It would be a waste of time, though, to think of NFTs only as the equivalent to collectibles. There have to be better use-cases than digital art, cryptokittes, K-pop, or owning a 10-sec clip of your favorite NBA star dunking.
Other thinkers are already beginning to chart the future of NFTs. Scott Belsky imagines
a world where NFTs become holistic assets that entitle you to ‘real world’ experiences. Like buying a Gucci suit that’s accompanied by an NFT establishing you as the owner, which then unlocks a series of entitlements e.g. Snap filters or Fortnite skins.
This is cool and all. But how can NFTs shake up traditional industries? Duncan Cock Foster, founder of Nifty Gateway, a cryptoart marketplace, predicts
NFTs will follow a similar arc to bitcoin: “bitcoin started as an asset collected by nerds. Now it’s hedge funds and insurance companies.“
I don’t know much about hedge funds and insurance companies (lol), but I do know about law - and think the use-cases for NFTs in the legal industry are being overlooked.
There are two examples I’m pretty excited about.
First, property. Real estate is the quintessential example of a unique asset - no two parcels are the same, which makes it the perfect use-case for NFTs. To buy property, you generally need to sign a deed (a type of formal contract).
Here’s the thing about deeds: they suuuuck.
In the UK, each party has to sign the deed with a witness present or, in the case of a company, two directors. These deeds are often duplicated, triplicated, scanned into databases and distributed. Oh, and things get even more complicated when we bring high-value commercial property and mortgages into the mix. But let’s not worry about that.
The main thing to understand is: property transactions are propped up by stacks and stacks of paperwork. No one likes paperwork. So imagine a smart contract platform where direct ownership in land is represented (and maybe even fractionalized) as NFTs? Where all you have to do to check a property’s past ownership and mortgage history is look at a token that lives on a blockchain?
So. Much. Easier.
Second, company shares. Here’s a loose example of what it’s like to buy shares in a company:
- A private company with existing shareholders is going through a new funding round (i.e. they want new investors).
- I like this company and I want to invest, so I agree to buy some shares. A lawyer in a nice suit sits me down and asks me to sign a share certificate. I sign it.
- This lawyer then goes back to his or her office, photocopies my share certificate and the share certificates of my fellow new investors, compiles them into a thick folder called a ‘Bible’ (not joking) and sends out a copy of the Bible to a) the private company; b) each new shareholder; and c) sometimes existing shareholders too.
Again, it’s so much paperwork. Why can’t my ownership of the shares be tokenized as an NFT?
I’m sure I’m criminally oversimplifying this, but I imagine a (distant) future where our digital wallets will contain proof of every certificate, license and asset we own.
The legal sector is the cornerstone of this future.