NFTs beyond art: How will it transform other industries?

In early 2021, I heard the acronym NFT (non-fungible token) for the first time and asked myself, what is an NFT? As it turns out, I quickly found, I wasn’t the only one asking that question. The truth is, it is not mainstream. And if they have heard of an NFT, they often have trouble defining what it is. So, to help frame this conversation it is worth defining what an NFT is.

An NFT is a record on a blockchain that is associated with and/or represents ownership rights to a digital or physical asset. To break that down, the non-fungible part means that it is unique and cannot be replaced with something else. In other words, it’s theoretically one-of-one and the NFT proves it. The token part comes in because the record of production, transaction and ownership has been recorded on a blockchain. In industry terms it is called ‘tokenisation’.

Many people when they think of NFTs, associate it with art, both physical and digital. This is driven by several factors. Art provides the perfect use case for NFTs – it is an industry that has long needed a way to truly identify the production, authenticity and ownership of pieces of artwork. Estimates vary but on an annual basis fraudulent or illicit art transactions run about $6bn. The other factors are the media and marketing coverage surrounding NFTs for art. But in this writer’s opinion the biggest fanning of the flame came from the sheer economics of it. The exponential increase in both the number of transactions and prices of NFTs during the crypto boom, headlined by Beeple and Bored Ape Yacht Club (BAYC), understandably grabbed people’s attention.

But art is just one use case for NFTs. It is important, even critical, to understand that NFT use cases exist beyond art. We are still very early in the technology life cycle of NFTs and related blockchain technologies, but the reality is they will have a significant impact on many industries. The following is a non-exhaustive list of current use cases that are being implemented by companies across multiple industries – supply chain management, real estate, digital and self-sovereign identification, event ticketing, fractional ownership rights, membership cards, collectibles trading, food production and digital twinning of fashion items.

The actual application of NFTs across the various industries will be different. But some of the common core challenges that are trying to be solved include traceability, transparency, clear chain of custody and ownership rights. At Metamall Group, the use case for NFTs, through our metaverse retail marketplace, is the twinning of fashion items. This breaks out into NFTs getting created for specific items that are purchased and traded through our platform; and being able to provide relevant data insights to our partners that can have a real impact on how they operate their business.

There will be other use cases that will emerge as the adoption rate of NFT utilisation increases. There are too many problems it can help solve for it not to. And when there are many problems to solve it means there are massive opportunities to capture.

But for NFTs to realise their full potential and impact it needs a strong ecosystem to support its evolution and growth. At a minimum, the ecosystem includes future forward thinking founders and their companies, the investment community, educators and government organisations.

This is where some cities in the Gulf region, specifically Dubai, are at the forefront. Dubai has made it clear they plan to be one of the major hubs, if not the epicentre of the metaverse, NFT and blockchain ecosystem. A key driver of this has not just been the government’s endorsement, but its support through investments, enacting business friendly legislation and infrastructure and the creation of organisations such as the Dubai Blockchain Center and Dubai Future Foundation. The signalling is, we see the sizable opportunity and we are all in on building the future through blockchain related technologies and creating a truly digital economy.

This has helped to create the perfect storm of conditions to accelerate the growth of the blockchain technologies ecosystem in the region. It is shown in massive capital flowing into the region, major companies – both blockchain and non-blockchain related – either setting up a regional office or relocating their headquarters, global talent inflow and accelerators that are helping companies get launched. Even amidst concerns about the global economy and the impact of the correction in the crypto market, the expectation is that the future is extremely bright and it is being built here in the region.

Keo Sar is the co-founder and CRO at Metamall Group

Read: Gulf Business enters non-fungible token space, launches GB Crypto NFT