Cryptocurrencies like Bitcoin have been making steady inroads into the retail sector. The blockchain holds vast potential as a currency alternative to fiat currency. But since each Bitcoin represents an identical medium of exchange of value, it cannot represent the uniqueness of real-world assets like digital goods, real-world assets and identities. Non-fungible tokens unleash the power of the blockchain to represent and secure these assets. NFTs can be exploited by businesses to create value for customers.
Non-Fungible Tokens (NFTs) vs. Fungible Tokens
These early years of cryptocurrency and the blockchain have focused on providing fungible tokens to represent identical stores of value. As the blockchain expands, more and more real-world assets will be tokenized.
Real-world assets are widely diverse and have a great variety of different properties. It will be critical for the future that blockchain tokens be able to represent assets in the real world. As businesses very well know, each of their products is unique and has different properties. Being able to represent these products, whether physical or virtual, with a cryptocurrency token opens up powerful potential for the tracking, verification and security of the products and assets you sell and own.
If you like this article, check out one of our previous in-house articles, “What are Non-Fungible Tokens?” by Census Open Finance.
One of the prime examples of the power of the blockchain as it relates to physical products has been the supply chain. Supply chains track products from the manufacturer to the buyer. These products can be represented by tokens on a blockchain and tracked in order to determine its progress along its path to its destination and reduce lost and delayed shipments.
The properties that can be represented by NFTs are virtually limitless. It is limited only by the size and performance of the blockchain. Furthermore, this data reflecting real-world and digital assets are dynamic and can change constantly. This makes non-fungible tokens (NFTs) a powerful tool for a whole host of applications for all kinds of assets.
Industries and Sectors That Can Benefit from NFTs
There are countless applications from NFTs in all kinds of industries. Here are a few examples.
Software has traditionally been secured through the use of license keys. These keys were distributed along with the software product when it was purchased. These seemingly random strings of letters and numbers allow users to verify themselves with the software as a legitimate user. However, depending on the way the license key is validated, the key can be shared amongst many different people. This undermines the intellectual property of the company selling the software. Furthermore, the license provided by the software company is often designed to be non-transferable.
NFTs can support this model of software licensing by representing a license key as a non-fungible token (NFT). It could be implemented in a way that the license is not transferrable or, by allowing ownership of the token to be transferred to others, the license could be transferrable as well. Since the previous owner would no longer have ownership of the token, they would not be able to use the software.
Real estate is an example of a product that is very unique. Even if two properties are identical, they can be located at two different addresses. Ownership of such property is currently represented by a host of legal documents that must be registered with the proper authorities. By replacing these documents with NFTs, a lot of paperwork could be eliminated and the potential exists for government authorities to be less involved with the process.
Identities are also unique—each individual has a separate one. This is true even for identical twins. Birth certificates, educational credentials and certifications could all be tracked and managed on non-fungible token blockchains. For businesses, everything from training certificates to building access could be represented by NFTs. Being able to identify the identity of your clients can have great potential for sales and marketing endeavors.
Perhaps the most popular use case for NFTs to date has been in the field of gaming. Modern games are quite interactive and complex—with literally millions of objects that can be discovered, traded or bought just like real-world assets. The unique properties of each of these digital goods make them a perfect fit to be represented by non-fungible tokens (NFTs).
The Census Note and NFTs
The Census Note is a cold hardware wallet that will soon support NFTs. This allows users of the Census Note to hold NFTs in a hardware wallet that is the size of a payment card—allowing it to be conveniently stored with all your other payment cards.
Cryptocurrency’s potential for reshaping the retail sector has gotten a lot of attention in recent years. But it holds amazing potential for tokenizing real-world and digital assets as well. Fungible tokens like Bitcoin encounter resistance as a medium of exchange and non-fungible tokens will face the same challenges.
The fact is that the world we currently live in is largely a centralized one. Decentralized blockchains radically alter the relationship between buyers and sellers by eliminating middlemen like government authorities and banks. While retail and consumer transactions will be the first to benefit from the NFT revolution, It will take time for the challenges that come with more highly regulated areas to be overcome, but overcome they will once the immense value they provide is recognized.