Are NFTs Obsolete? A Guide to NFT Use Cases

What Are NFTs? Features and Overview

NFTs (Non-Fungible Tokens) are a technology that issues a unique certificate of authenticity for digital assets. Traditionally, digital data could be easily copied or altered, but NFTs allow ownership to be clearly verified. Because NFTs are recorded on the blockchain, tampering is extremely difficult, making this technology an innovative way to guarantee the authenticity of digital assets.

For example, issuing an NFT for a digital artwork can prove its authenticity. Issuing NFTs for game items or tickets can also enhance their rarity and value. NFTs are expected to be used beyond just speculative investment, with applications across a wide range of industries.

Typical use cases for NFTs include:

• NFT Certificates: Conventional certificates are susceptible to forgery and tampering, but using NFTs allows for safer, more reliable certification. For instance, NFTs can be applied to graduation or qualification certificates to prevent the distribution of fraudulent credentials.

• NFT-Enabled Hometown Tax Programs: NFTs can be used to offer unique digital art or virtual experiences as rewards. This approach helps local governments showcase their region’s appeal in new ways and fosters interactive engagement with supporters.

• NFT-Based Crowdfunding: Creators can issue their work as NFTs and raise funds directly from fans in a new crowdfunding model. Supporters can back projects by purchasing NFTs and receive exclusive rewards in return. This system enables creators to connect with fans directly, without relying on traditional platforms.

• NFT-Powered Gaming: In NFT-based games, players can own in-game items or characters as NFTs and buy, sell, or trade them. This model gives real-world value to in-game assets, allowing players to earn through gameplay. The "Play to Earn" model is creating new economic opportunities in the gaming industry.

Although NFTs are still evolving, they are expected to play a vital role in real estate transactions and economic activity within the metaverse (virtual spaces) in the future. In particular, NFTs are anticipated to become increasingly important for proving ownership and serving as the foundation for economic activity in digital environments.

Are NFTs Really "Dead"?

NFTs have drawn attention as a technology for certifying ownership of digital assets like art and game items. At the same time, persistent criticism remains—some argue that "NFTs are meaningless or obsolete." Such criticism is driven by past market volatility and the mass issuance of low-value NFTs.

It’s True That Many Worthless NFTs Were Issued and the Hype Died Down

In the past, a large number of worthless NFTs were issued, and some NFTs lacked liquidity and were hard to sell. This confusion was caused by the early stage of NFT technology and the presence of malicious actors. For those who entered for speculative purposes, some NFTs lost 99% of their value, resulting in harsh conditions. However, the landscape has changed dramatically in recent years.

As the market matures, truly valuable projects are being selected, and NFT projects with strong core communities are surviving. Regulatory clarity and a broader range of use cases are also ushering the NFT market into a new phase.

Industry Perspectives

BeInCrypto reports that many NFT projects have already lost their value, with 43% of holders experiencing losses. On average, NFT holders have seen a 44.5% loss, and the typical lifespan of an NFT is just 1.14 years. Notably, about a third of NFT projects have disappeared, reflecting a high failure rate.

Devin Finzer, co-founder and CEO of OpenSea, highlighted the potential of NFTs in an interview with BeInCrypto, especially for gaming and physically backed NFTs. OpenSea is focusing on expanding use cases and stressed the importance of being a hub for all kinds of NFTs to capture the next wave of collectors.

OpenSea is constantly introducing new use cases. Being a hub for all types of NFTs is crucial for capturing the next wave of collectors.

— Devin Finzer, Co-founder and CEO of OpenSea

The platform supports NFTs for games and physical items and offers customizable collection pages. Finzer predicts that the gaming industry will drive NFT adoption and that a frictionless onboarding experience for gamers will become increasingly important.

Some companies are not pessimistic about the future of NFTs. According to a report by leading US venture capital firm a16z, NFTs are expected to establish themselves as digital brand assets and become mainstream among a wide range of companies and communities.

Why NFTs Still Hold Value

There are three main reasons why NFTs retain value:

• Scarcity: NFTs are recorded on the blockchain, enabling proof of unique ownership. This scarcity is a key element that gives digital assets the same kind of value as physical ones. Limited edition NFTs can become highly valuable as a result.

• Utility: NFTs can be used in various ways, such as game items or tickets. NFTs that provide real functionality or perks offer holders tangible value beyond mere collectibility. For example, NFTs as event tickets or membership passes have practical uses.

• Community: NFT projects often have passionate communities and active economies. Holders of the same NFT come together to share information and collaborate, boosting the overall value of the project. Community power is a vital factor supporting the long-term value of NFTs.

Even in Japan, more companies are adopting NFTs. NFTs are being used not only in PFP projects but also in hometown tax programs and crowdfunding, with more use cases expected in the future—including among major corporations and public sector organizations. Demand for NFTs is expected to rise further, not decline. NFTs are not simply a bubble; as a technology with the potential to deliver value to society, their use across diverse areas is likely to accelerate.

Practical NFT Applications

This section introduces practical and effective ways to use NFTs. In recent years, NFTs have come to be seen not just as speculative assets but as tools that benefit real life and business. The following examples highlight the practical value of NFTs.

NFTs for Building Communities

NFTs can function as a way to join communities of people with shared interests and values. In Japan, many NFT projects focus on community building, creating strong bonds among holders.

Projects like CryptoNinja and LLAC have formed passionate communities and remain highly active. NFT holders interact via Discord servers and at offline events, and many projects allow holders to participate in project management. This gives NFT holders an active role as project members, not just as owners.

Owning NFTs offers the following benefits:

• Networking: Connect with other members of the same NFT project. Meeting like-minded people can lead to new friendships or business partnerships.

• Information Sharing: Access to the latest and exclusive information about the project. Holder-only updates are valuable for investment decisions and deepening project understanding.

• Bringing Ideas to Life: Use NFT IP to launch new projects or events. Community members can work together to accomplish things that would be difficult alone.

• Exclusive Perks: Receive benefits or services available only to NFT holders, such as rights to purchase limited edition merchandise or priority event access.

In this way, NFTs are a tool for building communities, connecting people, and creating new value.

NFTs in Hometown Tax Donation Programs

Recently, using NFTs has become an innovative approach to hometown tax donation programs. NFTs are more than just digital assets—they offer new ways to promote regional appeal and foster two-way engagement with supporters.

In NFT hometown tax programs, donors receive NFTs as thank-you gifts. These NFTs may be digital artworks or region-exclusive items. Unlike physical gifts, NFTs are delivered digitally, making them easy to store and manage and environmentally friendly.

Many municipalities across Japan are adopting NFT-based hometown tax initiatives. Examples include:

• Imabari City, Ehime Prefecture: Offers NFT art inspired by Imabari Towels, a leading traditional craft. Providing a digital version as an NFT presents the region’s appeal in a new way.

• Izumisano City, Osaka Prefecture: Offers NFT art featuring the mascot "Izumisano Daruma." Turning local mascots into NFTs deepens regional pride and strengthens supporter connections.

• Koka City, Shiga Prefecture: Offers NFT art themed around ninja. As the historical home of ninja, Koka uses NFTs to share its history and culture, promoting regional appeal widely.

These examples show NFTs are being used as new tools for regional promotion. NFT-based hometown tax programs provide donors with new experiences and effectively promote local attractions.

NFTs in Crowdfunding

NFT-based crowdfunding is a new model where creators issue their work as NFTs and raise funds directly from fans. Fans can support projects by buying NFTs and, in return, receive unique digital content or perks. Unlike traditional crowdfunding, this model provides backers with digital assets of value.

NFT-based crowdfunding is being used in a variety of projects both in Japan and abroad. Examples include:

• CNP: CNP, one of Japan’s largest NFT collections, used NFT-based crowdfunding to produce an animated series. Fans who bought NFTs supported production and received exclusive content and access to the production process.

• LLAC: The LLAC House construction crowdfunding raised over 10 million yen. Supporters who purchased NFTs obtained the right to use the completed facility and attend exclusive events.

This model is likely to continue expanding as a new way for creators and fans to connect. NFTs allow creators to raise funds directly from fans, bypassing traditional platforms, while fans gain tangible value in the form of NFTs as well as supporting the project’s success.

NFTs in Gaming

NFT games use blockchain technology to issue items and characters as NFTs, which players can use in-game or trade with other users. In traditional games, in-game items are managed by the game company, and players do not have true ownership. NFT games, by contrast, allow players to truly own items or characters and freely trade them.

Epic Games has drawn attention by releasing Illuvium, an NFT/blockchain game built on ImmutableX. In these games, players can earn rewards by playing, creating new game economies under the Play to Earn model.

Because the use of NFTs in-game is well-defined, natural demand is created and stable liquidity can be expected as recognition increases. NFT games are reshaping the gaming industry with new business models and providing players with new earning opportunities. NFT games are expected to continue diversifying and attracting more players.

Key Points When Purchasing NFTs

There are several important considerations when buying NFTs. NFTs are highly volatile and risky, so careful judgment is essential. Below are the main points to consider before making a purchase.

Clarify Your Purpose

When purchasing an NFT, it’s essential to clarify your purpose. You may be buying for collecting, investment for future appreciation, or use in a game or as art. If you buy without a clear purpose, you may be swayed by market volatility and end up with significant losses.

Additionally, NFTs generally have lower liquidity than other financial products, so you may not find a buyer when you want to sell. Research the NFT’s use case and market trends thoroughly and make decisions calmly. In particular, check the project’s roadmap, community engagement, and the credibility of the development team.

Clarifying your purpose will help you stay focused and less affected by market swings. It also enables long-term holding and lets you benefit from the project’s growth.

Invest Only Your Surplus Funds

NFTs are extremely volatile assets. In the past, many worthless NFTs were issued, and some had little liquidity and were hard to sell. Although the situation has improved, NFTs remain high-risk compared to stocks or Bitcoin, so use caution when investing.

Only invest surplus funds that you won’t need for daily living. Avoid using money set aside for living expenses or emergencies. If NFT values drop sharply, your financial security could be compromised. By using surplus funds, you can handle losses calmly and without major impact on your life.

Investment in NFTs should also be part of a diversified portfolio. Rather than putting all your money into NFTs, balance your investments across different asset classes to reduce risk. Given their high-risk, high-return nature, consider your overall portfolio balance and set an appropriate investment amount.

FAQ

Why Did NFTs Lose Popularity? What Caused the Market Decline?

The main reasons NFTs lost popularity are that many projects lacked practical utility, there was rampant speculative trading and fraud, and over 70% of the market consisted of automated or artificial trades that provided little real value to users. Regulatory crackdowns on fraudulent schemes seriously damaged market trust. NFTs also struggled to deliver unique convenience, as similar features were possible with existing technologies.

What Are NFTs Used For? How Are They Applied in Real Life?

NFTs certify ownership of digital art, music, game items, trading cards, and more. Creators can automatically receive royalties from secondary sales. Use cases are expanding to include Play-to-Earn gaming, metaverse assets, and managing the distribution of physical assets.

What’s the Difference Between NFTs and Regular Digital Assets? What Makes NFTs Unique?

NFTs use blockchain technology to establish uniqueness and ownership of digital assets. Unlike ordinary digital assets, NFTs cannot be duplicated or tampered with and guarantee originality. This non-fungibility underpins their unique value and enables applications in art, music, and virtual assets.

What Fields Could NFTs Be Used in Going Forward?

NFTs are expected to be used in digital art, gaming, sports, music, and real estate tokenization. As blockchain technology and smart contracts advance, more sophisticated NFTs with features like automated royalty distribution and conditional transactions will likely become mainstream, setting new standards for digital asset management for both businesses and individuals.

What Are the Risks of NFT Investment? How Can You Start Safely?

NFT investment risks include fraud, copyright infringement, legal uncertainty, high gas fees, and price manipulation. To start safely, use trustworthy marketplaces, verify seller credibility, start with small amounts, and take steps to strengthen your security.

What Role Do NFTs Play in Blockchain Gaming and the Metaverse?

In blockchain gaming and the metaverse, NFTs guarantee ownership of digital assets like in-game items and avatars, enabling players to trade freely. NFTs ensure scarcity and authenticity, giving players real asset value.