Posted by We’re all seeing the attention around NFTs. Some say Hype, some say the Future. Setting aside the astronomical buzz for the myriad runs of art and NFT-tie ins, here are 5 practical real-world potentials for NFTs:
1. Immutable service records for autos and houses
If an NFT is tokenized to include specific parameters, that NFT can serve as an immutable record that is connected with a physical object. Cars, houses, and other large capital expenditures will still have standard titles of ownership associated with them, but what if there was also an accompanying NFT to track maintenance? High-end luxury sports car owners must keep immaculate records of all services performed. It’s part of the mystique that only authorized hands ever touched the machine. An NFT associated with the sports car could track all service interactions. This would require service providers to agree to write their records to the NFT, but on the high-end of the market, this would be seen as a competitive advantage for the servicer.
The same could be said for major repairs to a house: electrical upgrades, inspections, new bathrooms, etc could all be recorded and tracked in an NFT associated with the house. As with the NFT-friendly car mechanics, an NFT-friendly electrician would have a comparative advantage over a non-NFT provider. This would go a long way toward reassuring new buyers: as anyone who has bought an old house knows, inspections can be spotty and arbitrary (ask me about the 1920s aluminum wiring in my old house in St Louis).
2. Common VIN Registries
Other physical objects have collection value that is inherently tied to authenticity. See the two Vespas above? Believe it or not, the rusted one is worth 10x what the shiny one is worth. It’s considered “original,” with a matching VIN on the body and motor, along with clear evidence that it’s never been completely redone. The shiny Vespa is what collectors call a ‘bodge’: cheaply welded together from spare parts somewhere in Southeast Asia, slapped with new paint, and passed off to an unsuspecting buyer (who will likely get injured when those welds fail on the road). All legitimate Vespas are tracked with an online VIN database, but this database only continues by the good graces of its maintainers. If NFTs were assigned to every vintage bike out there, the bodge problem would be greatly reduced.
Similarly, what if all handguns had an NFT assigned to them that tracked all owners? This could go a long way to solving the tracking problem (and correlated corruption problem). Given the blockchain’s penchant for privacy and zero-trust, the NFT concept might actually gain traction where other database schemes have failed, politically.
3. Supply Chain Tracking
We’ve written on how Blockchain can be applied to supply chains. This is currently happening with vendors such as Everledger, Hyperledger, and Nifty Luxe. These providers specialize in tracking supply chain items of great value where authenticity and sustainability are essential (think: preventing conflict diamonds). This is currently limited to the luxury item market, but could soon spread to other markets where multiple brokers and dealers might otherwise cloud the authenticity of a given product.
4. Transaction Records (think ebay)
What if an NFT were to get minted when two private (and unknown to each other) parties buy/sell an item? The NFT could be tokenized at the moment of sale– not assigned to the item being sold, but to the transaction itself. This immutable record of the deal would then prevent either party from denying the deal was agreed. The NFT becomes a digital Notary Public.
5. Title Searches
Building on the NFT as Notary Public angle, NFTs could someday augment (and eventually substitute) the market for property title searches. As anyone who has bought a house knows, the title search process is slow and inefficient. In some ways, it seems like the title search portion of a property transaction is self-fulfilling to justify its own existence. The only viable reason that title searches are needed is because the legal bureaucracy around property ownership is still disjointed and outdated: liens, county records, mortgages, are all an uncoordinated hodgepodge of records. Someday (still a ways out), all of these transactions might be written to the NFT for the property.
Practicality
The overhead associated with NFT and blockchain transactions may make some of these specific uses impractical, but as technologies and mathematical constructs continue to evolve, NFT efficiencies could become commonplace. Where value can be added– authenticity, safety, and product value– the NFT for physical objects might be the practical usage that survives the current hype cycle around pixelized jpg art.