You might’ve heard about NFTs before. Countless celebrities online posting about their million dollar pixelated images, profile pictures changing into that of a cartoon style monkey, and always accompanied by a hefty price tag. Many looked down upon NFTs, considering it a mere consequence of the crypto bubble and nothing more than the digital embodiment of speculation (Bizouati-Kennedy, 2024).
What you might not know, is the enormous potential this technology has to reshape the world as we know it. Beyond the artistic aspect of the asset, NFTs are increasingly being given a proper use case in real world dynamics, and slowly replacing traditional mechanisms of identity and ownership as we know them.
Non-Fungible tokens can be defined and described many different ways, depending on who you ask, but the consensus is they are unique non-interchangeable cryptographic tokens containing data that reside in the Blockchain (Bellagarda & Abu-Mahfouz, 2022). With that out of the way, yes there have been multi-million dollar sales of NFTs who would put the average citizen questioning their actual value, with the NFTs collectible trading volume nearly reaching $600 million per month in mid 2021. (Anselmi & Petrella, 2023)
That said, a Non-Fungible Token’s core idea has huge potential for real world use cases, and finally after we look past the hype-driven digital art market the asset has undergone, we can see some companies and industries acknowledge the utility of the mechanism to reshape some of their fundamental procedures.
We can find examples of these regarding supply chains. A study in 2022 showed the pharmaceutical industry could tie their products to NFTs, tracking their journey from production to the shelves, helping reduce the counterfeiting of medicine (Chiacchio et al., 2022). In the wine sector, producers like Château Angélus attached Non-Fungible Tokens to their barrels, describing information related to the harvest and provenance directly in the Blockchain (Walls, 2021).
An innovative technology with potential to replace traditional systems of authenticity and access, NFTs are slowly being given a proper use case that will take full advantage of its capacity. That said, with so many technical and legal barriers, and the lack of incentive for adoption, whether they surpass being just singular experiments and become the new industry standard or remain just mere speculative assets, only time will tell.
References
Bizouati-Kennedy, Y. (2024, April 20). Are NFTs still viable investments in 2024? Nasdaq. https://www.nasdaq.com/articles/are-nfts-still-viable-investments-2024
Walls, M. (2021, July 27). Angélus and Cult Wines explore NFT trend. Decanter. https://www.decanter.com/wine-news/angelus-and-cult-wines-explore-nft-trend-462488/
Bellagarda, J., & Abu-Mahfouz, A. M. (2022). Connect2NFT: A web-based, blockchain enabled NFT application with the aim of reducing fraud and ensuring authenticated social, non-human verified digital identity. Mathematics, 10(21), 3934.
NFTNow. (2023, June 16). The 20 most expensive and famous NFT sales of all time. https://nftnow.com/features/most-expensive-nft-sales/
Chiacchio, F., D’Urso, D., Oliveri, L. M., Spitaleri, A., Spampinato, C., & Giordano, D. (2022). A non-fungible token solution for the track and trace of pharmaceutical supply chain. Applied Sciences, 12(8), 4019.
Anselmi, G., & Petrella, G. (2023). Non-fungible token artworks: More crypto than art? Finance Research Letters, 51, 103473.
