Although a large part of the NFT market is dedicated to collectibles and visual art, there the place where NFTs have the biggest potential to grow and reach the mainstream is utility.
NFTs can have all sorts of purposes and uses, and that’s what NFT utility is all about. These are some NFT utility ideas that can revolutionize, not just the landscape for NFTs and Web 3.0, but the world as a whole.
What is NFT Utility?
The term NFT or non-fungible token refers to any type of digital asset whose property is registered on a blockchain’s digital ledger. This means the asset can only be traded using said blockchain’s cryptocurrency.
NFTs are often bound to smart contracts, which are digital contracts in which the terms are automated and executed through programming within the blockchain when certain conditions are met.
Hence, NFTs can be made to fulfill certain specific purposes, solve problems for their holders or provide advantages for buyers and sellers in various ways. This is what the term NFT utility refers to.
For example, upon meeting specified conditions set by the smart contract’s programmer, the smart contract can make certain transfers, put a part of the money in a liquidity pool, give it to a specific user or execute other protocols related to the NFT.
Likewise, smart contracts can be set for the parts involved to adopt specific commitments, much like regular contracts. NFT sales can be bound to the acquirement of certain additional products, services, or assets, whereas these commitments are corroborated by the blockchain.
This gives NFTs an exceptional level of flexibility that other assets don’t possess, and hence, NFTs can have all manner of utilities, which provide a huge added value to their holders.
How to Add Utility to an NFT
Utility isn’t just added to an NFT. For an NFT to possess utility, said utility must be programmed into the NFT’s smart contract. However, NFT utility may also come via verbal agreement from its seller, as they commit to abide by the conditions on which the NFT is sold.
If the NFT is traded within the confines of a certain digital platform, the programming of the platform itself can be used to provide the NFT’s utility. This is the case for NFT-based social and content-sharing platforms like Geojam, or blockchain-based P2E games.
Best NFT Utility Ideas
We know that NFTs can be used for purposes beyond proving the ownership of digital art and collectibles, but what are those purposes?
These are some of the new NFT Utility ideas that are starting to be applied on projects with high potential for growth and which, if correctly led and focused, could change the landscape for NFTs and revolutionize entire industries.
Retail and Merchandising
Retail sellers are no strangers to the world of NFTs. As a matter of fact, NFTs in retail are changing how business is done by selling, among other things, physical articles whose ownership is bound to an NFT.
Beyond that, NFTs could revolutionize retail business models by selling NFTs with unique utilities, which may include:
- An NFT that allows early access to certain products.
- NFTs that act as transferable and tradeable subscriptions to receive limited products on a periodical basis within a certain framework.
- Tradeable and transferable NFTs that grant their holders permanent discounts for a store’s products and services.
Collective Intellectual Property and Entertainment
When consuming content in the form of arts and narratives like books, movies, series, video games, or music, we don’t usually think about the ownership of that piece in a broad sense.
Although we may buy a product such as a physical disc to watch a movie from or listen to music, there are certain things that we can and cannot do with that product, which are determined by the limits between the property of the object and the intellectual property for the piece of media.
For instance, most people know that they don’t have a right to copy or distribute the content of a Blue Ray film or a music CD, even if they own the disc itself.
As new media platforms are created and the world moves towards digital formats, users have increasingly less control over the media they consume, as they cannot be assured that the media will be on the platform in the future, even if it was fully purchased.
NFTs can redefine the concept of property over stories and other artistic and entertainment expressions in multiple ways through some of the following NFT Utility ideas:
- Media sold as NFTs that represent a percentage of the intellectual property of the piece, entitling holders to percentages over royalties through smart contracts. This way, anyone who buys the piece, is a true owner of the story itself.
- Cryptocurrencies that represent value over the intellectual property of a piece.
Entertainment platforms in the style of Netflix and Spotify can also start employing new NFT utility ideas to enhance the user experience in the following ways:
- Selling NFTs that provide special access to exclusive content on the platform.
- Developing NFTs that allow access to special payment deals or permanent access to the platform’s content for its holders.
Events Access and Group Memberships
One of the most interesting ways in which utility NFTs are being employed is by offering their holders access to certain types of events.
A notable example of this is the NFTs sold by the Coachella festival, which serve as digitally formatted lifetime passes for the festival, and can be freely transferred, sold, and bought, with a price that fluctuates depending on the event’s lineup.
Another interesting NFT utility that is often overlooked is in the popular Bored Ape Yacht Club NFT collection, in which each NFT grants its holder access to certain parties and events that come with being a part of the “club”, where people may even get to meet celebrities and important people within the NFT space.
Some new or relatively underused ideas for NFT utility may include:
- Tradeable memberships with access to certain installations.
- NFTs that grant access to exclusive programs from brands.
- Whitelisting for limited access to VIP access at live events.
- Special periodical interactions with important individuals as part of NFT smart contracts.
The type of business models most often referred as sharing economies have created new ways for people to interact and do business that were nearly unthinkable a decade or two ago. Platforms such as Uber and Airbnb have effectively revolutionized their respective fields.
Sharing economies span across multiple different industries, where creativity is the only limit as to what can and cannot be done. From food and hospitality to deliveries and transportation.
Sharing economy platforms allow for unprecedented levels of accessibility for both suppliers and consumers. However, NFTs can allow for new business models focused on exclusivity to complement those focused on inclusivity.
For example, companies and platforms may sell unique and tradeable NFTs that grant their holders access to some exclusive services, like premium deliveries, luxury transportation, and unique food services.
Regulations and Law Abidance
NFTs and blockchain technologies are all about decentralization, but they can also be used in many different ways to provide a fair and healthy balance between regulated accountable economies and independence for users and providers.
Thanks to the flexibility of smart contracts, NFTs can create useful digital instruments to allow companies and individuals to better accommodate to market regulation in industries that require them.
This is possible due to the fact that smart contracts are automatically fulfilled as they are programmed to make certain transactions when specific conditions are met.,
In a future where cryptocurrencies and blockchain technologies are the norm, governments and regulatory entities may issue NFTs that can be acquired by people and companies to automate processes such as paying taxes.
Some additional examples of NFT utility ideas applied to law abidance may include:
- Portfolio-based taxation for environmental regulations, where higher taxes are charged for owning stocks or commodities that generate environmental damage, where the NFT serves as a compliance and accountability smart contract.
- Automatically regulated financial instruments, whose programming can be modified as new laws are enacted.
- Law abidance NFTs for more flexible and automated tax brackets based on variables like portfolio size and income.
Why NFT Utility is Important
With each passing day, NFTs grow in popularity and their use becomes more widespread. Many internet platforms are implementing them into their services, and companies in all industries are employing them for multiple different purposes.
Today, the idea that NFTs are simply speculatory assets with no added value or economic purposes is still widely held. Although this is often the case, and there is nothing inherently bad about speculatory NFT collectibles, the technology that provides the base for NFTs has infinite potential waiting to be explored.
As Web 3.0 develops and scales, NFT utility will play an increasingly important part of everyday life, and those who understand and exploit its potential from an early stage will become the big winners of the future world.
If you want to learn more about the best NFT utility projects and meet the people making them a reality, you may visit Expoverse, the largest mass adoption blockchain event in the world.