Blockchain and NFTs are being utilized in an increasing number of new business use cases. It is an innovative breakthrough technology that holds immense potential by introducing asset-backed NFTs and may revive the value of many tangible assets. The next technological advancement in the cryptocurrency sector will be the combination of blockchains and real-world assets.
This is particularly true in the world of the luxury industry. Since its inception, the industry has been plagued by counterfeits, an unstable market, troubles with the supply chain, and problems validating the legitimacy of products on the secondary market. All of these problems can be resolved by utilizing NFTs, but what does it signify to back a digital asset on the blockchain with a tangible asset?
How Can NFTs Be Used for Premium Assets?
Historically, luxury assets have been associated with high entry barriers, with only the affluent and privileged being able to afford them. NFTs are altering this traditional model by enabling a broader spectrum of investors to acquire an ownership interest in these popular items.
Now, blockchain technology can be utilized for mass-produced items, but the market for limited, extremely valuable assets is more lucrative. In this situation, an NFT is the optimal solution. Asset-backed NFTs are digital tokens that can be demonstrated to be unique within a distributed ledger and are backed by real-world assets. Typically, these are associated with a digital artwork, referred to in the NFT, for sale on a marketplace.
An NFT can reference the barcode or another identifier of a corporeal asset as opposed to a digital work of art. The process of transferring non-blockchain-based assets onto a blockchain is known as tokenization. Now that the physical luxury products are registered on the distributed ledger, tracking and verifying them is simple.
The same holds true for designer clothing, watches, and shoes, as well as any other luxury items that consumers desire for their aesthetic allure and long-term value. They can all be tokenized so that they are readily verifiable by anyone.
For instance, the luxury watchmaker Franck Muller recently collaborated with a blockchain company to develop an NFT-backed timepiece. The watch is a physical object, but ownership is represented by a blockchain-based NFT that can be transferred. By tokenizing the ownership of the watch, Franck Muller is able to make ownership accessible to a broader audience while ensuring that the watch’s provenance and authenticity are readily verifiable.
The widespread use of asset-backed NFTs is not limited to a specific industry; the tokenized real estate market is anticipated to reach $2.2 billion by 2025. The most expensive NFT sale to date occurred in 2021, when a luxury condominium in Miami was sold for $22.5 million.
A digital artwork by the artist Beeple was sold as an NFT for $69 million, establishing a new benchmark for the most expensive NFT ever sold.
Asset-backed NFTs are also used to represent ownership of luxury goods such as clocks, jewelry, and automobiles. By tokenizing ownership, investors can own a fractional stake in these real-world assets, which can then be traded on blockchain-powered marketplaces.
Despite the fact that NFTs are excellent investments, it is preferable to purchase and trade them on a regulated exchange platform. Regulated exchange platforms, such as LCX, are secure, transparent, and safe for consumers’ funds and assets. With its own NFT – Tiamonds, which are tokenized diamonds with 1-1 ownership rights of diamonds, LCX is one step ahead of the NFT market.
Learn more about Tiamonds: https://tiamonds.com/
Conclusion
Overall, the potential for asset-backed NFTs is vast, with numerous industries investigating the use of this new asset class and continued expansion anticipated over the next few years. Through their capacity to fractionalize possession and provide greater liquidity for high-value assets, asset-backed NFTs are positioned to transform how we invest in and own valuable assets. Asset-backed NFTs are tokens secured by real-world assets. Someone who purchases such an NFT has a claim on the underlying physical asset. Businesses that use NFTs linked to real-world assets attract and retain a large number of customers.
