March 14, 2022

Scotch Whisky Retailer Demonstrates The Real-World Use Of NFTs

Scotch Whisky Retailer Demonstrates The Real-World Use Of NFTs

Mainstream Retailers Are Figuring Out Real-World Application For NFTs

NFTs are unique, no other version exists, and verification of digital asset ownership is possible by storing data on the blockchain. To date, NFTs have been dominated by art and online gaming, with music also having an impact. Art acted as an excellent introduction to NFTs for the world. In the early days, there were no utilities associated with the NFTs. This was probably a good thing. The introduction of utilities such as staking, decentralized autonomous organization (DAO), and yield farming in one large chunk is too much to digest for anyone but ardent crypto techies. 

As investors become comfortable with the premise of blockchain and NFTs, real-life utilities are becoming realized. The Scotch whisky retailer, "The Whisky Barrel," is one of the early adopters to utilize NFTs away from art, gaming, and music. 

With investing, there are two classes: standard assets and alternative investments. Traditional assets involve stocks, bonds, and cash, while alternative investments feature collectibles such as art, antiques, and whisky. 

Investing in whisky has been on the rise since the turn of the century. Creating high-quality mature whisky is a highly capital-intensive process for the distiller. The maturation age for fine whisky is between 12 to 50 years. To offset costs, distilleries sell casks at a low price at the start of the distilling process. The distiller handles the storage and distilling process, while brokers deal with the sales and marketing. Investing in whisky can return as much as 54%, with an average return of 10% per year over five years. Many people buy whisky for investment purposes rather than enjoyment.

Such investment involves the investor, the broker, and the distiller. The broker handles the sales and marketing and takes their fee from the investment returns. 

NFT and blockchain technology allow the distiller to deal directly with the customer and alleviate the need to use brokers. Distillers can sell their aged bottles and casks as NFTs on the marketplaces, and customers can buy direct. This is similar to musicians who can directly market their work as NFTs to the customer without record companies. 

"The Whisky Barrel" is focused on the authentication aspect of their products. The owner of the NFT is certified to own the actual product; there is no possibility of counterfeit or fake spin-offs becoming part of the equation. It's easier for the owner to sell their commodity as the potential buyers will have fewer concerns about the authenticity of the purchase.

"The Whisky Barrel" will use the Solana blockchain for their NFTs as this is an eco-friendly platform with low transaction costs. 

This moment is not the first time NFTs have represented whisky. "UniCask Co Ltd" became the first minter of whisky NFTs. In December 2021, the 1991 vintage cask of Single Malt Scotch Whisky Springbank was divided into 100 portions and sold as NFTs. The bottling of the whisky takes place in 2041. Until then, the holders can own and trade this rare whisky as an NFT from anywhere in the world. With each year the value of the whisky increases, we will see the price of the NFTs will rise. 

Since then, "UniCask Co Ltd" has created NFTs for another whisky product. "UniCask Co Ltd" is in the process of constructing online games to act as utilities in the same manner as traditional NFTs. 

The great thing about NFTs is the authentication aspect, only one version of the NFT can exist and eliminate the possibility of fraud or other malpractices. 

There has been rhetoric about NFTs authenticating expensive commodities such as Rolex watches or Chanel handbags. These are items that can increase in value with time. But NFTs do not eliminate the possibility of counterfeit products in such a scenario. The owner of the NFT, with the item in their possession, can always present a fake product. With time, blockchain and NFTs will solve such issues with the insertion of technology within the collectible pieces. 

There are some exciting prospects for NFTs in the future. As 2022 rolls on, blockchain and NFTs see their technology utilized away from art and online gaming. Sandbox and Decentraland sell virtual land. In time, NFTs could act as a contract for buying and selling real estate in the physical world.