Non-Fungible Tokens or NFTs are digital assets that are stored in a blockchain. You can buy these using digital currency from NFT marketplaces. These are virtual places with no physical presence. Therefore, they’re untraceable. When you visit an NFT marketplace, you can trade, buy, or sell an NFT. And with that, a Smart contract API is used to seal the deal. Since NFTs live on a blockchain, smart contracts help manage them. Smart contracts also execute these trades, which buyers and sellers rely on. But what are its other uses and benefits? Let’s find out more about smart contracts here.
Verifies the Authenticity of the NFT & Enforces Ownership
The first advantage of a smart contract is verifying the authenticity of the NFT. Furthermore, it enforces ownership for its new owner. And if the NFTs are hosted on public blockchains. Therefore, information about ownership and creation time can be accessed by anyone, for instance, in the case of digital degrees. NFTs can be issued to students’ educational institutions on public blockchains. If an employer wants to hire that person, they can access these NFTs to check the authenticity of the applicant’s degree through a block explorer. Here, anyone can access public information recorded on the blockchain.
Prevents Plagiarism & Counterfeiting
Since NFTs are becoming more popular over the years, people are trying to copy or plagiarize them to profit from them. Counterfeiting is a big problem that smart contracts can remedy. With the use of a smart contract, automatically check an NFT or token’s time and place of creation, i.e., the first recorded wallet address. Furthermore, these contracts can trace creative ownership, combat fake certificates, and eliminate the issue of counterfeit products. For instance, the products in question can be automatically filtered out if they do not meet particular provisions.
Helps in Facilitating Business Transactions
Smart contracts can facilitate and improve business transactions in two easy ways: speed and safety. These types of contracts allow two parties to enter an agreement while ensuring that the previously agreed upon outcome is enforced when the terms have been met. Therefore, it can eliminate delays due to a lack of trust. Hence, allowing a more efficient business transaction. Even though the parties don’t trust each other, a smart contract can enforce assurance that the transaction will be carried out as soon as the contract terms have been met. Once done, the smart contract can release the funds to the seller and transfer the rights of ownership to the buyer immediately.