• NFTs certify authenticity and enable easier and more transparent trading
• When delivering the corresponding bottle, the NFT is “burned”.
Besides watches, art and vintage cars, whiskey and wine are also popular alternative investments. According to “t3n”, last year a new sales record was achieved on the secondary market for premium spirits. The buyers do not buy the bottles to drink them, but as an investment that must ultimately be resold at a profit. But for a bottle of wine, whiskey and co. to increase in value, it must be properly stored and its authenticity verified. This is often not easy and, above all, not transparent. This is where spirits NFTs come in, looking to solve these and other issues when investing in high-proof spirits.
A spirits NFT certifies these rights
When purchasing a spirits NFT, buyers acquire not only the digital image of a bottle on the blockchain, but also ownership of the real bottle with, for example, the corresponding whiskey. The NFT primarily acts as a certificate of authenticity attesting to the authenticity and ownership of the bottle, but it can 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 intended for sale via Liquor-NFT are either stored directly by the producer or delivered to the warehouse of an NFT marketplace such as BlockBar, which specializes in these investment goods. This ensures that the deposited bottle is the original and not a fake. An example of a well-known producer that has already used Liquor NFTs to sell a special collection of whiskey is Scottish whiskey distillery Glenfiddich. She sold 15 bottles of Glenfiddich 1973, a 46-year-old Armagnac Cask Finish Single Malt Scotch Whiskey via BlockBar in 2021.
Buyers of this or other spirits NFTs then have the choice of simply keeping the physical bottle in the former warehouse, offering it for resale via a corresponding NFT marketplace, or having it delivered to them. But since the value of the NFT depends on the bottle attached to it and its authenticity – validated by a credible authority – delivery has far-reaching consequences: customers can either have the NFT version or the physical version of the bottle “at home” has, but not both. Because the authenticity of the bottle can no longer be fully guaranteed once it is 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, meaning that no one can access it anymore. The NFT thus becomes worthless, but of course not the physical bottle. Provided it has not been opened, it can then be resold in more traditional ways, such as rare spirit auctions.
CSF NFTs provide easier access and more transparency
“The value of a liquor NFT is so clear once you understand the process,” Samuel Falic, co-founder of NFT marketplace BlockBar, told Liquor.com. According to the magazine, the advantages of this type of spirits trade are, on the one hand, that producers can prevent counterfeits of their product from circulating on the market. Smart contracts on the blockchain also make it possible for a kind of license fee to be automatically paid to the distillery on each resale.
On the other hand, there are also several advantages for investors. As information on the number of bottles stored or shipped 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. Because here the following also applies: 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 being in the right place at the right time to get your hands on a rare or exclusive bottle. Since NFTs are offered online, you don’t really have this problem. Because of this, we see NFTs as a way to democratize the high-end liquor industry,” BlockBar 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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