A growing number of physical items are being immortalized in NFT form. What are the opportunities here... and the challenges that need to be addressed?
Where are the challenges that face the NFT sector in the future being discussed?
Mattereum is hosting a dedicated event to discuss physical asset NFTs on Sept. 21.
The meetup begins at 6pm London time — that's 7pm in Berlin, 1pm in New York, and 10am in California.
A previous event was held in July 2022, and set out how coveted high-value assets such as red wine, fine art and real estate could benefit from Mattereum's approach to NFTs.
With an ever-growing number of blue-chip companies exploring this space, adoption among everyday consumers will continue to skyrocket. Mattereum is determined to ensure that the industry gets off on the right foot, with investor protection a number one priority.
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What happens if something goes wrong?
Typically, disputes will end up going through the courts — but this can have mixed success.
It's easy to forget that NFTs remain a nascent technology, and this means that legal systems still lack understanding about how they work. This may mean that the nuance surrounding digital assets may get missed during civil action… but those in the lawsuit will still have to contend with hefty legal bills.
Mattereum — a new protocol that delivers transferable proofs of digital ownership — aims to do things differently. It offers its customers the legal technical capability to create Trustable NFTs for their physical assets, and legally binding mechanisms for dispute resolution that can be enforced in over 160 jurisdictions around the world. Such smart contracts establish a bond between ownership of the NFT and ownership of the physical asset, whether it's six bottles of red wine, a luxury car or a rare instrument.
While it may appear that this approach takes more time at first, it can have advantages. Offering valid authenticity documentation can significantly increase an asset's value — and boost the likelihood of a sale. It also creates a solid legal framework for the future.
What are the safeguards in place to prevent scams?
It's crucial to ensure that an asset's authenticity, provenance, condition and ownership rights can be verified — giving buyers confidence in what they're buying.
Standards across the NFT industry can help here. When the physical items that back an NFT go into a vault, it's crucial to be crystal clear on who will have the rights to take it out again. External auditors could also be tasked with assessing the background behind a transaction, and information about the condition of an item could be woven into metadata.
More than anything else, it's crucial for NFT platforms to gain a reputation for being trustworthy and credible. Not only is word of mouth a powerful marketing tool, but it can also assure consumers that they'll be in safe hands if they buy a collectible through one of these platforms.
Are there any big brands that are getting involved with physical NFTs?
Yes — and that's despite the bear market, which has seen trading volumes cool. More major companies are inevitably going to join in the future.
Nike has dominated the rankings when it comes to mainstream brands generating revenue from NFTs. Recent research shows the sportswear giant has netted a whopping $185 million in revenue after delving headfirst into the world of digital sneakers — in part thanks to a canny acquisition of the Web3 studio RTFKT.
But Nike's efforts aren't just about ensuring that avatars in the Metaverse look good in cutting-edge virtual threads. It's also been dabbling in NFT collections that accompany digital designs with a real-world version of the sneakers they buy. This could shape up to be a new wave for the fashion industry — and the innovation doesn't stop here.
Another particularly desirable memento for music fans relates to ticket stubs after they've been to a concert — a lasting memory they can stick on their wall that says "I was there." Ticketmaster is now dabbling in establishing NFT tickets that can serve as a commemoration of memorable gigs, immortalized forever on the blockchain. Other forms of technology, known as Proof of Attendance Protocols (or POAPs) could take this concept even further.
Could this help modernize the lucrative world of collectibles?
Yes — and potentially ramp up safety in the process.
Sports memorabilia remains incredibly popular — with Pokemon cards also enjoying something of a renaissance in recent years.
NFTs can be used to create digital representations of items that exist in the real world. This can help clamp down on counterfeiting, and create a crystal-clear record of ownership.
Some crypto companies have been established which even offer custody services for blue-chip collectibles — ensuring they're kept in a safe place and in mint condition. While this may sound counterintuitive at first, this can prove especially compelling if you regard memorabilia as an investment opportunity.
It can also streamline the process of auctions in secondary markets.
How is it possible to sell real-world items as NFTs?
Practically anything can be tokenized these days — and several companies have already started transforming physical items into nonfungible tokens.
Perhaps one of the biggest and most compelling use cases to emerge so far concerns property. If you've ever bought a place before, you'll know how arduous and time consuming this process is — with reams upon reams of paperwork and antiquated systems.
NFTs are being touted as a way of modernizing how things are done, with ownership being duly recorded on the blockchain. This can speed things up, reduce disputes, and help clamp down on fraud, too.
This also opens up the door to house purchases being made with cryptocurrencies instead of fiat — and a number of businesses, especially in Miami, have sprung up in recent months to bring this to reality.