Utility NFTs or NFT 2.0: Unveiling the full potential of NFTs (Part 51)
Welcome to the 51st part of the 100-part series on Blockchain.
Utility NFTs or NFT 2.0 are a class of non-fungible tokens designed not just for collecting but also for utility, i.e., these NFTs have underlying valuable and practical applications.
What are utility NFTs and how do they work?
Utility NFTs are NFTs with use cases beyond just being the representation of unique digital assets. Now nobody wants to buy your NFT because they look fantastic, but the expectation is what actual value your NFT will bring to others. Just like any other NFT, utility NFTs are created with smart contracts and are unique. But the core focus is to grant their NFT-holders rights, privileges, exclusive experiences, or rewards that they would not otherwise be able to access.
Like any other NFT, a utility NFT is also cryptographically secure and represents unique digital assets stored on a Blockchain. The immutability and transparency of blockchain technology make it easy for NFT holders to prove their ownership and help them verify the provenance of their NFTs.
NFTs and Blockchain (Part 46)
Welcome to the 46th part of the 100-part series on Blockchain.
How to add utility to an NFT?
Utility refers to how you add or create value, specifically in being helpful, profitable, or beneficial to others. There are several different ways by which one can add utility to their NFTs:
(i) NFT utility linked with exclusivity: You can provide your NFT holders with a certain type of exclusivity. For instance,
NFT holders can be rewarded with tickets to exclusive events, show passes, membership cards, etc. For example, motivational speakers have started to sell NFTs that give the holders limited or lifetime access to their events and provide access to them either for video calls or in-person meetings for breakfast, lunch, or dinner.
· NFT buyers can also be provided VIP access to events and shows.
· Special discounts on tickets or products can be given, especially if they can’t be offered for free. For example, suppose if you are a gaming company, provide NFT holder-only discount coupons on the early release of your next game.
· Another example of exclusivity to NFT owners is playing as a unique character in the video game.
· You can also give early access to merchandise sales to NFT holders first.
· Or you can also host events in the metaverse for NFT holders only.
(ii) NFTs with passive income utility: Passive income can be provided to the NFT owners.
· In the stock market, when investors buy and hold shares, they get dividends according to the percentage of shares they are having. In the same way, you can offer a percentage of dividends to be paid to the holders of your NFTs after a set length of time.
· Additionally, you can share a certain amount of profit with your NFT holders. This provides a consistent passive income stream to your NFT buyers and helps turn your NFTs into utility NFTs.
· The other example of NFTs that provide an opportunity to earn is in play-to-earn games. Utility NFTs can represent in-game assets, weapons, or virtual goods that players can purchase and use within a game. With NFTs, players hold a certificate of ownership of online assets, allowing them to sell their NFTs to other players within the game and on other NFT marketplaces to earn additional income.
With NFTs, play-to-earn games are not only exciting but also potentially rewarding. One such game that incorporates utility NFTs as its in-game assets is Blockchain Cuties. In this game, players can play with puppies, lizards, bear cubs, cats, and other real and fantasy creatures. Each cutie/creature is a unique NFT that 100% belongs to the owners. The players can collect their creatures, breed them, test their skills in battle, arm them, and level them up, meaning that they can increase their creature’s value within the game’s ecosystem. Within the game, the smart contracts allow users to trade their creature with other players for another creature. In traditional games, the assets belong to the game itself, and a player can not do anything with these assets outside of the game. But with Blockchain, the players can sell or transfer their creature NFTs to other players like regular cryptocurrencies.
(iii) Special content access: Providing access to unique content also adds utility to the NFT. Your NFT project could come up with premium content that would be of value to your NFT holders. It can be in the form of
· Research PDF
· Video reports
· Online education course
· High-value cheatsheets and guides
· Bonus and additional content that buyers of your NFT can only access. Whether you’re a YouTuber releasing extra videos, or a music artist releasing bonus tracks that your NFT-holders can access, it also creates a sense of exclusivity.
(iv) Make your NFTs redeemable: Making NFTs redeemable will allow the NFT-holders to claim for either a physical or digital good, for example, allowing NFT owners to claim a T-shirt or hoodie at the event. Since authentication is tighter with NFTs, you can also weed out any scammers that go after the free items you offer. As an artist, you may conduct a competition where the person holding the highest number of your NFTs receives a valuable product like an original hand-drawn art from you. People always love having access to original and rare art, therefore turning your NFTs into utility-based NFTs.
(v) Make your NFTs usable in the metaverse: A metaverse is a limitless virtual reality space within which people can live, work, shop, and interact with others. You can add qualities to your NFTs that make them possible to be uniquely identifiable, purchasable, and exchangeable on NFT marketplaces in the metaverse.
· For instance, an NFT could represent a piece of virtual real estate in the metaverse. By buying an NFT, you would own that piece of property and would be able to sell it or rent it out to other users in the metaverse. For example, Decentraland is a virtual world that uses NFTs to represent ownership of virtual land. Users can buy, sell, or rent their land on Decentraland’s decentralized marketplace.
· Another example may be of NFT sneakers so that the user character can wear them in the metaverse.
The options are limitless, depending on how much value you want to add to your NFT.
If you liked this article and want to know more about Blockchain, NFTs, Metaverse, and their applications, click the below link.
50+ Real World Applications of Blockchain: A beginner’s complete guide to Blockchain Fundamentals…
50+ Real World Applications of Blockchain: A beginner’s complete guide to Blockchain Fundamentals, Consensus…