In an era of heightened digitalization and decreasing use of cash, NFTs can transform both how the financial industry operates
and what it does and offers.
beyond fine arts
In 2021, NFTs were the “talk of the town” and had gained a lot of attention. Beyond the hype of NFT in the art sector, use cases across various sectors, including the financial industry, are emerging as NFT increases in maturity.
NFT stands for non-fungible token and is often described as a blockchain-based asset that can be used to represent ownership of unique items. As such, it presents the same intrinsic characteristics of blockchain technology (immutable, decentralized, traceable, transparent, and near real-time). But, NFT brings also its own set of characteristics, such as non-fungibility, uniqueness, scarcity, verifiability, and programmability.
Currently, the NFT ecosystem is mostly dominated by emerging technology players and had a total market capitalization estimated at $2B USD as of August 2022, which is still relatively small compared to the total crypto market capitalization ($1,118B USD).
However, as the technology continues to evolve, a growing number of non-crypto, “traditional players” in the financial sector (and beyond!) have shown interest, with some being directly involved and experimenting with NFTs. Learn more in this comprehensive, insightful and state-of-the-art document !
Currently, the most popular types of NFTs are those related to art.
However, as the technology evolves, new types of products are emerging, including as a way to issue bonds, distribute dividends, creating real estate products,and for enabling the DeFi ecosystem.
The number of NFT use cases explored to help address these pain points is growing, with the potential to improve this industry through verification of asset ownership, real-time transactions, fraud detection optimization and more. NFTs further have the potential to democratize certain classes of assets, products, or services.
Next Steps for Sound and Widespread Adoptions
Explore the current use cases for NFT and understand their impact on their industry.
Understand their customers' interest in NFT.
Consider how they can help their customers navigate this type of product safely.
Be aware of current regulations and regulatory trends.
Explore how NFTs could transform their industry and organization.
Investigate the value added and benefits / revenues that could be generated from the use of NFT.
Investigate potential risks associated with NFT for the business and how it could transform or be part of their operating model.
Learn about the risks of investing in this type of product, and determine whether they are comfortable with the risks.
Perform their due diligence before entering the market.
Take the time to read the sale agreement when purchasing an NFT.