What industries are ripe for NFT disruption?

By Jon Bragg

February 14 2022
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NFTs could be set to disrupt a range of industries this year, from music to gaming.

Non-fungible tokens (NFTs) well and truly made their mark during 2021 with US$24.9 billion in sales, according to market tracker DappRadar, up from US$94.9 million in 2020.

The explosive growth of NFTs has seen more businesses and individuals adopt them for a range of use cases beyond just digital art.

Five industries, in particular, are expected to undergo NFT disruption in the year ahead, according to CoinSpot market analyst Ray Brown.

In the music industry, Mr Brown said that NFTs could allow musicians to be equitably compensated for their work versus other compensation models such as those used by streaming platforms.

“Selling their content as NFTs allows musicians to be paid directly and more fairly,” he said.

“If an NFT owner then decides to resell the content, the original creator can automatically receive royalties. This process can continue each time the NFT is sold, thanks to the accurate record of ownership.”

Video games are set to experience disruption by NFTs as new games and publishers join the hundreds that already integrate them in a variety of ways.

“The certainty of ownership afforded by NFTs has the potential to revolutionise in-game commerce, giving digital consumers more confidence to spend their money in gaming realms,” explained Mr Brown.

Collectables could also face further disruption during 2022, according to Mr Brown.

“Digital trading cards were quick to see the potential for NFTs and this year they will continue to bridge the gap between the digital and physical realms,” he said.

Mr Brown pointed to the example of an NFT collection released by Dallas Cowboys quarterback Dak Prescott last year, which let customers unlock real-world items such as signed jerseys.

“NFTs also create fundraising opportunities for charities. Not just in creating digital assets which can be auctioned, but also in creating smart contracts which guarantee that the funds reach the target charities,” he added.

Event ticketing is another area that could be disrupted as Mr Brown noted that NFTs might be able to help solve a number of challenges.

“In terms of costs, the time and expense of selling and minting NFTs are negligible as compared to traditional ticketing systems. In return, ticket holders are left with a collectable digital stub after the event, harking back to the days of physical tickets,” he said.

“With blockchain providing certainty around ownership and authenticity, NFTs can also prevent fake tickets, scams and scalping. In cases where the resale of tickets is forbidden, NFTs can be developed as non-transferrable.”

Finally, Mr Brown highlighted the adoption of NFTs for subscription payments as another potential development this year and noted that Time magazine had already begun testing the use of NFTs as part of some subscription models.

Will NFTs also disrupt investments?

Alongside these disruptive effects on a range of industries, deVere Group chief executive Nigel Green recently tipped that NFTs will become a standard feature of investment portfolios.

Mr Green said that the strong demand for NFTs was linked to the fast pace of digitalisation and their ability to make business models more profitable and rewarding.

Furthermore, he put forward that NFTs could act as a “major diversifier” in a portfolio, which made them particularly appealing to investors.

“NFTs have a very low correlation to other assets, such as stocks and bonds, and can, therefore, lower your portfolio’s overall risk and volatility levels,” said Mr Green.

“I believe 2022 will be the breakout year for NFTs and, due the diversifier factor, within five years the decade’s hottest emerging asset class will become a standard feature of investment portfolios.”

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