture a fraction of the potential... Real-world assets can get much of the same value from on-chain NFT representation.

For example: Real Estate is unique, has an owner, and requires proof of ownership. Tokenizing real estate has multiple benefits: 1. Can be fractionalized to increase access and liquidity

2. Can be collateralized to increase capital efficiency (ex: easy access to loans backed by a property) 3. Proof of ownership is particularly important in countries with weak legal systems. 4. Investors globally can invest in specific properties, neighborhoods, towns, etc +++

The global Real Estate market is worth hundreds of TRILLIONS of dollars, and NFTs are the most effective way to prove ownership, resolve disputes and increase access for investors and homeowners worldwide.

Still very early days, but it's already in motion. @arrington, founder of TechCrunch sold the world's first real estate NFT through @PropyInc in 2021

I've written about this concept before as a thought experiment

Shiv@shivsakhuja · Feb 4, 2022

Here's a 🧵 about why real estate will eventually get tokenized and what that model could look like 👇 A thought experiment..

The team at @0x_illuminati also made an animated video based on this concept.

The Crypto Illuminati@0x_illuminati · Jun 17, 2022

Why real estate will eventually get tokenized and what that model could look like 👇 Animated explainer... [1/x]

So far, we've only discussed the benefits of NFTs for transferrable assets. But what about non-transferrable NFTs?

This is a concept that people are now calling Soul-Bound Tokens or SBTs. @VitalikButerin wrote a blog post about this 👇

vitalik.eth@VitalikButerin · Jan 26, 2022

Soulbound vitalik.eth.limo/general/2022/0…

Like I said, NFTs are essentially digital certificates that anyone can verify. That lends well to use cases like Degrees & Diplomas - though of course, you wouldn't want these to be tradable. So they would best be represented by non-transferrable NFTs (SBTs).

Having a standardized, public proof of diplomas, degrees, skills and achievements on-chain means that anyone can verify their legitimacy. The same is true for all other kinds of certificates.

Balaji@balajis · Nov 11, 2021

The diploma on the wall in a lawyer’s office may be replaced by a digital NFT picture frame, paging through proud — and provable — accomplishments. That smart contract? Your work. A visual resume, always up to date, with a tasteful little link for any skeptic to chaincheck.

For example: • LinkedIn could give you a verified checkmark for your degree. • You could earn NFTs for freelancing to showcase proof-of-work done, skills used, time spent, and samples. This can then be used as your portfolio on Upwork, Fiverr, etc.

Because NFTs are an open standard, this means that NFTs earned for work done on Upwork can also be displayed on your Fiverr profile. I recommend reading @cdixon's thread on data portability to understand this concept.

Chris Dixon@cdixon · Jan 8, 2022

How web3 data portability reduces the power of centralized services 🧵

NFTs can also be useful for Counterfeit Protection. Counterfeiting is the largest criminal enterprise in the world, estimated to be $2 TRILLION a year and growing. So there's a lot of value to anti-counterfeit tech. @ORIGYNTech is working on this.

Speaking of counterfeiting, identity theft/verification is another massive real-world problem that can be solved using NFTs. In the US, 15 million+ citizens face identity theft every year, suffering damages of over $50 billion a year.

You can also find an extended version of this article on my blog. shivsak.substack.com/p/the-future-o…

I share my best posts on my blog. Subscribe if you enjoy my writing and want to read about the most interesting ideas in crypto. getrevue.co/profile/shivsak