Top 10 NFT Use Cases in 2024

NFTs, which are digital assets represented by cryptographic tokens, are becoming more popular because of their numerous use cases. That’s represented by the global revenue rise in the NFT (non-fungible token) market is expected to be $1.6B by the end of 2023. That’s almost twice what it was in 2021. 

People might think of NFTs as digital images of the Bored Ape Yacht Club, fetching millions of dollars. But NFTs have grown to be value-adding assets to society in different industries by providing additional revenue streams and cost-saving mechanisms. 

In this article, we discuss the top 10 use cases of NFTs in 2023 in: 

• Supply chain management 
• Gaming 
• Fashion
• Finance, and more.

1. Music

NFTs can significantly change the music industry. Artists can leverage NFTs to:

• Tokenize their songs and albums
• Sell digital merchandise to create additional sources of income (limited digital assets)
• Provide royalties to creators/artists/producers 
• Combine them with additional physical benefits to encourage their fans to engage with their songs.

For example, Nas, a prominent American rapper, created¹ three tiers of NFTs for two of his songs (Figure 1). These tokens entitle the holders to a percentage of royalty based on the song’s stream volume across streaming platforms, in addition to real-life benefits like merchandise and VIP concert tickets.

2. Fashion

Fashion NFTs can be collected and worn as digital garments during occasions in virtual worlds, such as when visiting a friend, attending a party, or participating in a meeting. Fashion brands have already started experimenting with fashion NFTs. For instance:

• Gucci sold a digital-only bag on Roblox (a metaverse space) for $4,115

• Dolce & Gabbana creatively combined

3. Gaming 

NFT-based play-to-earn games have gained attraction over the last year. For instance, Axie Infinity, the top NFT gaming market leader, now has more than 2M active daily players. The NFT gaming market is growing at an exponential rate. If the current trend continues, the revenue generated is expected to reach $15B by 2027, up from the current $4B (Figure 3).

These NFTs usually concern in-game items such as avatars, skins, and weapons that can  be created on the blockchain for game-altering or cosmetic upgrades to the players. In-game NFTs are sold on various platforms, like NFT marketplaces, game-specific marketplaces, and occasionally through the game themselves. 

Some traditional gaming companies; however, have largely reacted negatively towards incorporating NFTs into their business model. For example, Steam, the largest PC game store,  has banned the use of NFTs and cryptocurrencies, citing instances of fraud and high volatility.⁷  Or Microsoft Gaming CEO voiced concerns in November 2021 about speculation and exploitation in the NFT market.

But not every major company has been skeptical of NFTs. Ubisoft, one of the biggest game developers, briefly launched its  NFT project Ghost Recon Wildlands, on Tezos. The NFTs represented cosmetic upgrades that gamers could use (Figure 4). The project was short-lived, after making only $400 and being scrapped. But it indicated that shifting dynamics of established gaming market players in embracing digital tokens.

4. Luxury goods

NFTs can act as a proof of authenticity for luxury goods by containing all relevant information.For instance, counterfeits are common in the wine industry. Some wineries have started releasing NFTs to store the wines’ data, such as its date of harvest and bottling, grapes’ origin, authenticity certificate, etc. For instance, Château Angélus sold an NFT for $110,000, giving the owner one barrel of wine (equivalent to 30 bottles) and digital artwork (Figure 5).

5. Metaverse 

Metaverse is expected to impact almost every industry. And its market value is expected to reach a trillion dollars in the future. Metaverse is a combination of immersive virtual worlds where the user can replicate their “real” life actions and circumstances – like buying a house or wearing clothes – on there (Figure 6).

Even though metaverse is still new, it’s soaring in valuation. In January of 2023, the real estate valuation in metaverse – calculated by summing up the land market cap of top platforms like Decentraland and NFT Worlds – was $1.4B. Moreover, the virtual real estate market is predicted to grow more than 31%CAGR by 2028. Virtual lands are bought and sold through NFTs. When someone buys a virtual land, the NFT representing the ownership of that parcel is transferred to the buyer’s wallet.

The largest metaverse land purchase was made in the Sandbox, one of the virtual worlds, for $4.3 million. Large companies from different industries, such as Gucci, PwC, Samsung, and JP Morgan have purchased lands on the metaverse. And interestingly, some real estate companies are incentivizing real estate sales in the physical world by promising digital twins on the metaverse. For example, the following is the digital replica of a seven-bedroom house put up for sale in Miami.

6. Supply chain

NFTs can be used to improve supply chain operations by storing metadata of products into the blockchain. In terms of security, blockchain technology in supply chain management prevents data elimination and manipulation. Logistics-wise, a use case of NFT is supply chain management is end-to-end tracking of goods from origin to destination. For example, Koinearth is a startup that creates enterprise NFTs that enable the tracking of physical goods and documents across the supply chain.

7. Ticket sales 

Popular event tickets tend to sell out  fast. And the rise of ticket bots is worsening the situation, as almost 40% of ticketing traffic is coming from ticket bots. And once tickets are sold out, they are then resold on secondary markets for profit. ¹⁷

This: 

• Robs organizers of additional revenues. While the initial sale still generates income, organizers miss out on potential additional sales from merchandise, food, and beverages that would have been purchased by genuine attendees. Can lead to fraudulent activities. It is estimated that 12% of concert ticket buyers have been scammed (e.g. sold fake tickets).
• Stops legitimate, interested customers from getting tickets.

NFT transactions on a blockchain will be on a public ledger, making secondary sales trackable and enabling rules-based validations before purchases. For example, eligible purchasers may be required to purchase a specific type of NFT or hold such an NFT. 

Therefore, NFTs can improve the ticket industry by: 

• Removing the 3rd party ticket seller between the artists and fans.
• Reducing scams due to transparency and authenticity verification provided by NFTs.
• Non-transferable NFTs can prevent ticket reselling.
• Due to the public nature of the blockchain and historical record-keeping, platforms can use smart contracts to establish rules to prevent bots and scammers by checking their transaction history.
• A royalties system can be put in place that pays the artist, producer, or any party a percentage of subsequent sales of the ticket.

8. Asset tokens

NFTs can be used to tokenize physical assets, such as real estate, art work, and collectibles, creating a bridge between the physical and digital worlds. This process involves converting a tangible asset into a digital token on a blockchain, which represents the ownership, provenance, and other information related to the asset. 

For instance, the sporting goods giant Adidas sold 30,000 NFTs in 2021 which entitled the holders to physical goods, such as hoodies and tracksuits.

Benefit of asset tokenization include:

1. Fractional Ownership: NFTs can be used to break down a physical asset into smaller, more affordable fractions, allowing multiple individuals to own a portion of the asset. This increases liquidity, as it enables a larger number of people to invest in and trade these fractional shares.
2. Provenance and Authenticity: By tokenizing a physical asset, its ownership history, provenance, and authenticity can be securely stored on the blockchain. This can help combat fraud, counterfeiting, and theft, and also create trust among buyers and sellers in the secondary market.
3. Easier Transfer of Ownership: The tokenization of physical assets allows for the transfer of ownership to be executed digitally and efficiently, without the need for physical paperwork. NFTs can be easily bought, sold, or traded on digital platforms, reducing transaction times and costs.
4. Market Creation: The tokenization of physical assets can create new digital marketplaces where these assets can be bought, sold, or traded. This can lead to increased price discovery, market efficiency, and liquidity for these assets.
5. Cross-border Transactions: NFTs can facilitate cross-border transactions and investment in physical assets, as they are not bound by geographic limitations or borders. This can create a more inclusive and global market for tangible assets.
6. Digital Asset Management: Tokenizing physical assets allows for the creation of a digital record of the asset’s details, maintenance history, and other important information. This can simplify asset management processes and provide greater transparency to all parties involved.
7. Interoperability: By tokenizing physical assets on a blockchain, they can become more easily integrated with other digital assets and systems, allowing for new and innovative use cases.

9. Identity and credentials

NFTs can represent digital identities, certifications, or credentials, which can be easily verified and shared. This can be particularly useful in education, employment, or government services for validating skills, qualifications, or personal information.

10. Loans and financial instruments

Holders of blue chip NFTs, like valuable collections, real estate, or digital art pieces, can put them down as collateral and get loans and other available financial instruments. Once the collateral is approved and loan terms are agreed, the loan amount is transferred into the borrower’s digital wallet via smart contract execution. 

The borrower repays the loan according to the agreed-upon terms. Once the loan is fully repaid, including interest, the NFT collateral is returned to the borrower. If the borrower defaults on the loan, the lender can seize the NFT collateral and sell it to recover their funds.

Learn more about NFT loans and lending. 

This article was originally written by former AIMultiple industry analyst Arshia Mojtahedi and reviewed by Cem Dilmegani.

External Links

• 1. “Ultra Black” Royal. Retrieved on 20 April, 2023.