Are NFTs Dead? A Guide to NFT Applications

What Are NFTs? Features and Overview

NFTs (Non-Fungible Tokens) are a groundbreaking technology that provides a unique certificate of authenticity for digital assets. Unlike traditional digital files—which can be easily copied or altered and are difficult to verify as original—NFTs leverage blockchain technology to establish clear proof of digital content authenticity and ownership.

For instance, by issuing an NFT for a digital artwork, the artist can certify its originality. This process reduces the risk of unauthorized copying and ensures creators receive fair compensation. NFTs can also be issued for game items or event tickets, adding rarity and unique value. Beyond speculative investment, NFTs are poised for practical adoption across diverse industries.

Here are some concrete examples of NFT applications:

• Proof of NFT Issuance: Conventional certificates are vulnerable to forgery and tampering. NFTs, recorded immutably on the blockchain, offer secure and highly reliable proof of issuance.
• NFT-Enabled Hometown Tax Donations: Municipalities use NFTs to deliver unique rewards—such as digital art or virtual experiences—distinct from traditional gifts. This approach helps promote regional appeal and fosters interactive relationships with supporters.
• NFT-Based Crowdfunding: Creators issue NFTs for their works and raise funds directly from fans. Supporters purchase NFTs to back projects and receive exclusive perks or digital content in return.
• Gaming with NFTs: Players own in-game items and characters as NFTs, enabling free trade or exchange. This model gives game assets real-world value and allows players to earn income through gameplay.

Though still developing, NFTs are expected to play a vital role in real estate transactions and economic activities in the metaverse (virtual environments). By clarifying digital asset ownership, NFTs promise safer and more transparent transaction environments.

Are NFTs Really "Dead"? A Market Perspective

NFTs were once at the center of the digital asset boom, especially for digital art and gaming items. Yet, criticisms persist, with claims that "NFTs are pointless" or "the NFT trend is over." To understand this debate, it's essential to objectively analyze the market's history and current status.

Fact: Many Low-Value NFTs Were Issued and the Boom Subsided

In 2021, countless NFTs with little real value flooded the market. Many suffered from poor liquidity, making resale difficult. These problems stemmed from early market turmoil and fraudulent practices by bad actors. Recently, however, the NFT boom has cooled, and market conditions have notably shifted.

Industry Opinions and Market Status

Market research shows that approximately 96% of NFT projects have failed, and 43% of holders have incurred losses. The average loss among holders is 44.5%, and the typical NFT lifespan is just 1.14 years. In 2023 alone, about one-third of NFT projects disappeared, setting a new record for project failures.

Despite this, the co-founder and CEO of a leading NFT marketplace highlights untapped potential, especially for gaming and physically-backed NFTs. The platform is expanding new use cases and emphasizes the need to become a central hub for all NFT types to capture the next wave of collectors.

New use cases are constantly emerging. Serving as the hub for all NFTs is crucial for attracting the next wave of collectors.

Co-Founder & CEO, Major NFT Marketplace

The platform now supports game and physical item NFTs and offers customizable collection pages. The gaming sector is accelerating NFT adoption, and a frictionless onboarding experience for gamers is seen as increasingly important.

On the other hand, some companies remain optimistic about NFTs' future. According to a major US venture capital firm's December 2023 report on crypto markets for 2024, NFTs are expected to establish themselves as digital brand assets and become widely adopted by businesses and communities.

Why NFTs Still Matter

Even amid temporary market downturns, the intrinsic value of NFTs persists. These key factors ensure NFTs remain relevant:

• Scarcity: NFTs, recorded on the blockchain, provide definitive proof of unique ownership—bringing new value to digital assets.
• Utility: NFTs serve a variety of practical purposes, from in-game items to event tickets. NFTs with tangible utility are more likely to maintain value over time.
• Community: NFT projects often foster passionate, active communities that support sustainable economic ecosystems.

Across Japan, more companies are adopting NFTs, not only for PFP (profile picture) projects but also for hometown tax donations and crowdfunding. Large enterprises, governments, and public institutions are also likely to increase NFT adoption. Far from fading, NFT demand is expected to grow. NFTs aren't just a bubble—they offer genuine societal value and will find increasing practical use as the technology matures.

NFTs Are Not Obsolete: Practical Use Cases

Far more than speculative assets, NFTs are being applied in numerous fields as a technology with real utility. Here are some major NFT use cases and examples.

NFT Use Case 1: Community Building

NFTs can function as digital membership passes for communities of like-minded individuals. In Japan, many NFT projects focus on fostering active, engaged communities among holders.

Projects like CryptoNinja and LLAC have developed robust communities, with regular interaction via Discord and offline events. Many also allow holders to participate in project management. By holding NFTs, members gain benefits such as:

• Networking: Connect with fellow holders and build new friendships.
• Information Sharing: Access exclusive updates and share insights with other members.
• Project Realization: Use NFT IP to launch new initiatives or events, collaborating creatively within the community.
• Exclusive Benefits: Enjoy special perks or services reserved for NFT holders.

NFTs serve not only as digital assets but also as proof of participation in vibrant communities.

NFT Use Case 2: Hometown Tax Donations

Recently, the use of NFTs in hometown tax programs has gained traction as an innovative approach. NFTs offer new ways for local governments to showcase regional appeal and foster two-way engagement with supporters.

In NFT hometown tax programs, municipalities issue NFTs—such as digital art or region-exclusive items—as thank-you gifts. Delivered digitally, NFTs are easy to manage and imbued with unique or rare qualities.

Examples of NFT hometown tax projects include:

• Imabari City, Ehime: NFT art featuring Imabari towels, promoting local traditional industry in digital form.
• Izumisano City, Osaka: NFT art based on the mascot "Izumisano Daruma," expanding local character culture.
• Koka City, Shiga: Ninja-themed NFT art, uniquely expressing local history and culture.

These cases show how NFT-based hometown tax programs can help regions promote themselves and build new relationships with supporters.

NFT Use Case 3: Crowdfunding

NFT crowdfunding allows creators to issue NFTs for their works and raise capital directly from fans. Fans support projects by purchasing NFTs and receive unique digital content or perks in return.

Compared to traditional crowdfunding, NFT-based approaches offer:

• Transparency: Blockchain tracks all transactions, enabling supporters to confirm how funds are used.
• Uniqueness: NFTs are one-of-a-kind digital assets, offering supporters special rewards unavailable elsewhere.
• Secondary Market: NFTs can be traded, giving supporters the chance to profit if their NFT appreciates in value.

Notable NFT crowdfunding examples include:

• CNP: Japan's largest NFT collection, used NFT crowdfunding for anime production with impressive results.
• LLAC: The LLAC House crowdfunding project raised over ¥10 million, demonstrating the power of community-driven initiatives.

While still new, NFT crowdfunding is expected to grow rapidly in the coming years.

NFT Use Case 4: NFT Gaming

NFT games issue in-game items and characters as NFTs on the blockchain, allowing players to use, buy, and sell them. When Epic Games launched the blockchain game Illuvium on ImmutableX in October 2023, it further heightened industry interest in NFT gaming.

NFT games' key innovation is that in-game items and characters have real asset value. Players can earn rare items and sell them for income—creating new "play-to-earn" ecosystems not found in conventional games.

Because NFT games have clearly defined use cases, they naturally generate demand and maintain liquidity. For many players, NFTs are more than entertainment—they're a vehicle for economic activity, and adoption is expected to expand further.

Important Considerations When Buying NFTs

Despite their potential, NFTs come with risks and require careful consideration. Here are the most important points to evaluate before purchasing:

Consideration 1: Define Your Purpose

Before buying an NFT, clarify your intended use—whether for collecting, investing, or practical application in games or art. Without a clear goal, you may be exposed to market volatility and risk significant losses.

Since NFTs tend to be less liquid than other financial assets, you may not always find buyers when you want to sell. Research the NFT's use case and market trends thoroughly before making a decision.

Key points to consider include:

• Project Credibility: Investigate the project team's background and track record.
• Community Engagement: Assess the activity and enthusiasm of the project's community.
• Utility: Confirm whether the NFT offers practical features or exclusive benefits.

Careful research can help ensure safer NFT purchases.

Consideration 2: Use Only Surplus Funds

NFTs are highly volatile. In 2021, many low-value and illiquid NFTs were issued, making resale difficult. While the market has improved, risks remain high—even compared to stocks or Bitcoin—so exercise caution.

It's best to invest only surplus funds, not money needed for living expenses or emergencies. Diversify your portfolio to help mitigate risk, and never invest more than you can afford to lose.

Given market volatility, consider a long-term investment horizon. Focus on the project's fundamentals and community growth, rather than short-term price swings.

Conclusion: NFTs Are Not Obsolete—Use Cases Will Expand

This article explored whether NFTs are "dead." NFTs represent a technological leap for proving digital asset ownership, providing unique authentication not possible with traditional digital files.

While the early market saw many low-value and illiquid NFTs, the landscape has changed—only the most valuable NFTs remain, supported by strong communities. However, NFTs remain more volatile than other assets, so it's crucial to define your use case before investing.

NFTs are still evolving, but their practical applications—including community building, hometown tax donations, crowdfunding, and gaming—are expanding. Use this guide to discover effective ways to leverage NFTs. Far from being a passing bubble, NFTs are a technology with the potential to add real value to society, and their ongoing growth is promising.

FAQ

What Is an NFT? How Does It Relate to Blockchain?

An NFT is a non-fungible token built on blockchain technology. It records digital asset ownership and authenticity on the blockchain, representing unique digital items.

What Are Real NFT Use Cases and Applications?

NFTs are used to certify digital art ownership, enable in-game item trading, prevent electronic seal forgery, and manage metaverse assets. Blockchain guarantees authenticity, driving adoption in various industries.

Is the NFT Market Over? What's the Current Situation?

The NFT market has contracted since its peak but remains active. As of 2026, new uses—such as gaming, digital art, and metaverse assets—are gaining momentum, and the market continues to evolve.

What Are the Risks and Safety Considerations for NFT Investment?

NFT investment carries liquidity, price volatility, security, and fraud risks. To stay safe, use reputable platforms, manage your wallet securely, and research projects thoroughly.

What's the Difference Between NFTs and Cryptocurrencies?

NFTs are non-interchangeable digital assets with unique value. Cryptocurrencies are interchangeable and function as money. NFTs certify ownership; cryptocurrencies are mainly for value exchange.

What Is the Future Outlook for NFTs?

The NFT market is expected to grow, becoming a key foundation of the digital economy. Advances in technology and regulation will drive further development, and NFTs offer diverse future possibilities.

How Do You Buy and Sell NFTs? What Are the Steps?

Go to an NFT marketplace, select the NFT you want, and submit a bid or offer. To sell, list your NFT and wait for buyer offers. When a deal is made, NFT and payment are exchanged.

What Are Some Well-Known NFT Projects or Examples?

Famous NFT projects include Beeple's Everydays, CryptoKitties, Bored Ape Yacht Club, and OpenSea. Corporate marketing examples are growing, such as Calbee's potato chips NFTs.