FUTURE’S FINEST # 3 – NFT: A HYPE WITH ADDED VALUE
Non-Fungible Tokens, better known as NFTs, are currently all the rage in the digital world, to the extent that the value they add is even making the insurance industry sit up. In the Future’s Finest section, every month Fokke and Maarten share a digital innovation that simply should not be missed. This month they discuss the excitement surrounding NFTs and the value that they can add.
An introduction to NFTs
NFTs represent unique, digital proof-of-ownership for all kinds of online and offline assets. These can vary from art and photographs to a laptop or even a car. For every NFT, blockchain technology makes it possible to keeps tabs on who is the rightful owner of an object, as well as at which moment in time. Thanks to this system, the rightful owner of every asset is always correctly registered in a logbook. This technology also makes it impossible for people to illicitly falsify ownership or distribute copies of NFTs in the market.
DIGITAL ART IS EASY TO FAKE. ALL IT TAKES IS TWO KEYBOARD COMBINATION-STROKES, CTRL+C, CTRL+V
The world of digital art
One of the markets in which NFTs have made their presence felt this year is digital art. NFTs offer clear advantages over what you’d term “classical” art, because with the latter engaging the expertise to inspect whether or not a work of art is a forgery is very time consuming. Fortunately, making a good fake is a lengthy and laborious process. Digital art, on the other hand, can be copied quickly, with just two keyboard combination-strokes: ctrl+c, ctrl+v. It’s for this reason that NFTs have been adopted so quickly in this world. Thanks to an NFT, a fake can swiftly be spotted. The complete journey taken by a work of art, from its artist to its current owner, is there for all to see. However, it’s key to establish the authenticity of an asset and its creator as soon as the NFT is created, as opposed to doing so several years later.
NFTs a boon to the insurance industry too
For insurance purposes, the application of NFTs can also offer interesting new possibilities, particularly when it comes to laptops and smartphones. Mobile phones have a secure module for cryptographic keys to facilitate contactless payments, and the same applies to laptops. This is an excellent basis for digital proof of ownership, making it easy to verify the authenticity of these products.
Currently, when closing an insurance policy for a laptop or telephone, more often than not a check is not made on whether someone is the actual owner. A claim under a certain threshold is automatically honoured. As is the case with classical art, verifying a claim is a laborious process. Furthermore, investigating the circumstances surrounding a claim and ownership takes a lot of time and energy. However, just like with digital art, an NFT of a mobile phone enables the insurer to reliably, cheaply and quickly establish whether the insured party really is entitled to the claim amount. Consequently, the premium can be reduced.
So if you are buying a second-hand phone or laptop any time soon, don’t forget to check its authenticity; ask for the NFT of your new purchase!