Asset-Backed NFTs

What are Asset-backed NFTs?

In a world where you can already get your mind around cryptocurrencies, blockchain, security tokens, and Bitcoin, there are also NFTs or non-fungible tokens. Before we go any further, they are proof of ownership, either temporary or permanent, and they are unique, cannot be switched with another token, and are not divisible. Consider NFTs to be digital assets that may be tied to anything of value: A work of art, a snapshot you took, something you shared on Instagram or Twitter, or pretty much anything of worth in physical or digital form. Then come into play the asset-backed NFTs. Now, these NFTs are something that holds or is backed by physical assets of physical value. Much like how asset-backed securities in the financial ecosystem are securities whose value is derived from and collateralized by a specified pool of underlying assets.

What is the Purpose of NFTs?

Now, the purpose of NFTs might alter depending on who you ask. For example, if you are an artist, it provides a platform for you to sell your work. For example, if you are an artist and have a very amazing sticker concept, making an NFT out of it is much superior to selling it on the iMessage app store.

NFT functions as a speculative asset for purchasers. This implies that individuals purchase the item with the belief that its value would rise over time. This is in addition to the principle of supporting your favorite artists. Another advantage is that you may boast about owning a work of art. To put it simply, NFTs are being seen as the future of art collecting.

Given that every digital entity may be an NFT, there are several applications that might be imagined. One of the most intriguing is Nike’s use of an NFT system to validate the authenticity of its footwear.

Why Use Physical Assets to Back Asset-backed NFTs?

Most of us consider tokens to be exclusively digital assets, and this is especially true in the context of NFTs. That is how these assets have become so simple to trade and have created their own global market, but blockchains offer highly appealing features for physical assets. To begin, blockchains are tamper-proof distributed ledgers. It is almost hard to delete or change an entry after it has been logged on the ledger.

Blockchain technology was developed to automatically resolve conflicting transactions. The consensus technique used to prevent double-spending is ideal for supply-chain management. Anyone who has dealt with them understands how difficult it is to ensure that all of the entries in a log are valid. A distributed ledger may be shared by several organizations throughout a supply chain while being independent of any one. Another big annoyance is having to rely on entries from a separate business and trust that they are accurate.

How is an NFT Different from Cryptocurrency?

NFTs are constructed using the same code as cryptocurrencies, such as Bitcoin or Ethereum, but that’s where the similarities stop. Physical currency and cryptocurrencies are both “fungible,” which means they may be traded or swapped for one another. They’re also worth the same amount—one dollar is always worth another dollar and one Bitcoin is always worth another Bitcoin. The fungibility of cryptocurrency gives it a reliable method of executing blockchain transactions.

NFTs are distinct. Each contains a digital signature that prevents NFTs from being swapped for or equivalent to one another (hence, non-fungible). Because they’re both NFTs, one NBA Top Shot clip isn’t the same as EVERYDAYS. For that matter, one NBA Top Shot footage isn’t necessarily comparable to another NBA Top Shot clip.

Some NFT Use Cases | Asset-backed NFTs

The surge in interest in non-fungible tokens has resulted in a surge in crypto-collectibles and NFT art. These are two of the most visible applications in the DeFi ecosystem, but they are not the only ones. Non-fungible tokens are a suitable fit for real-world assets, logistics, music royalties, and more due to their scarcity and uniqueness. As NFTs evolve, we should expect to see more experimental use cases adopted.


In-game transactions in video games are already being revolutionized by NFTs. Until recently, digital assets purchased inside a game belonged to the game company. However, linking these virtual assets to NFTs would transfer ownership to the real gamers, who would be free to purchase and trade among themselves. NFTs are now the foundation of whole games.

Players, for example, might acquire NFTs as they move through a game’s stages. They may sell the tokens they earned after finishing the game for a profit since they would have full — and proven — ownership.


In the ticketing business, NFTs offer apparent and highly significant prospective applications. They might be used to represent tickets to a sporting event or a concert, guaranteeing that each attendee has exclusive access. NFT-based tickets would also help to reduce counterfeiting since they could readily be validated as genuine on the secondary market.

NFT tickets might be configured to automatically send royalties to the team using smart contracts. Season ticket holders might also be given special NFTs that entitle them to, for instance, an autographed jersey or a meeting with their favorite player.

Combating Forgeries

The fashion and sports sectors are plagued by counterfeit items, and blockchain and NFTs provide a solution, since NFTs may theoretically be used to authenticate any asset-backed NFT, not only digital ones, as is currently the case.

Maintaining Land Records

Physical land might one day be represented on a blockchain as an NFT, with all of its features such as size, location, and current price. Non-fungible tokens and the blockchains they operate on are very hard to tamper with and allow for simple verification, making NFT-based land records a viable answer to identity and ownership crimes. Consider how many hours they would save in court, not to mention the legal bills. While land tokenization in the actual world is a concept for the future, NFT-backed real estate is already a reality in online realms such as Decentraland, where a block of the virtual property was sold for around $913,000 in June 2021.

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