Are NFTs obsolete? A comprehensive look at NFT applications

What Are NFTs? Key Features Explained

An NFT (Non-Fungible Token) is a breakthrough technology that issues unique certificates for digital assets. Using blockchain as its foundation, NFTs provide indisputable proof of authenticity and ownership for digital data. Unlike conventional digital files—which are easily copied or tampered with—NFTs enable clear verification of ownership and guarantee the rarity of digital assets.

What sets NFTs apart is their ability to prove "uniqueness" in the digital realm. For example, issuing an NFT for a digital artwork certifies its authenticity and protects its value. NFTs can also represent game items or event tickets—adding scarcity and extra value to digital assets.

The applications for NFTs are broad and rapidly expanding across diverse sectors:

Digital Certificates: Paper-based certificates historically faced risks of forgery and alteration. NFTs allow for secure, trustworthy digital certificates. They're expected to play a significant role in digitizing important documents like diplomas and credentials.

Furusato Tax Program Gifts: NFTs enable local governments to offer unique digital return gifts—such as artwork or virtual experiences—for furusato tax payments. Regionally themed digital content helps promote local communities in innovative ways.

New Crowdfunding Models: Creators issue their works as NFTs and raise funds directly from fans, creating a new crowdfunding paradigm. Supporters purchase NFTs to back projects and receive exclusive rewards or digital content. This fosters direct, robust relationships between creators and their audiences.

Ownership of In-Game Assets: NFT-powered games let players truly own in-game items or characters as NFTs, enabling free trading and exchange. In-game assets gain real-world value, and players can actually earn income through gameplay.

Though NFT technology is still developing, its potential is immense. In the future, NFTs are likely to play a pivotal role in real estate transactions and economic activity within the metaverse (virtual spaces). As digital society evolves, NFTs will become increasingly important.

Is NFT Really "Dead"?

NFTs have attracted attention for proving ownership of digital assets like art and game items. Yet critics persist, claiming "NFTs are meaningless" or "NFTs are dead." To understand this debate, it's crucial to know the historical context and current state of the NFT market.

Value-Less NFTs Were Issued—The Boom Has Ended, That's a Fact

In recent years, the NFT market saw major swings—particularly around 2021, when numerous NFTs lacking substance or utility flooded the market. Many NFTs suffered from extremely low liquidity, making them hard to resell. These problems stemmed from the market's early immaturity and the presence of malicious actors.

Many investors who entered for speculative gains failed to realize expected profits and suffered substantial losses. These experiences fueled skepticism about NFTs. However, following the initial chaos, the market has matured and evolved.

Industry Views and Current Market Conditions

Research by BeInCrypto, a leading crypto media outlet, shows most NFT projects have already failed, with 43% of holders in the red. On average, NFT holders face losses of 44.5%, and the typical NFT project lasts just 1.14 years. About one-third of projects disappeared in recent years—a record-high failure rate.

Despite these tough circumstances, many industry leaders remain optimistic about NFTs' future. Devin Finzer, co-founder and CEO of OpenSea, emphasized NFT potential in a BeInCrypto interview, highlighting particular interest in gaming and NFTs backed by physical assets.

OpenSea is constantly seeing new use cases emerge. Making OpenSea a hub for every type of NFT is critical for capturing the next wave of collectors.

Devin Finzer, Co-Founder & CEO, OpenSea

OpenSea supports a wide variety of NFTs—including gaming and physical items—and has expanded its platform with customizable collection pages. Finzer predicts the gaming industry will drive NFT adoption, and frictionless onboarding for gamers will be the key to future growth.

A market outlook report by US venture capital firm a16z forecasts NFTs will be established as digital brand assets, becoming commonplace for businesses and communities. This suggests NFTs have lasting value beyond any short-term boom.

Why NFTs Still Hold Value

Despite market volatility and failed projects, NFTs possess fundamental value for several reasons:

Proof of Scarcity: NFTs are recorded on the blockchain, providing indisputable proof of unique ownership. This enables true digital scarcity—unlike traditional content, NFTs guarantee non-replicable uniqueness.

Expanding Utility: NFTs can function as game items, event tickets, memberships, and more. Increasingly, they're used for practical purposes—providing access to services and economic activities beyond simple collectibles.

Community Building: Many NFT projects have vibrant communities and active economies. Holder engagement and collaboration help drive sustained project value.

In Japan, more companies and municipalities are adopting NFTs. Usage is expanding beyond PFP (profile picture) projects to furusato tax programs, crowdfunding, and digital certificates. Large corporations and public agencies are expected to increase NFT adoption in the future.

All these developments point to NFTs as a technology with real, lasting value—not just a speculative bubble. After the initial shakeout, meaningful NFT projects have survived, and the market is entering a healthy growth phase. NFTs will continue to find practical uses and become a vital part of digital society's infrastructure.

Practical NFT Use Cases

Here are practical ways to use NFTs, with real-world examples.

Community Building and Engagement

NFTs serve as access passes to communities of people with shared values and interests. As digital assets, NFTs represent not only ownership, but a sense of belonging and eligibility for specific communities.

Japan hosts many NFT projects focused on community building, leading to energetic member activities. For instance, PFP (Profile Picture) projects like CryptoNinja and LLAC have cultivated passionate communities and strong bonds among members.

These projects operate Discord servers exclusively for NFT holders, hosting lively daily discussions and information exchanges. Offline meetups and events are held regularly, deepening online relationships in real life. Many projects let holders participate directly in management, enabling community-driven decision-making.

Owning NFTs provides several benefits, including:

Networking with Members: Connect with others holding the same NFT, discover new friends or business partners, and expand your personal and professional horizons.

Access to Information and Insights: Receive project updates and exclusive information not shared publicly, allowing you to anticipate market trends and make better investment decisions.

Bringing Ideas to Life: Use NFT intellectual property (IP) to launch new projects or events. Collaborative creation and derivative works by community members are increasingly common.

Access to Exclusive Benefits: Enjoy perks and services reserved for NFT holders, such as priority purchase rights for exclusive products, invitations to special events, and airdropped (free) additional NFTs.

Innovative Furusato Tax Applications

Recently, NFTs have emerged as an innovative tool in furusato tax programs. NFTs go beyond digital assets—they help showcase local attractions and foster lasting, interactive relationships with supporters.

NFT-based furusato tax programs offer donors NFTs as return gifts. These include locally themed digital artwork, region-exclusive virtual items, and event access rights. Unlike physical gifts, NFTs require no storage and can be held indefinitely online.

Municipalities across Japan are adopting this model. Leading examples include:

Imabari City, Ehime: Offers NFT art inspired by Imabari towels, the region's traditional industry. Digital art highlights the quality and beauty of Imabari towels in new ways, connecting with younger audiences.

Izumisano City, Osaka: Issues NFT art featuring the local mascot "Izumisano Daruma" as a return gift, leveraging character popularity for modern regional promotion.

Koka City, Shiga: Provides NFT art themed on ninjas, reflecting local history, to showcase Koka's cultural heritage domestically and internationally.

These initiatives show new possibilities for regional development. NFTs can share local appeal worldwide, unconstrained by physical limitations. Online events and perks for NFT holders visiting the region are also being established to foster ongoing engagement.

New Crowdfunding Models

NFT-powered crowdfunding lets creators issue their works as NFTs and raise funds directly from fans. Supporters receive NFTs as lasting digital assets, unlike conventional crowdfunding rewards.

Fans purchase NFTs to support projects and receive exclusive content or perks in return. If the project succeeds, their NFT may appreciate in value. This approach builds direct, deeper ties between creators and their supporters.

NFT crowdfunding is already in use for prominent domestic and international projects. Examples include:

CryptoNinja Partners (CNP): Japan's largest NFT collection, CNP used NFT crowdfunding to finance an anime project. Community support enabled high-quality animation, and NFT holders received exclusive viewing rights and limited content.

Live Like A Cat (LLAC): LLAC raised over $70,000 through crowdfunding to build a community house. NFT holders enjoy rights to use the facility and attend special events.

While NFT crowdfunding is new, it offers creators new funding channels and lets fans engage with projects more deeply. NFT technology bridges the gap between small creators and individual supporters—something traditional finance can't easily provide.

NFT Adoption in Gaming

NFT games use blockchain to issue items and characters as NFTs, letting players use or trade them in-game. Traditional games only grant usage rights, but NFT games offer true asset ownership.

Major platforms like Epic Games have joined the NFT gaming market, releasing titles like Illuvium (built on ImmutableX), signaling mainstream industry adoption.

NFT games' greatest strength is clear, practical in-game utility. Items and characters have real functions, directly influencing strategy and enjoyment. This drives natural demand and helps ensure liquidity as games grow in popularity.

NFT games also realize the "Play-to-Earn" model, letting players earn income by selling items gained through gameplay. This adds new economic value to gaming, offering earning opportunities for both professional and everyday players.

What to Know Before Buying NFTs

Define Your Intended Use

It's essential to clarify your purpose before buying NFTs. Given their diverse possibilities, unclear goals could leave you disappointed in their value.

Common purposes include collecting favorite artists' works, investing for future price appreciation, using NFTs for gameplay or in the metaverse, or accessing communities for networking and information. Evaluate your own use case carefully before purchasing.

Without clear intent, you risk being swayed by market volatility and suffering substantial losses. For investment, focus on long-term project value—not short-term price swings.

Also, NFTs tend to have lower liquidity than stocks or crypto. You may not always find a buyer when you want to sell. Research the NFT's use case, community activity, team credibility, and market value trends before making a decision.

Use Only Surplus Funds

NFTs are highly volatile assets. In recent years, many utility-free NFTs were issued and liquidity was often poor, making resale difficult.

While the market has matured, risks remain high. NFTs are riskier than stocks or Bitcoin. Sharp price spikes can occur, but so can rapid declines.

Careful risk management is vital. The golden rule: only invest surplus funds you don't need for daily life or emergencies. Never allocate living expenses or money intended for near-future use to NFT investments.

Keep your investment size within a range where losses won't affect your overall financial health. Generally, 5–10% of your portfolio in high-risk assets is recommended, but consider an even smaller stake for NFTs.

Base investment decisions on objective analysis, not emotions. Ignore others' success stories—focus on your own risk tolerance and investment goals for long-term results.

FAQ

What Is an NFT? How Is It Different from Cryptocurrency or Digital Assets?

An NFT is a non-fungible token—a unique digital asset on the blockchain. Cryptocurrencies are interchangeable and share equal value, but NFTs are each unique, difficult to duplicate or tamper with, and have distinct value, especially as art or collectibles.

Is NFT Really Dead? What’s the State of the NFT Market in 2024?

NFTs aren't dead. New projects continue to launch in 2024 and leading projects remain active. The market is maturing, with more utility-driven NFTs. By 2026, the NFT market shows sustained growth.

What Are Real Use Cases for NFTs? Are There Applications Beyond Art?

NFTs have diverse applications: in-game items, proof of ownership for digital content, event tickets, music sales, and more. Blockchain-based uniqueness enables authentication and trading of virtual assets.

What Are the Risks of NFT Investing? How Can You Stay Safe and Avoid Scams?

NFT investing risks include price volatility, fraud, and smart contract vulnerabilities. Stay safe by using reputable platforms, securing wallets, and thoroughly checking project information. Avoid scams by steering clear of fake sites and reviewing community reputation.

What’s the Future Role of NFTs in the Metaverse and Gaming?

Metaverse and in-game NFTs will be central to digital asset ownership and trading. NFTs deliver true ownership of game items, fuel player-driven economies, and are expected to massively expand the gaming industry.

Why Are Major Brands and Companies Adopting NFTs?

Brands and companies use NFTs to sell unique digital content and develop new revenue streams. NFTs' exclusivity and clear ownership make them valuable to collectors, strengthen customer relationships, and open new markets.

How Do You Determine the Value of an NFT?

NFT value depends on rarity, transaction volume, and community size. NFTs with limited issuance, high historic transaction values, and active communities tend to command higher value.