What can we do with our non-fungible tokens?
New NFT projects always pop up and continue gaining visibility and volume – but what is NFT utility? Is there more to it than having a cool PFP? All these so-called ‘benefits’ of having non-fungible tokens can’t really be considered utilities, right? Let’s dive deep into this increasingly necessary discussion in the text.
What are NFTs for?
First of all, need to reflect on the very reason for the existence of NFTs. Those same old questions we all constantly hear from anyone who doesn’t really get the crypto hype.
What are NFTs used for? What is NFT utility?
Well, although they may sound similar, these two questions are not the same.
We’re still in the very early stages of the NFT era. Despite the fact that many NFT collections are popping up and getting popular, not all of them deal with utility as they should.
Feeling a bit lost? Consider reading our article What are Non-Fungible Tokens (NFTs) before continuing.
What isn’t NFT utility?
Instead of simply pointing out what NFT utility is, let’s begin with what it is not. Why? Because it is (unfortunately) one of the most common misconceptions of the industry.
NFT utility cannot be things like:
- Purchase this NFT to unlock purchasing our products;
- Gain access to our discord;
- Get a 10 min call with our team;
- Become part of the PFP community.
And so on and so on.
However frequent this type of speech may be, it is not what utility is all about. NFTs and all the blockchain technology involved in creating them should not be a bargaining chip for dubious products or services that don’t add real value to anything.
There is more to NFTs than what the current market is leveraging, and it definitely goes deeper than PFPs (profile pictures). It goes beyond individuals, and brands are the ones with the most to gain from adhering NFTs to their strategies.
Looking for the right NFTs is no easy job. You can use the DappRadar NFT Explorer to check out the performance metrics of NFT collections and gain insights into how each one is performing. In fact, we compiled this list using the data found there!
What is NFT utility?
NFT utility is what gives its owner real-world benefits, making them more than just digital assets. As non-fungible tokens, their real value lies in their uniqueness and how they can be proved.
As they fundamentally carry proof of provenance and proof of ownership, NFTs can help businesses from different industries in their processes.
By granting NFT owners commercial rights to their assets, collections also have a powerful branding strategy to work with their public image.
Brands, however, need a proper NFT strategy and ‘implementation journey’ across their business model and industry for specific use cases applicable to them.
There has been a lot of entry into the NFT space without appropriate strategies in place or vision other than what seemingly appears to be a jump on the hype train or a quick cash grab.
How can businesses add utilities to their NFTs?
Since 2021, the year of public discovery of NFTs, global brands have adopted NFTs into their marketing strategies – although they weren’t always utility NFTs.
But despite these examples, NFTs can actually bring value to businesses.
NFT as a proof of ownership
When purchasing any good, like a car, for example, people can have all the registration and mechanical information registered in an NFT. If or when the car is sold, the NFT gets transferred.
Also, owners holding the NFT may have VIP access to future brand metaverse cities where they will be able to purchase digital products, register for mechanics, interact with other owners, belong to a club, etc.
This may seem like distant futuristic talk, but it’s already more real than you might think. McLaren, Audi, and Mercedes Benz are some car brands that have already started their projects to either transform their cars into NFT or deepen their businesses in the metaverse era.
The same goes for real estate properties in the real world and in a metaverse virtual world, for example.
Commercial rights as a utility for NFTs
While NFT owners have their ownership secure and unquestionable, some collections can also give owners commercial rights.
This means that by purchasing an NFT, even if it’s simply a nice-looking picture, you could get a license to use the NFT brand for any external project, corporate, promotional, and so on.
The world’s most famous collection of NFTs, the Bored Ape Yacht Club, is a perfect example of this utility. The owners of BAYC’s NFTs have commercial rights over the images and can therefore make other creations with them.
Many businesses have already taken advantage of the famous brand name to profit from it. Whether the business is Eminem and Snoop Dogg’s latest music video with their Bored Apes, or the small Californian restaurant Bored and Hungry.
Read further: How Musicians Are Making Money With NFTs
NFTs as proof of authenticity
Another way businesses can provide real-world use for NFTs is through proof of provenance or authenticity. Fashion brands may be the best example of this application.
The luxury fashion brand Gucci, for example, launched an NFT collection related to their physical branded sculptures.
Of course, the NFTs give owners exclusive access to perks and experiences as well, but the point that really makes the tokens useful is their capacity to track the product’s origin and authenticity. The Gucci name alone is worth thousands, but only if it’s an original.
Prada, Lancôme, and Balenciaga are other big names in fashion that have also launched their NFTs. The inclusion of NFTs in the fashion industry would help verify the ownership and authenticity of luxury Items and high fashion brands.
This would reduce counterfeit and can include a chain of ownership from the original owner to the sellers also adding the metaverse digital twin to this.
Not to mention that proof of authenticity can also be applied to music albums and concert tickets, medical records, voting, and even your digital identity.
Keep up with the NFT industry with DappRadar
As now you know, there is much more to NFTs than the hype. Sure, there are amazing designers creating beautiful collections, but real value doesn’t come from speculation.
So, next time you are searching for hot projects on the DappRadar NFT Explorer, remember to ask these questions: What is this NFT used for and what is NFT utility?
However, asking yourself the basic questions of utility is necessary if you approach NFT projects by their potential long-term opportunities. It’s a much-needed reflection that many people forget to have.
DappRadar will continue to monitor the best NFT projects out there closely. Keep an eye on our DappRadar NFT Ranking to stay ahead of the game.