Implications of NFTs in traditional finance

In the world of technology, especially in IT, we are used to hearing new buzzwords every year. And then they bombard us with them wherever we go. Most of them go to waste within a year, except only a few survive and become part of our vocabulary. Now the buzzword of 2022 is not AI or Blockchain, not even Crypto. In fact, it is NFT: non-fungible tokens.

I firmly believe: “The nice thing about NFT heck is that those silly things that you probably don’t care about today may be your biggest asset tomorrow.” Believe it or not, this is how the crazy world of technology moves today.

The academic definition of non-fungible token or NFT is: NFTs are a new class of digital assets that are unique, indivisible and immutable. NFTs represent ownership of digital assets in the blockchain ecosystem.

Read also | Importance of API Economy and Open Banking

In fact, they can be used to represent ownership of any single asset, such as a certificate for an object in the digital or physical realm. NFTs are representations of digital assets that resemble digital passports in that each token contains a unique and non-transferable token. identification to distinguish it from other tokens. Unique NFT data makes it easy to verify ownership and transfer tokens between owners during the transaction. They contain proprietary information for easy token identification and transfer between token holders.

The most important thing to know is that NFTs are unique crypto tokens that exist on the blockchain and cannot be replicated. They were originally useful for trading digital assets and now have multiple use cases. NFTs are primarily based on the blockchain, which makes up the majority of ERC-721 tokens (a standard for representing ownership of non-fungible tokens).

NFTs offer unprecedented immutability and unique ownership features, representing someone’s ownership of digital assets such as social media posts, digital art, paintings, signatures, and more. They have unique properties, so they cannot be traded or exchanged for other assets with the same financial value due to non-fungibility.
in nature. In other words, NFTs are non-fungible tokens and assets on the blockchain with unique characteristics, information, and metadata that distinguish them from millions of other assets. This makes NFT digital assets completely different.

In addition to tokenizing intangible digital content, NFTs can also represent a tokenized version of real assets, including land and buildings. NFTs provide undeniable proof of ownership that is more secure than any land deed. As NFTs become integrated into the financial infrastructure, it will be possible to implement the very concept of tokenized parcels of land and their value and location in the physical world.

In the future, digital real estate primarily refers to the ownership of digital assets, with each NFT owner having a place in the Metaverse. You can use NFT to completely own virtual space in the metaverse. This means that NFTs in the Metaverse can represent ownership of anything, including game assets, avatars, and real estate. Metaverse assets can be traded using Metaverse currencies such as NFTs.

Read also | Conversational AI platform as a digital fabric for banks

The Metaverse, along with DeFi (decentralized finance) and NFTs (non-fungible tokens), has real world use cases in the virtual world for the financial industry.

As the gaming industry has already shown that the gaming system to make money will bridge the gap; and NFTs will pave the way for the exchange of contracts in the Metaverse marketplace and many more use cases linked to the financial industry and others. Amongst all the technological advancements, NFTs will disrupt the traditional metaverse paradigm of user interaction, socialization, and social commerce.

Beyond the hype associated with multi-million dollar sales of digital art, avatar, etc.; the usefulness of NFT will be to create something that resembles a genuine human society based on free trade in goods, services, or ideas, and more importantly, the radical concept like “Social
Contracts”. By providing a digital representation of physical assets, NFTs will represent a step forward in rethinking modern financial systems.

However, NFTs are already a key component of the emerging Metaverse, where viability largely depends on asset tokenization. Non-fungible tokens and the technology behind NFTs play a critical role in the evolution of the Metaverse. Non-fungible token, which means that digital records of ownership stored on a blockchain will become the centerpiece of a functioning economy, enabling the authentication of assets, property, and even identities. Therefore, I see a great future for NFTs in the emerging virtual world (Metaverse) and their utility related to the financial industry in the virtual universe.

Opinions expressed by: Chakraborty Utpalchief digital officer, allied digital services, quantum and artificial intelligence researcher

Elets The Banking and Finance Post Magazine has carved a niche in the crowded market with exclusive and unique content. Get in-depth insights into the trend-setting innovations and transformation in the BFSI industry. The best deals for print and digital editions! Subscribe here➔

Get a chance to meet the Who’s Who of the NBFC and insurance industry. Join us for upcoming events and explore business opportunities. Like us on Facebook, connect with us on LinkedIn, and follow us on TwitterInstagram and Pinterest.

Leave a Comment