Companies use NFTs, blockchain to manage real-world assets

The process involves converting these records into NFTs and entering them into a blockchain-based ledger.

Bru Finance is one of a growing number of firms using NFTs in the real world, focusing heavily on the trading aspect of NFTs through mediums such as digital art and music.

“Our NFT proof (PFP) is not a picture for an NFT; it is an NFT representing commodities like wheat, rice, etc.,” said Ashish Anand, founder and CEO of Bru Finance. While it works with farmers for now, the company aims to mark other real-world properties in the future and provide loans on them.

According to Anand, making NFTs solves the problem of fake and duplicate receipts and other issues being faced by lenders. It also gives the company visibility into the life cycle of the commodity it is lending for as any change in ownership will also be recorded on the blockchain. This leads to instant receivables such as finance, liquid market access and global reach at a faster rate than paper-based systems.

NFTs are digital tokens with unique identification codes, and any digital asset can be assigned to identify its owner. Since it is stored on a blockchain, the code cannot be tampered with, making it difficult to duplicate or copy. Invoices and receipts for such loans are often shared digitally over email. However, those receipts can be tampered with using computer software to create new copies. However, attaching NFTs means that even though the original document can be tampered with, its digital record remains on the blockchain as proof of change.

Praful Chandra, founder and chief scientist of blockchain firm CoinEarth, explained that NFTs are essentially a digital certificate with the benefits of blockchain technology that makes the issuer and owner globally identifiable. Chandra has created a platform called ngageN, which allows brands to sell NFTs without using crypto-based transactions.

“There are digital certificates that have links to physical assets and there are certificates that have links to digital assets. Blockchain companies have been working on this for years. It’s just that they are now called NFTs,” he said.

Chandra also attributed the move to maturity of standards. “Going forward, you will see certificates that have equivalents in the physical world, be it invoices, cars or land. All of that will eventually convert to NFTs,” he said.

Furthermore, while Bru Finance is using NFTs as proof of credit, a startup called DeFi is treating NFTs purely as an asset. It plans to start lending money to users against their NFTs.

DeFi founder Amogh Tiwari said that the company is offering instant loans to people on NFT collections. It assigns a score based on the minimum price, sales history, number of holders and price fluctuations of the NFT. Tiwari said the company has already received requests for such loans, and plans to tie up with banks and other lenders to offer such services. Prateek Shah, leader of financial services advisory at EY, however, warned that the fact that NFTs are not always tied to real-world assets could spell trouble in the future. “An NFT artifact can be worth half a million dollars and that can change significantly within a few weeks,” he said. Shah, however, noted that a blockchain platform may remember that an NFT is subject to escrow until the loan has been paid. This can reduce the risk of loss of collateral.

To be sure, this is not the first time that blockchain-based technologies have been used for record keeping in the real world. The Andhra Pradesh government had in 2018 announced plans to create blockchain-based land records, eventually using a platform from Hyderabad-based blockchain firm Zebi.

Another example is Achilles, which sold a stake to Bharti Airtel Ltd this February. Even after big tech firms like Google and Apple stopped allowing companies to track users on the web, the company created a way to help firms run ads online, according to Aqilliz’s chief executive officer, Gowtman Ragothaman. Is.

Big tech firms have already started to block cookies, which allow companies to track users outside of their platforms. In their absence, Aqilliz’s blockchain platform could help telcos like Airtel to record user interactions and use it for targeted advertising online. This is not the same as maintaining records via NFTs, but it uses the blockchain to provide an alternative to cookie-based tracking.

Crypto trading in India has declined this month, as new government rules to tax the industry come into force. During the Union Budget this year, Finance Minister Nirmala Sitharaman announced that the government will levy 30% tax on capital gains from crypto and NFT trades.

According to data from crypto research firm Crabaco published last week, volumes on Indian exchanges have dropped significantly since the new rules came into force. The report noted that trading volumes on WazirX are down 72% since April 1, while those on ZebPay, CoinDCX and BitBNS are down by 59%, 52% and 41%, respectively.

With inputs from Prasid Banerjee.