It is important to note that the title deed has a life of its own independent of the physical property. You can handover the physical possession of your house to a renter while still ensuring proof of your ownership. With the title deed, you can pledge this asset as a collateral to secure a loan.
If you have ever bought a house, you may recall going to the Sub-Registrar’s office to get your property “registered” in your name. Take a moment to think about why do we do this? Well, the land is an asset and when we buy it, we want proof that we own it – verifiable, undeniable proof. The government provides this service by taking on the responsibility of maintaining a registry of property ownership. “Registering” a property also gives you the “title deed” – a document that represents the property as an asset.
It is important to note that the title deed has a life of its own independent of the physical property. You can handover the physical possession of your house to a renter while still ensuring proof of your ownership. With the title deed, you can pledge this asset as collateral to secure a loan.
This is true for other valuable assets too e.g., cars. When we buy a car, we “register” its ownership at the Regional Transport Office. The RTO plays the same role as the Sub-Registrar office for vehicles – it maintains a secure, verifiable registry of vehicle ownership. Same idea, different asset. NFTs (Non-Fungible Tokens) are the true digitization of this idea. Blockchains provide a simple way to create secure, verifiable registries of any asset. When an asset’s ownership is registered in a Blockchain-based registry, an NFT is issued to represent this asset. Think of the NFT as a “title deed” of the underlying asset. The first assets to be registered on such blockchain-based registries were Digital Art. The high valuations of these Digital-Art backed NFTs have dominated media reports recently. NFTs could soon turn out to be the perfect opportunity for enterprises for three reasons:
Enterprise Digital Collectibles: A lot of brands are often sitting on assets without realizing their true value. Brands like cars, watches, designer clothes often have digital designs preceding the product creation – assets which fans would love to be associated with. Marketing departments are sitting on vast amount of digital assets – some of them are moments that fans would love to be associated with. All of these are what we call Brand Digital Collectibles. Enterprises can create NFTs backed with such digital collectibles to enable completely new forms of marketing and customer engagement. What is interesting about these marketing models is that they can drive a much closer engagement between brands & their customers than advertising and traditional media channels. One platform working in this direction is ngageN.
Product Passports: Products like cars and industrial machines are expensive and have a long lifecycle. By enabling manufacturers to issue passports for such products, you are enabling after-sales service providers, financiers, insurers, secondary buyers to record the cradle-to-grave lifecycle data about the product. This product-specific data-sharing approach across multiple enterprises enables a win-win scenario for all participants. Manufacturers can offer pay-as-you-go models, financiers reduce risk by lending against a digital asset, insurance companies can enable usage-based insurance models, secondary buyers get a credible record of the product enabling higher value and lower cost of ownership. One platform working in this direction is marketsN.
Documents as Digital Assets: Today, vast amounts of capital are stuck in “documents” like outstanding invoices, delayed bill-of-ladings, unpaid credit notes, etc. Delays in manual processes and reliance on “original” documents means that the ability of enterprises to optimize the use of capital and operate at speed is significantly compromised. Similar to a title deed of a document that converts property into an asset, NFTs enable such enterprise documents to be converted into assets whose ownership can be easily, yet securely, transferred without relying on cumbersome processes. These document-based assets can also be used as collaterals in supply chain finance. Unlocking Capital in Supply Chains will increasing become a critical success factor for enterprises and NFTs will play a key role here.
Even with these powerful use cases, we believe we are still scratching the surface. With increasing awareness about these applications among enterprises and regulators, NFTs can bring about significant efficiencies in the economy. We are just at the beginning of this journey and the possibilities are endless.
Source: Business World
