Non-fungible tokens (NFTs) are becoming “a thing” and this is not surprising anymore.
Born and commonly defined as “digital art”, NFTs have proven, in many applications, to provide a wide range of utilities that can be beneficial for both parties, issuers and holders, that go beyond simply the artistic standpoint.
There is actually a potentiality that is coming out and that still has to be discovered that can revolutionize the way we approach our everyday lives.
One example might be the second-hand market. Within this industry, there have been many “black swans” that have led people to discredit the market.
However, NFTs have now the potential to solve some of those problems, and this article will explain how.
What are the real-world problems of the second-hand market?
Since its beginning, the second-hand market has experienced challenges.
Counterfeiting, scams, frauds, and other negative behaviors have made it a risky industry that many people shun.
Furthermore, the luxury second-hand market may make customers distrustful of the items’ provenance, authenticity, and so on.
Why is it essential to revive the second-hand market?
As overconsumption causes more waste, which pollutes our air and water, the need for a circular, more sustainable economy grows.
As such, many people are seeking alternatives to traditional solutions as their concern for the environment increases.
For example, more people are paying attention to the materials they buy, making sure they’re recyclable, while others choose to buy fewer products.
The second-hand market may play a crucial role in this scenario, as reusing existing materials and items will significantly reduce pollution.
What roles may NFTs play in the second-hand market?
NFTs are defined as verifiable identity art that exists on a blockchain that is irreplaceable, unique, and cannot be copied.
NFTs rely on cryptocurrencies and the blockchain, which is a distributed digital ledger, or a shared electronic database. However, unlike other standard databases, blockchain allows us to add to it but not remove or alter anything.
Because of these characteristics, NFTs are ideal for the second-hand market because each new transaction is registered after the first creator has issued the NFT, and, therefore, its path is transparent.
Potential buyers of a second-hand item associated with an NFT, in fact, will be able to learn about its provenance and how many owners it has had.
How may NFTs help with second-hand market challenges?
So far, NFTs have proven to be capable of overcoming a variety of current challenges that the second-hand market faces on a daily basis.
Here are a couple of such examples.
NFTs as proof of authenticity
One of the first second-hand markets that NFTs may be able to tackle is that of authenticity. Indeed, too frequently, second-hand items, particularly those belonging to luxury brands, lead consumers to believe they are fake or well-executed imitations.
These doubts prevent buyers from purchasing, prompting them to exit the second-hand market.
In this case, because NFTs embed and track each transaction since their issuance, they may be able to offer purchasers useful information that may be used to confirm the item’s authenticity.
NFTs as proof of ownership
Potential buyers in some second-hand markets, such as the automotive one, may be interested in learning how many owners the automobile has had in order to evaluate its condition and usage.
Again, NFTs may offer useful information on how many owners owned the car or any other item.
NFTs as proof of provenance
Most likely for reasons related to authenticity, the provenance may also be a sore point in the second-hand market.
This is because a verified provenance can demonstrate a piece’s legitimacy and considerably raise its value.
In this way, potential buyers may examine the NFT’s metadata using a blockchain explorer such as Etherscan or an NFT explorer such as Solana explorer, identifying details like the asset’s owner and verifying its provenance.
Although NFT utilities are still in their early stages, they are revealing their potential to tackle some of the most frequent problems we face on a daily basis.
As shown throughout this article, the challenges associated with the second-hand market are ideal candidates for NFTs to take on.