How One Day, You May Use NFTs Every Day

In the near future, we can expect NFTs to be used to validate almost every aspect of our lives.

The popularity and hype surrounding non-fungible tokens (NFTs) shows no signs of slowing down. According to Activate Consulting, robust sales are expected to continue well into this year, as 94% of previous NFT customers say they are somewhat or very interested in buying an NFT in the next 12 months, as do 42% of people who haven’t yet bought one.

While NFTs are most closely associated with collectible jpeg images and music files at the moment, the foundational blockchain and smart contract technology that makes many cryptocurrency projects possible, as well as the unique ownership of an NFT, has far-reaching implications for all of us.

Why are NFTs so popular?

Two of the biggest reasons for the growing adoption and sales of NFTs are that humans like to collect stuff and NFTs are programmed to be scarce. Basic economic theory states that scarcity of nearly anything in demand bids up its price even if it lacks any inherent value or use. NFTs have proven that to be true.

Additional attributes of NFTs are:

• Digital permanence: They last as long as the blockchain they’re built on continues to exist, and blockchain tech isn't going away.
• Fakes and forgeries are easily identified: Anyone can confirm authenticity by checking the blockchain.
• Provable ownership: Ownership can be transferred if the NFT is programmed for resale.

Technically speaking, an NFT is a software app with specific conditions programmed into its computer code. This code allows the NFT to be bought, sold, or transferred to someone else once those conditions are met -- so they’re basically an automated or "smart" contract. Smart contracts are self-executing snippets of software that can’t be changed once they go live. As part of a blockchain, additional transactions could be added to the NFT if its original programming allows -- such as a new owner if it’s sold -- but the initial terms of the smart contract cannot be altered.

Blockchain-based smart contracts are the key to NFTs

Currently, the majority of NFTs run on the Ethereum blockchain -- the leading platform for smart contracts and NFT exchanges. Those exchanges are online markets where NFTs are purchased or auctioned, similar to how eBay works for auctioning physical goods. Examples of the most popular exchanges to create and sell NFTs are OpenSea, VeVe, Rarible, and Mintly.

As digital assets, NFTs allow transfer of virtual versions of music files, original art, videos, digital trading cards, sports memorabilia, e-tickets, and in-game purchases, among other things. NFTs can also be used as certificates of authenticity for any physical asset for sale.

Here’s one example to consider: Until recently, singers and musical groups received pennies on the dollar in royalties for the unique songs they created. Illegal internet sharing and streaming eroded those royalties even more. Now NFTs enable artists to create content that can only be accessed by validated purchase on the artist's terms as coded into the smart contract.

Additionally, the artist can ensure they get a predetermined percentage of every future sale of that specific NFT automatically deposited to their digital wallet. That guarantees the artist receives a larger residual revenue indefinitely, sidestepping bootleg copies, their manager, the music store, and recording label.

In the future, NFTs will likely be how we "own" anything

Once an NFT is sold, the unique transaction is added to a blockchain that cannot be hacked, changed, or manipulated. The NFT blockchain validates proof of ownership of the underlying asset -- whether it’s something physical or virtual.

The implications of that are enormous. In the near future, we can expect NFTs to be used to validate almost every aspect of our lives. New use cases for NFTs could include, among other things:

• Drivers' licenses
• Concert/movie/sporting events tickets
• Voter ID cards
• Loyalty rewards programs
• Fundraising efforts
• Birth certificates
• Academic degrees
• Warranties
• Home purchases
• Property deeds
• Medical records
• Insurance policies
• Club and gym membership
• Personal online data

We seem to be on the verge of a brave new world where NFTs are "virtually" everywhere, both literally and figuratively.