Are NFTs obsolete? A comprehensive look at NFT applications

What Are NFTs? Features and Overview

NFTs (Non-Fungible Tokens) are a breakthrough technology that issues a unique certificate for digital assets. Unlike traditional digital data, which can be easily copied or tampered with, NFTs provide unequivocal proof of ownership. The technology is anchored on the blockchain, guaranteeing ownership in a tamper-resistant manner.

By issuing NFTs for digital artwork, creators can certify authenticity. NFTs can also be issued for game items or tickets, enhancing scarcity and value. Far beyond investment, NFT adoption is anticipated across numerous sectors.

Key NFT use cases include:

NFT Certificates: Conventional certificates were prone to forgery and tampering, but NFTs enable safer, more reliable certification. Blockchain technology ensures transparent tracking of issuance history and ownership, helping prevent fraud.

Local Tax Donations with NFTs: NFTs enable the delivery of unique digital rewards, such as digital art or virtual experiences. Communities can express regional appeal as digital assets, forging new relationships with supporters.

NFT-Driven Crowdfunding: Creators issue works as NFTs, raising capital from fans in a new crowdfunding model. By purchasing NFTs, supporters fund projects and receive exclusive perks. Unlike standard crowdfunding, supporters gain an asset with tradable value.

NFT Gaming: In blockchain-based games, players own in-game items or characters as NFTs, which can be traded or sold. This gives in-game assets tangible value and enables players to earn through gameplay. The result is a new ecosystem merging game and real-world economies.

Though still developing, NFTs are expected to play a vital role in real estate transactions and the metaverse (virtual worlds). As digital society evolves, NFT applications will keep expanding.

Are NFTs Really “Dead”?

NFTs have gained attention for verifying ownership of digital assets such as art and game items. Yet, criticism persists that “NFTs are pointless or obsolete.” Understanding this debate requires examining the market’s history.

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

During the early NFT boom, many low-value NFTs were minted, and some lacked liquidity, making them difficult to sell. This stemmed from early-stage confusion and malicious actors. Speculators flooded the market, producing many projects with little real value.

Research shows most NFT projects have already ceased operations, leaving many holders with losses. On average, NFT holders have faced sizable losses, and project lifespans are typically short. Notably, many projects have disappeared in recent years, resulting in a high failure rate.

Industry Insights

Co-founders of major NFT marketplaces have highlighted NFT potential in media interviews, especially in gaming and physically-backed NFTs. They are expanding new use cases and stressed that serving as a hub for all NFT types is critical for capturing the next wave of collectors.

“Our platform constantly introduces new use cases. Being a hub for every NFT type is crucial for attracting the next wave of collectors,” industry leaders stated.

The platform supports gaming and physical-item NFTs and offers customizable collection pages. Industry experts predict that gaming will accelerate NFT adoption and that seamless onboarding for gamers will be essential.

Many companies remain optimistic about NFTs. A leading US venture capital firm’s market report forecasts that NFTs will become established digital brand assets and commonplace among businesses and communities.

Why NFTs Still Hold Value

Three key factors sustain NFT value:

Scarcity: NFTs are recorded on the blockchain, certifying exclusive ownership. This technical trait gives digital assets scarcity akin to physical ones. Limited-edition NFTs may maintain high value due to their rarity.

Utility: NFTs serve various practical purposes, including in-game items and tickets. Beyond collecting, functional NFTs attract steady demand. For example, NFTs can verify event participation or membership, delivering real value.

Community: NFT projects often foster passionate communities and vibrant economies. Shared values and interests drive engagement and project growth, supporting and enhancing NFT value. Stronger community bonds tend to yield long-term success.

In Japan, NFT adoption is rising among corporations. NFTs are used for PFP projects (profile picture NFTs), local tax donations, and crowdfunding, with increasing examples from major enterprises and government bodies.

Accordingly, NFTs are not obsolete; demand is expected to rise. Far from a passing bubble, NFTs are a technology with the potential to deliver societal value and will be applied across diverse domains. As the technology matures, more practical and sustainable NFT ecosystems will emerge.

NFTs Are Not Obsolete: Practical NFT Use Cases

Below, we detail effective NFT applications with real-world examples, demonstrating that NFTs are practical digital assets—far more than speculative instruments.

Meaningful NFT Use Case #1: Community

NFTs can function as memberships for communities sharing common interests and values. In Japan, many NFT projects prioritize community building, developing distinctive cultures.

For example, PFP projects like CryptoNinja and LLAC have vibrant communities with active engagement. These projects host regular Discord meetups and offline events, and often let holders participate in project operations.

Holding NFTs provides several benefits:

Networking: Connect with fellow project members and build valuable relationships. These connections can spark business or creative collaborations.

Information Sharing: Access exclusive project updates and non-public information, giving holders an edge in investment and participation.

Idea Realization: Use NFT IP to launch new initiatives or events. Collaborating with community members to create derivative projects boosts the entire ecosystem’s value.

Exclusive Perks: Enjoy benefits and services reserved for NFT holders, such as early access to new releases or invitations to special events.

Community-driven NFTs are more than digital assets—they connect people, and this social value is crucial for NFT sustainability.

Meaningful NFT Use Case #2: Local Tax Donations

NFTs are gaining attention as an innovative tool in local tax donation schemes. NFTs transcend digital assets, providing new ways to showcase regional appeal and foster interactive supporter relationships.

NFT-based local tax donation involves giving NFTs to donors. These may include digital artwork or region-exclusive items. Unlike physical gifts, NFTs can be held indefinitely as digital assets.

Municipalities across Japan have adopted NFT local tax donations. Notable examples include:

Imabari City, Ehime Prefecture: Offers NFT art themed on Imabari towels, digitizing traditional industries to engage new audiences.

Izumisano City, Osaka Prefecture: Offers NFT art featuring the local mascot “Izumisano Daruma,” boosting regional brand recognition.

Koka City, Shiga Prefecture: Issues ninja-themed NFT art, representing history and culture as digital assets. Combining tourism with NFTs supports new regional revitalization strategies.

NFT local tax donations provide a means to promote regional appeal worldwide. For digital-native generations, NFTs are a familiar reward, helping encourage youth participation in local support.

Meaningful NFT Use Case #3: Crowdfunding

NFT-driven crowdfunding enables creators to mint works as NFTs and raise funds from fans, forming a new crowdfunding model. Fans support projects by purchasing NFTs and receive unique digital content or perks.

Compared to traditional crowdfunding, NFT-based crowdfunding offers distinct advantages: supporters acquire an asset with investment potential, and NFTs can be traded on secondary markets, providing an exit strategy.

NFT crowdfunding is gaining traction in Japan and abroad. Leading examples include:

CNP: One of Japan’s largest NFT collections, CNP used NFT crowdfunding for anime production. Community backing enabled large-scale animation, with NFT holders receiving exclusive viewing rights.

LLAC: Raised over ¥10 million for LLAC House construction, blending physical facility development and NFTs to create a new hybrid crowdfunding model.

NFT crowdfunding is still early-stage but poised for further growth. As a new way to connect creators and fans, it is drawing significant interest.

Meaningful NFT Use Case #4: NFT Gaming

NFT games leverage blockchain to mint items and characters as NFTs, which users can play with or trade. Major gaming companies are releasing NFT and blockchain games on leading blockchains, boosting industry attention.

NFT gaming’s defining feature is true asset ownership for players. Traditionally, game assets were controlled by operators, but in NFT games players own assets on-chain, which may persist even after game services end.

Clear use cases drive natural demand and help secure stable liquidity as recognition grows. Players can enjoy gaming while accumulating assets, enabling a new “Play to Earn” experience.

NFT gaming merges entertainment and economic activity in a pioneering model, and is expected to keep evolving. The rise of NFTs in gaming is accelerating the practical use of digital assets.

Key Considerations When Buying NFTs

While NFTs are technologically innovative, they carry investment risks. It is crucial to consider the following points before making a purchase.

Buying NFTs: Consideration #1 — Define the Purpose

When buying NFTs, clarify your intended use—whether for collecting, investing, or as part of a game or artwork. Buying without a clear purpose can expose you to market volatility and losses.

Defining your purpose helps you choose suitable projects. For community participation, select active projects; for investment, prioritize those with clear roadmaps and proven track records.

Due to their specific nature, NFTs often have lower liquidity than other financial assets, posing risks if you need to sell quickly. Conduct thorough research on the NFT’s use case and market value trends, and make informed decisions. Review official project information and community activity, and take a long-term approach.

Buying NFTs: Consideration #2 — Invest Only Surplus Funds

NFTs are highly volatile assets. In recent years, many low-value NFTs were minted with poor liquidity, making them difficult to sell. Early market failures left many investors with losses.

Although conditions have improved, the risks remain high. Compared to stocks or Bitcoin, NFTs are even riskier—proceed with caution. The NFT market is still developing, and regulatory frameworks are incomplete, so unexpected risks can arise.

Invest only surplus funds—money not needed for daily expenses or emergencies. Safeguard living costs and reserves, and only invest what you can afford to lose. Diversify and avoid concentrating funds in a single NFT project.

Strict risk management and rational decision-making enable safer NFT investing. Monitor market trends and adjust your strategy as needed.

FAQ

What Is an NFT? How Does It Work?

An NFT (Non-Fungible Token) is a unique digital asset built on blockchain technology. Each NFT has a distinct ID, with author and transaction history recorded on-chain. It’s difficult to forge or alter, making NFTs ideal for proving ownership of digital art and content.

Are NFTs Really Obsolete? What’s the Current State of the Market?

The NFT market is not dead. Transaction volumes remain robust, new projects are launching, and mainstream adoption is expanding. Technological innovation and use case growth continue to drive market development.

What Are the Real-World Uses for NFTs? What Industries Are Embracing Them?

NFTs are used across digital art, music, gaming items, sports cards, trading cards, fan communities, and real estate ownership, among other fields. Artists can sell works while retaining copyrights, and gamers can own and trade items.

What Are the Risks of Investing in NFTs? How Can You Avoid Scams and Losses?

NFT investing entails risks such as scams, pump-and-dump schemes, and phishing. To avoid losses, research credible projects, buy from verified sellers on official marketplaces, safeguard private keys, and decline suspicious giveaways.

How Do NFTs Differ from Traditional Digital Assets?

NFTs are unique, non-fungible digital assets with ownership verified on the blockchain. Conventional digital assets can be copied and exchanged freely. NFTs guarantee scarcity and authenticity, setting them apart.

Do NFTs Have Long-Term Potential? What’s the Outlook?

NFTs have strong long-term potential. Tokenization of game assets and RWAs, plus integration with Web3, are maturing the market. Growing participation from major companies and regulatory progress are expected to drive wider adoption.