Why NFTs Will Upgrade Everything

NFTs have morphed from crypto-obscurity to mainstream talking point over the past two years, and it could be just the beginning

OPINION
article-image

Source: Shuttestock

share

When most people think of NFTs, they think of overpriced art, digital collectibles and very expensive pictures of cartoon monkeys.

But NFTs can enable all sorts of practical applications, from securing loans to AI-powered interior design. They do this by revolutionizing how people — not Big Tech — benefit from their data. Here’s why:

  • Everything you care about is non-fungible.
  • Digital representations of non-fungible things are useful (and common).
  • Decentralizing these representations makes them vastly more useful to the end user.

Everything you care about is non-fungible

Something is fungible if it is interchangeable with and indistinguishable from other items of the same type. A fungible item can be replaced by another identical item without any loss of value, like trading a dollar for another dollar.  

Fungible assets, like money or gasoline, while valuable, are typically only important to the extent they help us acquire something non-fungible (belongings, experiences). 

Something non-fungible, on the other hand, is unique.

Bored Apes are cryptographically unique (source: OpenSea)

This includes your belongings, such as your home, your car, and even your cup of coffee. It includes your relationships, your body, and your preferences. Experiences, credentials, memories, and reputation are all non-fungible. Each is unique and cannot be replaced by an identical equivalent.

Even things that start out as fungible can become non-fungible. Cars of the same make, model, and year might seem fungible when they’re brand new, but if you’re buying a used car, you definitely want to evaluate the specific vehicle’s condition. You might not care which cup of coffee the barista hands you out of the same pot, but you probably don’t want to trade after the first sip.

Digital representations of non-fungible things are useful (and common)

Retailers keep records of their customers and what they buy. This helps them support buyers when something breaks, or determine what warranties are applicable. Interior designers and architects use blueprints to propose solutions within the limitations of a space. Doctors and dentists use health records to treat patients. 

Many tech-enabled businesses are built on digital representations of non-fungible things. Spotify, YouTube, Netflix, and GoodReads model users’ tastes to recommend content.

Zillow and AirBnB use real estate data to help buyers find homes and approximate prices. Facebook and Twitter map relationships to populate feeds. TicketMaster and StubHub digitally represent specific seats for unique experiences.

These digital representations allow platforms to provide services based on user data, but they don’t allow the user to leverage that data directly. This optimizes value for the platform, not the end user.

For example, I can’t use my GoodReads or YouTube history to automatically follow all my favorite creators on Twitter. I can’t use my Spotify taste model to find local events on TicketMaster. I can’t use blueprints from my home to find fitting furniture on Wayfair.

Illustration by @TheGhostDesignr

Even if users could access this data directly, it wouldn’t be very useful, because these representations aren’t standardized or portable — they’re different from provider to provider, and incompatible with other services. In most cases, the end user has no control over who or what has access.

For these digital representations to achieve their full potential, users need ownership and interoperability.  

Decentralizing representations makes them vastly more useful to end users

Decentralization gives users control over their data, which creates ownership. It removes barriers to data access imposed by centralized platforms, which allows for interoperability. These properties unlock new services and capabilities for end users, upgrade the utility of the underlying non-fungible item, and enable entire ecosystems of data-driven businesses. 

NFTs, or non-fungible tokens, are uniquely identifiable blockchain assets used to certify ownership and authenticity. NFTs can denote off-chain assets, like artwork, memberships, or actual land deeds.

Stored on decentralized blockchains instead of centralized databases, no one controls an NFT except its owner. Although most NFTs today are publicly visible, technologies such as secret NFTs and Zero-Knowledge Proofs are quickly giving owners more control over who can access their data.

Portability and ownership enable many new use cases. For example, a single NFT representing my home could contain its blueprint, location, purchase history, up-to-date photos, and other metadata. That data could be plugged into a variety of applications. I could use it to find furniture that fits in each room, to calculate property taxes, to rent my home on marketplaces, or to secure a loan.

Illustration by @TheGhostDesignr

NFTs can also be combined to enable use cases that are impossible when data is siloed. Representations of our style and physical form can personalize shopping experiences. NFTs of our calendars, tastes, locations, and relationships can be combined to auto-plan personalized events for every group, or schedule dates.

Data about belongings can be used to surface qualified services and add-ons, like insurance or integrations. Credentials, schedules, and interests can be used to identify professional or educational opportunities across platforms.

User-owned data also unlocks new applications of AI. AI needs to process user data to generate user-specific solutions. For example, Vana requires a user to upload multiple photos of their face to generate a gallery of artistic portraits – without access to that data, it can’t generate relevant portraits.

Op-ed author Ben Turtel goes through Vana AI

As AI becomes more powerful, it will require standardized user data to generate unique solutions to unique problems. Decentralizing this data incentivizes AI-enabled startups to build highly-tailored solutions. There are many potential use cases:

  • Interior design proposals based on the blueprint of your home, taste, and budget (including highly-custom AI-generated art!).
  • Educational content tailored to your knowledge, goals, and learning style.
  • Personalized recipes based on your health, tastes, and goals.
  • Wardrobe suggestions tailored to your size and style.
  • Personal AI assistants who know everything about you, your schedule, your relationships, and have full access to all of your data, but share none of it with anyone.

Startups are already building the foundations for many of these use cases:

Much of this will be incredibly positive, although there may be drawbacks — we’ve already seen the echo chambers that can result from highly personalized content feeds. Advances in both technology and regulatory frameworks will be needed to ensure data isn’t accessed and copied without the NFT owner’s permission.

However, it’s worth keeping in mind that all of this data is already out there — it’s just currently controlled by platforms and service providers, instead of end users.

We’re just getting started

Everything you care about is non-fungible. Companies have been using digital representations of your non-fungible assets for years to pad their bottom lines. These centralized players lack both the incentives and the coordination to open up these representations to other data-driven systems.

Decentralization makes data vastly more useful to the end user. NFTs put data back in the hands of individuals, and incentivize the development of all kinds of new capabilities, by making digital representations more portable and accessible.

JPEGs are a proof of concept. The best is yet to come.


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the Forward Guidance newsletter.

Get alpha directly in your inbox with the 0xResearch newsletter — market highlights, charts, degen trade ideas, governance updates, and more.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Javits Center North | 445 11th Ave

Tues - Thurs, March 18 - 20, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

recent research

LTIPPanalysis.png

Research

This report is a retroactive analysis of Arbitrum's Long Term Incentives Pilot Program (LTIPP). We collect relevant data at a protocol level and review bi-weekly updates to analyze recipients, their strategies, and the impact of the incentives on high level growth metrics. In particular, we want to highlight outperformers and underperformers, and glean any best practices or lessons learned for protocols distributing ARB incentives in the future. The overarching goal is to synthesize lessons learned that the DAO can reference as it begins thinking about future incentives programs–namely, the working group for incentives that is being actively discussed–especially as Timeboost introduces new conditions for trading and economic activity.

article-image

Sponsored

AI project Zerebro intersects the spheres of artificial intelligence, finance, art, music, and culture

article-image

Allmight is focused on furthering the United States’ leadership in crypto

article-image

The conditions Charles Schwab is waiting for before jumping headfirst into crypto could take shape soon

article-image

The FCA’s director of payments and digital assets shared some takeaways from chats with crypto companies and law firms

article-image

Let’s take a look at how US equities typically perform this time of year and what we might see in the coming days

article-image

Lumina introduces transparency and permissionless integration via an OP stack-based optimium, challenging traditional oracle designs