You’ve seen the Bored Ape profile pictures and heard about the sale of digital tokens for everything from gifs to parcels of digital land. But the sudden rise of NFTs -- non-fungible tokens -- in pop culture shrouds the enterprise potential of this blockchain tech. No less an authority than the World Economic Forum considers enterprise NFTs a critical component in the treatment and movement of data as assets.
Understanding enterprise NFT use cases means first understanding what exactly an NFT is. “At their core, NFTs are digital data-carrying tokens stored in a blockchain ledger, and that makes them potentially valuable as secure data storage, proof of ownership, and [more],” said Chris Mattmann, chief technology and innovation officer at NASA Jet Propulsion Labratory and adjunct research professor at the University of Southern California.
A blockchain ledger itself can store a vast variety of records: financial transactions, ownership, intellectual property, artwork, and so forth. A key feature is its immutable. Once written, data in the blockchain cannot be deleted or overwritten the way it can in a traditional database or on a server.
When there is a new transaction associated with a given NFT (for example, the token is sold), a new immutable block of information tied to that token is created on the blockchain. The result is a secure and permanent ‘chain’ of information attached to a single digital token, and a way to represent physical assets digitally on the blockchain.
This confers a level of security and verifiability to NFTs that has wide enterprise appeal, given the legal and business value of that immutability.
A key enterprise NFT use case is to make illiquid assets liquid.
“NFTs are a mechanism to transfer value between business partners,” said James Canterbury, EY Technology consulting principal. “When companies begin representing their assets (inventory, IP, etc.) as NTFs, the exchange of those assets becomes much more fluid.”
By representing assets as NFTs, enterprises can free up working capital and apply financial instruments to assets that are traditionally illiquid, Canterbury said. “Just as DeFi [decentralized finance] is bringing sophisticated banking/trading to the masses, NFTs will merge finance with supply chain,” he noted.
He pointed to collaborative work done by the Maker DAO community and Centrifuge as an example.
At EY, Canterbury helps clients migrate real-world assets to product tokens. He refers to these product tokens as the “backbone” of enabling value transfer in this way.
Given that NFTs were designed to protect intellectual property, IT is an area for potential enterprise adoption of the tech, said Charles Edge, CTO of Bootstrappers.mn and an author. For example, Edge pointed to tools like ipwe.com or ipledger.co, which prove an event happened at a particular time as part of the patent process.
Other NFT use cases include support for per-use charges via smart contracts versus one-time fees – e.g., for 3D models.
“This supports the industrial revolution 4.0,” Edge said.
In addition, NFTs are carving a path for the future of enterprise governance, noted Maxwell Hammad, an enterprise software engineer who runs NFTcharts.com. Companies can use smart contracts distributed on the blockchain, and regular exercises like voting on a contract matter could also be taken to the blockchain, he said.
Changing How Employees Work
Other enterprise NFT use cases are less obvious but still potentially valuable. For example, NFTs could change enterprise work culture.
NFTs are a traceable digital asset that can incentivize employees’ return to the physical office, Mattmann said. Employees, for instance, could earn NFTs as a record of attendance in meetings for use or redemption in the office or at another location.
But NFTs could also enhance employee experiences in a remote or hybrid work environment, Mattmann added. Organizations could use NFTs to connect staff to VR experiences in the metaverse or other VR environments.
“NFTs help to value assets and enable a community in the digital space,” Mattmann said. “With employees increasingly physically disconnected, NFTs and digital wallets will become essential to eliminating physical paper or materials-based awards, for career retention and employee wellness … and also career advancement.”
Enterprise NFT Adoption Faces Challenge
Despite the development of NFT use cases, the technology has several hurdles to jump before it could see widespread enterprise adoption.
One such hurdle is the frequent association of NFTs with (often high-profile) scams, which has eroded the confidence many people have in the technology. Industry watchers believe that improved tools to determine NFT authenticity will help overcome this reputational challenge.
Blockchain tech also has a negative environmental reputation, due to the high energy needs for mining and storage. The environmental concern will exist for as long as data centers rely on non-green energy sources.
These worries tie into overall concerns about our increasing reliance on cloud data storage and the exponential increase in global data creation.
“In the government and federal space, the uptick of NFTs is slowed by the perception that they either are harming the environment or enriching scammers or ‘crypto bros,’ ” Mattmann said. “These thoughts are misguided.”
Another roadblock for adoption is that blockchain technology may not play well with another hot area in enterprise tech: digital transformation.
“The broader enterprise digital transformation trends really harken back to industry 4.0 initiatives and are almost antithetical to ledger-style technology,” Edge said. “For example, if we want to run a machine learning script and we have to walk a blockchain to find all the relevant data points in metadata on different blocks, that is going to be a fairly latent process.”
Work is being done to iron out these issues, Edge noted. Much could change in coming years.
“There is risk in such early adoption,” Edge acknowledged. “But if no one adopts, then we won’t work out the kinks in the tech, so I guess it’s fun to watch history being written.”