The trading volume of non-fungible tokens (NFTs) reached $17 billion in 2021, a year in which NFTs acquired enormous traction. NFTs facilitate the demonstration of ownership over a distinct digital asset. Numerous industries, including entertainment, apparel design, and athletics, have set up NFTs. Starbucks also revealed its intentions to issue non-fungible tokens (NFTs) as a component of its loyalty program.
Understanding the potential applications of this cutting-edge innovation is essential when assessing its value to businesses (even though some of that initial euphoria has subsided).
The Role of Non-Fungible Tokens in Business Processes
NFTs are cryptographic assets that are unique and built on blockchain technology. Each NFT has its own distinct metadata and identification numbers that distinguish them from each other.
Because of their distinctive characteristics, NFTs are non-fungible, meaning they cannot be swapped with one another. This is contrary to fungible assets, such as a dollar bill, a gold coin, or a bitcoin, which can be traded for similar items. NFTs are also extensible, meaning individuals can combine two NFTs to generate a third token, which is also a unique and distinctive asset.
Non-fungible certificates are used in enterprises to monitor services, products, and assets across various organizations. They are most suitable for use when working in complex environments featuring several businesses and customers.
Converting a physical asset to a digital asset can improve the efficacy of a process. It can facilitate the authentication of the authenticity and rarity of electronically stored data. Another essential attribute of NFTs is their ability to restrict access to specific assets.
How Businesses Can Apply NFT Technology: Key Use Cases
Non-fungible tokens are not limited to the purchase of digital art or gaming. They have myriad applications in business processes, including:
1. Improving customer experiences through NFTs
Businesses favor loyalty programs based on a customer’s purchase history, as this increases customer loyalty and engagement. NFTs could be used by organizations to track previous purchases and recompense customers. Unlike conventional programs, NFT-led loyalty programs help consumers demonstrate their attachment to the brand more effectively.
For instance, Burger King introduced Royal Perks, a loyalty program supported by NFT. Customers could obtain one NFT game element by reading a QR code on each meal carton. Upon accumulating three NFT game pieces, people were automatically granted a reward, such as a year of free Whopper sandwiches, a phone call with a celebrity artist, or a digital souvenir NFT.
2. Proving product provenance in supply chains
By 2028, the global blockchain-based supply chain market is expected to reach $3.15 billion. This suggests that the sector is excited to utilize the various blockchain capabilities, including non-fungible tokens. NFTs can be used as a digital equivalent to verify the reliability and origin of products.
Elements of the supply chain can be tracked through its entire lifecycle, augmenting operational effectiveness and visibility. Further, with NFTs, end-users can obtain authenticated data on a product’s origin, shipping, value, and updated material.
3. Giving patients ownership rights over their own data
NFTs in healthcare can enhance the preservation and tracking of individual medical records and even empower people to make a profit from genetic information.
After medical data has been documented and mined as an NFT, patients can sell it for research purposes to other entities, like pharmaceutical firms or laboratories, and receive payments. Notably, users can monitor where their NFTs wind up and who viewed them at what time.
- Better monetizing events through NFT tickets
Your company could place event tickets on the blockchain, such as those for seminars, and offer them as NFTs. Using tickets based on NFT helps organizations prevent ticket fraud and falsification. Also, the verifiable legitimacy of tickets fosters another secondary market for tickets.
Ticket resales can motivate attendees to buy them in advance, increasing event organizers’ revenue. From trade shows to association meetings, non-fungible tokens could help businesses maximize the power of events, once again, in a post-pandemic world.
5. Digitizing the learning & development (L&D) field
NFTs may be employed to safely retain credentials, licenses, ratings, or recognitions for corporate L&D. The security, reliability, and validity of all accreditation data stored in digital tokens is, naturally, enhanced — given its strong focus on security and non-fungibility.
Importantly, unidentified individuals or fraudsters won’t be able to hack into these records or alter them. Digital certifications are easily transferable for prospective job hunts and internal movement. This helps businesses learn about applicants’ higher education, skill sets, and certifications quickly and confidently.
Applications like these for NFTs exist in certain universities. For its Master of Engineering in Financial Technology degree, Duke University, for instance, created professional credentials in the form of non-fungible tokens.
6. Verifying customer identity in insurance
NFTs increase insurance sector transparency by safeguarding policyholder data on public ledgers, like identities, policy details, payment histories, and other relevant information. This improves industry transparency and protects against fraudulent activities like ghost claims.
Unlike traditional systems that require paperwork gathering and bank officer authentication, NFT policies deliver expedient ownership verification. hey are a perfect fit for the insurance industry, given that deadlines for expiration or renewal specifications do not constrain them.
7. Streamlining transactions of real-world assets
A tangible NFT is created by identifying a physical asset on a blockchain, such as a residence, office, or commercial space. The result is an inventory of current and prospective transactions related to ownership. Due to NFTs, transfers of assets can be carried out faster and more securely.
Further, the deed may be divided into several NFTs for combined or shared ownership. Since these partial or part-ownership NFTs are share-based investments, they function just like equities. In other words, non-fungible tokens allow businesses to treat real-world assets with the same flexibility as digital ones.
8. Securing financial transactions
Users create accounts on an online system that allows NFT banking. This form of banking is meant to be safer and more confidential than traditional banking as NFTs are built on the blockchain, which uses cryptography and cannot usually be altered or reversed. Only the sender and recipient of the item in question can access the transaction records.
It is easy to imagine how departments like accounts payable (AP) and procurement can gain from non-fungible tokens. It may enable secure and timely transactions, thereby strengthening partner networks.
What Are the Concerns to Watch?
Implementing blockchain technology to generate and trade non-fungible securities isn’t a failsafe. Numerous cyberattacks and other security infringements led to the disappearance or destruction of valuable assets. This could add another risk to most enterprises’ growing number of digital threat vectors.
Legal loopholes are another issue. The Securities and Exchange Commission (SEC) pointed out that most exchange-traded notes (ETNs) can be sold as securities. At the same time, the Supreme Court has only connected ETNs with investment contracts. Such issues need to be ironed out before NFTs can gain widespread traction among businesses.
Finally, non-fungible tokens involve an initial cost for smart contract development, blockchain creation, etc. With sufficient adoption, businesses may be able to achieve the ROI they expect and justify the expense.
At its nascent stage, any new technology seems revolutionary and challenging to catch on or sustain.
Just as the blockchain can provide an operational boost to most industries, NFTs could transform data operations and financial transactions for good. It is easy to forget the time established businesses took to figure out how to use the Internet and build genuine intersections with their core business models. Walmart only began retailing online in 2000, six years after Amazon’s founding.
As a commercial tech framework, Web3 – the virtual world of blockchain and NFT – has grown slower than Web1 and Web2. Nevertheless, just like the early stages of the Internet, organizations have to keep their ear on the ground and stay abreast of meaningful change.