In early 2021, I heard the abbreviation NFT (non-fungible token) for the first time and asked myself, what is an NFT? As it turns out, I quickly found out I wasn’t the only one asking that question. The truth is that 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 an entry on a blockchain that is linked to and/or represents ownership rights to a digital or physical asset. To break it down, the non-fungible part means that it is unique and cannot be replaced with anything else. In other words, it is theoretically one-of-one and NFT proves it. The token part comes in because the record of production, transaction and ownership is recorded on a blockchain. In industry terms, it’s called “tokenization”.
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’s an industry that has long needed a way to truly identify the production, authenticity and ownership of works of art. Estimates vary, but on an annual basis, fraudulent or illegal art transactions amount to around $6 billion. The other factors are the media and marketing coverage surrounding NFTs for art. But in this writer’s opinion, the greatest fanning of the flame came from the pure economy. The exponential increase in both the number of transactions and prices of NFTs during the crypto boom, headlined by Beeple and the Bored Ape Yacht Club (BAYC), understandably caught people’s attention.
But art is just a 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 that they will have a significant impact on many industries. The following is a non-exhaustive list of current use cases being implemented by companies across multiple industries – supply chain management, real estate, digital and self-managed identification, event ticketing, shared ownership rights, membership cards, collectibles trading, food manufacturing and fashion digital twinning.
The actual application of NFTs across the various industries will differ. But some of the common core challenges that are being addressed 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 that are created for specific items bought and traded through our platform; and to be able to provide relevant data insights to our partners that can have a real impact on how they run their business.
There will be other use cases that will emerge as the adoption rate of NFT exploitation increases. There are too many problems it could help solve for it not to. And when there are many problems to solve, that means there are huge opportunities to capture.
But for NFTs to realize their full potential and impact, it needs a strong ecosystem to support its development and growth. At a minimum, the ecosystem includes future forward-thinking founders and their companies, the investment community, educators and government organizations.
This is where some cities in the Gulf region, specifically Dubai, are at the forefront. Dubai has made it clear that it plans to be one of the major hubs, if not the epicenter of the metaverse, NFT and blockchain ecosystem. A key driver of this has not only been the government’s support, but its support through investment, the adoption of business-friendly legislation and infrastructure, and the creation of organizations such as the Dubai Blockchain Center and the Dubai Future Foundation. The signaling is that we see the great opportunity, and we are all involved in building the future through blockchain-related technologies and creating a truly digital economy.
This has helped create the perfect storm of conditions to accelerate the growth of the blockchain technology ecosystem in the region. It shows in massive capital flowing into the region, large companies – both blockchain-related and non-blockchain-related – either setting up a regional office or relocating their headquarters, global talent influx and accelerators helping companies launch. Even amid 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 co-founder and CRO of Metamall Group
Read: Gulf Business Enters Non-Fungible Token Space, Launches GB Crypto NFT