What is Utility NFT[Basic Knowledge]| coindesk JAPAN | Coindesk Japan

NFTs are often associated with JPEG images, but real-world use cases continue to evolve.

Last year saw a surge in interest in NFTs, especially profile picture (PFP) NFTs, NFTs that can be used as avatars on social media.

At the height of the NFT boom, PFP projects inspired by Larva Labs’ NFT project CryptoPunks dominated Twitter and marketplaces like OpenSea. . Other types of NFTs, such as generative art, were also growing in popularity.

Art-focused NFT projects continue to be popular with collectors, but many creators add real-world experiences and perks to their NFTs. These concepts are called “utilities,” and they give digital assets a broader value beyond mere collectibles.

Whether the added value is physical, event or website memberships, utility NFTs represent a huge opportunity for brands and creators to expand NFT use cases.

What are NFTs?

NFTs are crypto assets that represent unique items such as real-world objects such as sneakers and digital assets such as skins (appearances) used in blockchain games. Transactions are possible with a single point that cannot be replaced, and data related to NFTs are stored on the blockchain by smart contracts.

Taking advantage of the benefits of blockchain, it is often used to verify the authenticity and ownership of assets.

How to add utility to NFT

Utility NFTs extend the NFT concept by offering holders real-world rewards, benefits tied to ownership, and more. Rather than ending up with mere collectible art, NFTs can be used for a wide range of practical purposes, such as acting as tickets to events or granting holders long-term club memberships.

Some NFT projects, such as “Bored Ape Yacht Club” and “Doodles,” started as PFPs and gradually began adding utilities to their holders, such as special access to parties, events, and more.

Other NFT projects, like Coachella Collectibles, which gives you a lifelong pass to music festivals, have focused on utility from the start.

Access to events and locations

Some early utility NFTs offered access to proprietary platforms. The most common example is limited access to Discord channels.

As utility NFTs have evolved, so have new ways to provide holders with digital access to events and platforms.

For example, Americana is an online platform for collectors looking for luxury items. To buy or sell items on Americana, you need to hold the native token “Something Token” and prove your membership.

Another example is Tokenproof. A platform that allows proof of NFT ownership and access to real-world events without connecting a crypto wallet.

Another entrepreneur, Gary Vaynerchuk, used utility NFTs to issue tickets to the crypto conference VeeCon.

In addition to event tickets, utility NFTs are often used as membership cards for members-only clubs and restaurants. NFT Social Clubs offer a longer-term option for NFT holders looking to meet members of the community in person and collaborate in the same space.

Internet community Poolsuite launched the Manor DAO last year, which will offer token holders limited access to a property it plans to purchase called Poolsuite Manor.

Vaynerchuk, mentioned above, has also announced plans for a New York seafood restaurant called Flyfish Club, which will be open only to NFT holders.

Real-world items and links

Limited access through NFT holdings provides a unique way for communities to come together, while some NFT projects combine NFT holdings with rewards.

For example, the PROOF Collective uses NFTs to offer holders various perks, such as access to future NFT drops.

Additionally, both Web2 and Web3 brands use utility NFTs to reward holders with physical items such as apparel.

Adidas, for example, has an exclusive, crypto-themed line-up exclusively for Into The Metaverse NFT holders. Nike’s digital fashion brand RTFKT allows CloneX collection holders to craft physical items out of digital tokens.

As the use of utility NFTs evolves, various industries are leveraging NFTs to offer their holders all sorts of perks, including access cards and discounts. NFTs are becoming more and more valuable to their holders over the long term.

｜Translation and editing: Akiko Yamaguchi, Takayuki Masuda
｜Image: Shutterstock
｜Original: What Are Utility NFTs?