Utility-Driven NFTs

Rajiv Naidoo
May 1 · 6 min read

In “What are NFTs?” we discussed the emerging asset category’s ability to verify ownership and authenticity, and the implications this has for the world of fine art and collectibles. As NFT development surges, these unique assets look to bring much more to the table, and will likely become pervasive across several industries. The ability to mint, deploy, and exchange NFTs introduces an entirely new layer to the user experience, enabling connectivity between network participants that we haven’t seen before.

A New Layer of Connectivity

Scarcity has long been associated with value; it’s among the elements that has allowed gold to maintain its allure over thousands of years. NFTs allow these same principles to be imbued into digital assets. One industry in particular that has seized hold of the NFT craze is music. The music industry has been wrought with disparity, whether it be by record labels or streaming services. These “middlemen” not only take a cut of the value transfer between fans and artists, but on a more subtle level they impact engagement. The experience of purchasing a new vinyl or CD, not only listening to the music, but experiencing the album art, flipping through lyrics and exploring other extras included with the purchase has been reduced to a mere stream. NFTs may be able to change this, opening up new revenue streams for artists and new levels of engagement for fans.

Popular rapper Tory Lanez recently released an NFT series with Bondly Finance. Bondly’s CEO, Brandon Smith, described the venture as creating a relationship, where Tory Lanez is aware of every NFT holder, allowing for a number of unique activations between the artist and fans. Holders can get exclusive access to Tory’s next single, merchandise, as well as special concerts and events. This hyperconnectivity allows for a heightened level of fan engagement, with the NFT unlocking access.

The ability to enhance connectivity has a number of implications for the industries that the XDB Foundation operates in, notably consumer digital asset spheres such as fan engagement, gaming, and loyalty and rewards.

NFTs on DigitalBits

Ethereum is the current market leader for NFTs — unfortunately, congestion issues have led to exorbitant fees and extended wait times. The current state of the network is incapable of supporting NFTs on a large scale, with high fees for minting and transfer creating a significant barrier to entry. Recent developments within the DigitalBits ecosystem look to bring NFT-functionality to the network, where users will soon be able to take advantage of the network’s superior scalability. Zytara, the digital banking platform and payment network led by DigitalBits founder Al Burgio recently announced its intent to leverage the DigitalBits blockchain as it expands into NFTs. Additionally, Litemint, a leading Stellar-based NFT and Collectibles marketplace announced it would be integrating the DigitalBits blockchain.

Energy Concerns and Pivoting Towards More Sustainable Networks

The energy consumption associated with Ethereum and its impact on the environment have come under fire with the recent surge in NFTs. A single Ethereum transaction has been estimated to account for approximately 48.14 kWh, the same energy consumed by an average American household in about a day and a half. However, especially with the sale of NFTs via auction, multiple transactions can be involved in any one sale — using Cryptoart.WTF, artist John Lemercier determined that the sale of his works on Nifty Gateway consumed approximately 8.7 mWh.

The number of transactions involved with the sale of an NFT, combined with the energy intensiveness of Ethereum’s Proof-of-Work (PoW) consensus algorithm make the emerging asset category an easy target for environmental concerns. However, criticism surrounding NFTs is misplaced; a shift towards more scalable, energy efficient blockchains may actually be the solution. Energy intensiveness is a key element of the security of PoW. Until Ethereum is able to switch to Proof-of-Stake, this issue will persist. This opens the door for protocols such as DigitalBits, where lightweight infrastructure demands significantly less energy while maintaining security and decentralization. As major brands and artists continue to grapple with both the cost and environmental impacts of NFTs on Ethereum, DigitalBits and other scalable blockchains may arise as an appealing alternative.

To learn more about Ethereum’s energy consumption, click here.

The rise of social media brought the value of attention to the forefront. Platforms such as Youtube, Facebook and TikTok facilitate massive amounts of engagement, triggering the emergence of influencers and their respective followings. Fan engagement has become an integral part of this relationship, and depending on content, style, and fanbase, influencers engage with fans a plethora of ways. Similar to other applications, blockchain can help to disintermediate these processes, allowing for higher degrees of monetization while fostering enhanced connectivity.

Influencers can create and distribute NFTs to their fans, they may take the form of collectibles, or more utility-driven NFTs that allow access to exclusive content perks. This introduces a new layer to fan engagement, enhancing existing interactions while allowing for the creation of net new forms.

Today’s dominant platforms for influencers and fan engagement boast distinct qualities, notably, they are easy to use, low cost, and fast — humans now have an attention span of 8 seconds, unless these activations happen in near real time, people will move on. In addition, approximately 3.96 billion people worldwide use some form of social media, and followings can exceed the tens of millions (Cristiano Ronaldo has approx 271.24 million followers on Instagram). In order to support these use-cases, fan tokens will require highly scalable networks and ready-made solutions, creating a perfect opportunity for the DigitalBits network.

Gaming is unique in that much of the value exists within digital realms. In many cases, the NFT is not a representation but the asset itself. Verifiable uniqueness and ownership have the potential to introduce a number of new aspects to gaming, some of which you will find below.

Asset Ownership — True asset ownership is synonymous with blockchain, granting an unparalleled level of autonomy to users not found in other systems. This has a number of benefits, especially within gaming. In today’s gaming environments, regardless of the progress or achievements you’ve made, it’s ultimately up to the developers. NFTs return this control to the user, where regardless of what occurs in-game, they maintain control of their items, characters etc. This opens up a number of opportunities for players to monetize their in-game activities, provides infrastructure for secure transfer and trade of in-game assets, and increases asset longevity past the game itself.

Scarcity — Similar to a pair of shoes worn by Michael Jordan, not all in-game items are the same. They may have been involved in different quests, held by different players, and this history, like real world collectibles, adds to their perceived value. NFTs enable this same story telling to occur with digital assets, and with the rising fandom surrounding esports and gaming, it’s fitting that these unique properties can now be quantified.

Loyalty and rewards programs gamify seemingly everyday human interactions. The value we associate with collecting, exclusivity, and progression have allowed these programs to influence consumer behaviour, creating meaningful relationships between brands and consumers. NFTs have the ability to amplify this connection, and add new layers to create a more immersive, personalized experience.

There are numerous ways that NFTs can be integrated into programs to enhance value and connectivity. In traditional programs, users collect points by making purchases and completing tasks. However, the larger these programs get, the harder it is to distinguish between individual participants, diluting the feeling of exclusivity. The Platinum Club was super cool until you realized that everyone was in it. NFTs can change this by introducing a layer of personalization. You are no longer just a member, you are member 999, granted special privileges for being among the first 1000 participants. This could take the form of priority access to certain sales and events, increased discounts, or higher cash back amounts. Furthermore, you own this NFT, and are free to do what you wish with it. Keep it and keep generating points — or maybe you don’t really use the program anymore and you want to sell it? The uniqueness of being member 999 and the activations this affords are forever etched into the NFT, allowing for the creation of robust secondary markets.

Moving Forward

The verifiable uniqueness of NFTs will impact both analogue and digital realms the world over. Our ability to differentiate brings an entirely new layer to experiences, allowing for interactions that are more meaningful and personalized.

For more information on DigitalBits, follow us on Facebook, Twitter, LinkedIn and Telegram!

For more on the XDB Foundation, click here.


DigitalBits is a protocol layer Blockchain designed to help…


DigitalBits is a protocol layer Blockchain designed to help facilitate mass market liquidity for various digital assets, and integrate with existing apps to drive market-adoption of Blockchain technology.

Rajiv Naidoo

Written by

Head of Research & Community @ DigitalBits


DigitalBits is a protocol layer Blockchain designed to help facilitate mass market liquidity for various digital assets, and integrate with existing apps to drive market-adoption of Blockchain technology.