• NFTs certify authenticity and enable easier and more transparent trading
• When delivering the corresponding bottle, the NFT is “burned”
In addition to watches, art and vintage cars, whiskey and wine are also popular alternative investments. According to “t3n”, a new sales record was reached in the secondary market for premium spirits last year. Buyers do not buy the bottles to drink them, but as an investment that will ultimately be resold at a profit. But to a bottle of wine, whiskey and co. must increase in value, it must be stored correctly and its authenticity verified. This is often not easy and above all not transparent. This is where liquor NFTs come in and want to solve these and other problems when investing in high-proof spirits.
A spirit NFT certifies these rights
When buying a spirit NFT, buyers acquire not only the digital image of a bottle on the blockchain, but also ownership of the right bottle with, for example, the corresponding whiskey. The NFT primarily serves as a certificate of authenticity certifying the authenticity and ownership of the bottle, but it may also be associated with other bonuses, such as a tour of the distillery or special packaging for the physical bottle in the event of a delivery. Bottles for sale via Liquor-NFT are either stored directly by the manufacturer or delivered to the warehouse at an NFT marketplace such as BlockBar, which specializes in these capital goods. This ensures that the deposited bottle is the original and not a counterfeit. An example of a well-known producer that has already used Liquor NFTs to sell a special collection of whiskey is the Scottish whiskey distillery Glenfiddich. She sold 15 bottles of Glenfiddich in 1973, a 46-year-old Armagnac Cask Finish Single Malt Scotch Whiskey via BlockBar in 2021.
Buyers of this or other spirit NFTs then have the choice of simply having the physical bottle stored in the previous warehouse, offering it for resale through a similar NFT marketplace or having it delivered to them. However, as the value of the NFT depends on the bottle associated with it and its authenticity – validated by a credible authority – delivery has far-reaching consequences: Customers can have either the NFT version or the physical version of the bottle “at home”, but not both. Because the authenticity of the bottle can no longer be fully guaranteed once it has been in the hands of the owner, the corresponding NFT is “burned” upon delivery. That is, it is taken off the market by being sent to a wallet address that has no owner, which means no one can access it anymore. The NFT thus becomes worthless, but of course not the physical bottle. It can then – if not opened – be resold in more traditional ways, such as at rare liquor auctions.
CSF NFTs provide easier access and more transparency
“The value of a spirit NFT is so clear once you understand the process,” Samuel Falic, co-founder of NFT Marketplace BlockBar, told Liquor.com. The benefits of this type of liquor trade, according to the magazine, are, on the one hand, that manufacturers can prevent counterfeits of their product from circulating in the market. Smart blockchain contracts also make it possible to automatically pay a kind of license fee to the distillery at each resale.
On the other hand, there are also several benefits for investors. As information on the number of stored or shipped bottles according to “t3n” is available on the blockchain and published by the NFT marketplaces, collectors can always see how many bottles from a collection are still in circulation. The following also applies here: The fewer bottles there are – for example because NFTs were burned – the more valuable they are. The price per bottle can also be seen, making the secondary market much more transparent. The buying and selling process is also simplified by the NFT marketplaces. “On […] Traditional markets require you to be in the right place at the right time to grab a rare or exclusive bottle. Since NFTs are offered online, you do not really have this problem. Because of this, we see NFTs as a way to democratize the high-end liquor industry, ”BlockBars co-founder Dov Falic told Liquor.com. It is also a good way to park your money in a more reliable and less volatile market segment, as the secondary market for whiskey and wine is characterized by constant and reliable growth – which cannot necessarily be said for cryptocurrencies.
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