The continual adoption of blockchain protocols for digital transfer of ownership continues to penetrate different industries. The acceptance of these crypto-assets and their different derivatives is resulting in different innovative uses from around the world.
Non-fungible tokens, among other crypto assets, are an example of such innovation that is fast gaining attention on the African continent. The use of NFTs for their unique and immutable metadata on the public digital ledger is seeing a disruptive level of adoption, especially in Africa’s largest economy.
As early as 2018, at the Ethereal blockchain submit, a project by Jacon Osinachi Igwe was among the finalists for the Bridgeman Studio awards. The knowledge of how to mint NFTs and the application of this knowledge to his artwork was the channel he was able to harness to sell his artwork amid COVID-19 scares.Other African artists like Jacon are increasingly getting into the NFT space as there is explosive growth that is showing no sign of slowing down any time soon. Following the success of his artwork in attracting attention in the crypto art market, he is getting recognition as the first African artist to exhibit some digital art at Christie’s, a renowned art auction house in London, UK.
Another Nigerian artist, Abdulrahman Yusuf, is another notable artist that got into the NFT art space to showcase his artwork. Yusuf uses NFTs to publish his work and still get his royalties when his artwork is traded. So far, Yusuf claims to have sold 44 digital works of art on various NFT platforms. At the annual Art X Lagos fair, the exhibition and sale of different NFTs further put a stamp on the large adoption of NFTs as NFTs took centre stage during the exhibition. The use of NFTs is making it possible for artists to commercialize their work and secure their rights to such artistic expression on the blockchain. Art sales in Africa are still ranked low, with a 1% aggregate in the $50 billion global art market worldwide. Taking a piece of the global pie of the art market by African artists seems more possible now than ever with the use of NFTs over the blockchain.
In kenya, NFTs are also seeing large scale adoption, with different works of art auctioned as NFTs. Rich Allela, an award-winning photographer and filmmaker, was one of the early adopters of NFT to lead the charge in auctioning his art collection via NFTs. In collaboration with Picha Images, he was able to auction his artwork on the OpenSea marketplace.
In South Africa, liquidating the capital that is currently illiquid in NFTs is one of the major targets for companies that are playing in the NFT scene. A South African company, NFTfi, is making the financialization of NFTs possible. This company is a marketplace that allows its users to get a cryptocurrency loan on their digital artwork and uses their NFTs as collateral for loans. This loan is from users on the blockchain on which they built their platform.
This digital way of raising funds for other projects by digitalizing the traditional loan process, just like traditional banks and auction houses, shows how NFTs are becoming useful for real-life purposes. In the traditional scenes, loans come in at 50% of the value of the artwork. On digital platforms like NFTfi, lenders offer up to 50% of NFT values as principal, with interest rates varying on the asset valuation.
Use cases of NFTs in Africa
One of the main reasons Web 3.0 is getting all the attention it deserves is because of the digital ownership it provides. Think about it this way: NFTs can provide creators with the keys to own their assets digitally. Each NFT has its own distinct metadata that contains information about the piece of art that certifies its uniqueness and authenticity. This special information is encoded on the blockchain’s ledger. Using this platform is useful for tracking ownership as ownership changes hands. Various intellectual properties can exist on the blockchain, with a traceable public framework backing this up. The decentralization of these pieces of information makes them immutable and traceable back to their origin. This will mean that ownership will forever have a traceable origin to its creator, and royalty will forever be remitted, creating an intergenerational pool of wealth over the internet.
So, how can NFTs be useful for the push for ownership across several African intellectual properties? Here is how:
- Art and Content
The uniqueness of African art makes it a commodity that the world always wants to have. There is an African art scarcity problem that NFTs can help solve. Their peculiarity and uniqueness, coupled with digital technology, makes it easier to authenticate them and their origin. The cultural value that these authentic pieces of art possess shows the excellent craftsmanship of African artists via their art to the rest of the world.
Crypto art and the infusion of African craft can get better valuations with their authentic verification and digital ownership. Just like the wave that CryptoPunk on the Ethereum blockchain is making, African art and craft can also hold tremendous value.
Although the craft itself is important, an important aspect of this setup is proof of ownership of these art pieces. This is one of the major reasons why crypto art is the most popular NFT use case.
- Fundraising
By and large, several African countries still rely on foreign aid to fund some developmental projects. These projects are important for the growth and development of certain sectors in the country. Unfortunately, these funds may not be adequate to finance these projects to completion. With NFT, there might be a way to raise funds properly and for the right course. Certain initiatives that are funded can be tracked on the blockchain. Tracking funds’ utilization this way will ensure that there is total accountability for the funds that these initiatives receive. NFTs have potential in the fundraising space as they can turn content that people around the world make to raise money into digital properties. These contents become NFTs that can be sold, bought, resold, and auctioned where the charity receiver receives royalty every time ownership changes hands. NFTs can also be turned into a more creative revenue stream where the receiver receives a royalty any time an audience base watches a specific video or listens to a specific song.
All of these things are only possible with the collaboration of artists, businesses, and technology platforms to generate, monetize, and monitor the inflow of funding. Interestingly, the blockchain platform is also useful for tracking the way funding is used for different projects. In the area of raising funds for specific projects, funding does not necessarily have to come from outside the country. In a bid to make these projects more sustainable, converting them to NFTs and having the community of people that these projects directly affect helps to raise money in its little way. By using this route of raising funds, the locals are also part of the development, and the value of their stake will increase in good time.
- NFTs for Real Estate
The property ownership industry is changing with important technology advancements and the latest innovations. For several industries, the use of blockchain and cryptocurrencies is disrupting the way the market works, and the property industry is one of them. Several new opportunities exist for investors who are looking to get into this space but do not have the necessary know-how. As it concerns Africa and its real estate scene, NFTs offer a great way to sell fractional ownership of a property to individuals. NFTs are capable of holding digital information about the ownership of physical items and real estate properties. Real estate owners can decide to sell fractional ownership of their property to investors by issuing non-fungible tokens over the blockchain. The investors in this fractional ownership split would receive a rental income and NFT appreciation when there is a sale of such property.
Furthermore, there is always a tussle in certain African countries when it comes to land and buildings. However, converting physical ownership to digital assets is a way of proving ownership over real estate property. The ability to store the ownership of a physical asset and the records of ownership transfer over a public ledger for people to access.
This way, there can be dispute resolution and proof of ownership whenever any dispute comes up. Using this method of proving ownership does not restrict locals to ownership and offers the rest of the world the ability to buy into Africa without being in Africa. One of the major disadvantages of making physical properties or any property digitally is that the technology is still new. There will always be a level of risk because procedures are not cast in stone, at least not yet.
- NFTs for Gaming
Gaming is another area of Africa’s development that is taking the world by storm. Several talents are doing a great job in creating realistic characters in the gaming scene in different African creative industries. One of the ways NFTs can become a useful tool in this space is via purchasing items in the games. Several games have valuable in-game items that are bought or sold for real money. Just as the direction of the gaming scene is going around the world, gamers play to earn. Gamers get to earn items that are tradeable in the game. These items are NFTS that gamers can sell on the NFT marketplace at a price they set. Interestingly, these items are useful for achieving certain performance goals in the game. They can be skins, tools, or other useful equipment that makes gamers better in the game.
As a developing gaming scene on the African continent, there are several ways with which the concept of NFTs can be implemented in gameplay. The early adoption of using NFTs as a collectable item with values will make them attractive to players from all around the world.
- NFTs for Sports
It is common knowledge that several athletes with high potential for going far in their profession need funding to progress. Several African athletes fall under this category and can benefit immensely from tokenizing their career progression. How will it work you may ask? Well, an exclusive collectable from up and coming talents who have the potential to break out. This is just like investing in a startup with potential. This way, investors have their NFTs with the hope of trading them for gains in the future. Accomplished athletes can create NFTs of their top moments. Right now, the most expensive NFT is of LeBron James’ shot, selling for $387,000. Capitalizing on this opportunity to raise funds for athletes for future profit is a win-win opportunity for both the athlete and the investors.
Wrapping It Up
Getting ahead of new technology gives its users some advantage over those that come at a later stage of the technology. When it comes to NFTs and how they are currently being adopted on the African continent, it is evident that the adoption will continue to increase as time goes on. Although new technologies add benefits to their users, they also come with a level of potential risk. Weighing the disadvantages to its advantage will help you decide if this is something you can accommodate as a user. While NFTs provide Africans with a unique way of unlocking their ownership issues, the control of this legal right is an issue that needs serious consideration.
NFT’s potential and use cases are massive. Its solution to how ownership should work will solve problems in Africa across several industries. The industries in Africa can get ahead of this new technology to fashion and design how it would work for their benefit.
