Not Just a JPEG - Usecases of NFTs

Written by
Rahul Kaushik
Published on
June 8, 2022
Read time
2 Min Read
Category
DeFi

In this article, we'll look at some of the applications of NFTs.

1) Digital Ownership

Never before have we had the option to truly 'own' digital items.

With NFTs, you could do whatever you want with your NFT - grant, revoke access to events/concerts, trade it with a friend, list it on a marketplace and sell it, receive airdrops by holding it for a period, etc.

Imagine if you could get into a virtual call with the best minds in your industry to learn, network, and have fun.

You can do that now by owning a Bored Ape NFT, which is a collection of 10,000 unique NFTs created by Yuga Labs called Bored Ape Yacht Club - a virtual lounge reserved only for its members.

Image: medium.com/@coinregwatch

2) Collateral for a Loan

If you're holding a valuable NFT and you need funds, you can either sell it or use it as collateral to get a loan.

Let's look at this scenario in the traditional world.

Imagine you're an artist that has drawn this beautiful piece.

Now you go to your local bank and say,  "I have a painting that is worth $50,000. I’d like to use it to secure a loan in that amount please."

Your bank would laugh in your face and call security.

One, the bank can't verify your claim that your painting is worth $50,000, and two, the bank can't hold art in its vault and take on the custodian risk as it doesn't know how to value the art to keep the collateral: loan ratio healthy.

This is where NFTs could come to your rescue. You could borrow just by holding an NFT and using it as collateral to secure a loan.

Since NFTs exist on the blockchain(an immutable transparent digital ledger), everyone immediately knows the value of your NFT and that you are its original owner.

Imagine if you had this cute Cryptokitty NFT worth $5000.

Image: Cryptokitties.co

A smart contract (an algorithm equivalent to a traditional bank) checks the NFT, learns that it is worth $5000, and verifies that you are the true owner and will have your cash ready in a few mins by taking your NFT as collateral.

A fair warning here. You could get liquidated just as quickly if you fail to pay back the loan or if the value of your NFT drops.

3) Lending & Renting

Gaming is another area where NFTs could have a big impact.

Skins, guns, swords, and other in-game items are already purchased by traditional gamers from the games they play.

Consider the following scenario: you lend your game NFT to a friend for a while, and in exchange, he pays you interest for borrowing your NFT.

Assume you and a friend are avid gamers who are currently engaged in a game such as PUBG. You have a level of 20, and your friend has a level of 10.

Your friend is currently struggling to complete level 10 because he lacks a high-skilled weapon with which to defeat his enemies.

What if you could lend your high skilled sword NFT to a friend to help him clear level 10 and earn interest in exchange for lending your sword NFT?

When your friend completes level 10, you will automatically receive your NFT back.

4) Digital Resume

Getting a job offer with a good resume is difficult enough, let alone without one. What if I told you that you could get a job in your dream company without a resume?

You'd think I'm insane, wouldn't you?

No, not quite.

With NFTs, this is possible.

In the traditional world, you'd need a proper resume to get into the interview, then showcase your skills, and finally, after a period of waiting and watching, you'd find out whether you got the job or not.

NFTs would streamline the process to the point where you could receive a job offer in a matter of minutes.

Consider getting a job just because you have certain NFTs that can only be unlocked by completing certain tasks that are only possible if you have the right skills.

Holding certain NFTs instantly communicates to the world that you have what it takes and are the right person for the job.

In a way, NFTs become your intellectual property as well as a digital resume that communicates your skill level in a matter of seconds.

These are just the tip of the iceberg. Other industries that could be impacted by NFTs include real estate, voting, course certificates, and medical records. With time and capital, the possibilities of NFTs are nearly limitless, and they could significantly disrupt our daily lives.

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Rahul Kaushik

Rahul is a former software engineer who is now a writer. After working as a full-stack developer early in his career, he realized that coding was not his forte and began writing blogs, poetry, and articles for sports magazines. He is always torn between Football and Bitcoin as his first love. In his spare time, he enjoys reading books on economics, startups, and business, as well as educating people on personal finance, cryptocurrency, and Web 3.0 on Instagram.

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