NFTs are here to stay. When I write this I do not mean some of the shitty pictures, where people want to make a quick buck, but instead the technology itself.
Before I give an outlook on the future of NFTs I want to explain were we currently are.
NFTs in 2022
If we want to understand the future we have to understand the past. This old saying also goes for NFTs.
One model that is quite useful to explain such technological revolutions is the “The life cycle of a technological revolution” taken from the book “Technological Revolutions and Financial Capital” by Perez.
The conceptual model basically describes four phases. On one axe there is the degree of technological maturity and on the other axe the phases that technology usually goes through.
If we look specifically at NFTs we are currently in Phase One. Many collections are started by artists and wanabees. Like spagetti lots of collections are thrown on the wall and we see what sticks.
As regulators are going to move in, we then see the transitions from phase two to phase three, until the innovation stops and we reach maturity.
As with similar internet phenomenon’s also NFTs are currently characterized by the get rich and make money mindset. Also scammers are trying to get your money, which is usually a sign that we are in an early phase.
The Future of NFTs
So how do we envision the future of NFTs? What should the future look like? How do we WANT the future to look like?
At Coindation Collective we thought a lot about this question and came up with one clear objective that we believe should be build in the future.
Bringt NFTs to the real-world
NFTs are used to represent a digital asset with a token. This digital asset can be traded and held in a wallet. What if we could represent a real-world asset on the blockchain and trade it and hold it in a digital wallet.
The advantages of such a representation are:
- Proof of ownership: Using the NFT you can proof that you own this asset
- Provenance: You see clearly on the blockchain who owned the asset before you
- Fractionalization: You can easily fractionalize a physical asset by using the NFT
- Ecosystem: Using an NFT to represent a real-world asset, you are becoming part of the growing ecosystem
- Tradeable: NFTs are super liquid.
What is needed to NFT a real-world asset?
The real-world asset has to have a unique identifier and a clear connection to the blockchain. Furthermore, it should not be able to fake this unique identifier.
Conceptually the process to issue an NFT for a real-world asset should be:
- Put identifier on real-world asset and mint unique NFT
- To strengten the connection photos should be stored on-chain to identify the asset
- To rule out scam, we believe that you should send the asset in a first step to a vault service
- Now you can trade your NFT on the platform
- If you want the real-world asset you basically ask the vault service to send the item to you
- In this case the asset will clearly be marked that it has left the vault
- If you trade it now you have to make orchestrate everything that is needed for the transaction, like send the item to the owner and also send the new owner the NFT to proof ownership
Outlook
In the coming months we are going to work on this idea and proof that this is possible to achieve. If you want to join this idea, just contact us.