The NFT market is on its highs right now. The topic of non-fungible tokens is being discussed not only by crypto enthusiasts, but also by the mass media, increasing the interest towards new phenomena. In fact, In 2021, the NFT market jumped from $100 million to $22 billion! Despite all the hype around NFTs in 2022, the advantages of using them remain in the digital reality. The main question stays: what is the practical use of NFT tokens? Is there a physical benefit for the owner? Recently, a separate segment has emerged in the art market, which positively answers these questions. It is called utility NFT.
What are utility NFT tokens
This is an NFT which has a real application in modern non-digital reality. That means, the owner of this type of token receives not only the exclusive right to have any object of art, but also its physical equivalent, for example, a privilege or an award.
Differences between utility and standard NFTs
In technical issues utility NFTs do not differ from standard ones. This is still the same set of smart contracts based on Ethereum. But in terms of practicality, utility NFT owners have more cool perks, such as:
- Club membership in real life
Let’s take for example utility NFT tokens of Bored Apes Yacht Club. By purchasing them, the user receives a lifetime membership in a private club. Among the privileges of this club are: participation in online and offline events; ownership and commercial use of NFT; access to an exclusive server in Discord, where you can communicate with famous holders of cryptocurrencies and NFTs.
- Access to digital goods or services
Nowadays the virtual real estate sector is developing quickly. Some Metaverses today offer their users to invest in construction or purchase of virtual real estate, the price tag for which can reach hundreds of thousands of dollars.
- Physical items
Utility NFTs can be just a digital addition to an item from the real world that you actually can feel.
- Event tickets (access to a concert, lecture or conference)
Also, the creators of a certain utility NFT can provide its users with a unique opportunity to vote, communicate, or other exclusive rights in the community of the token, which immediately increases its status and, for sure, the price.
Where utility NFTs are used today?
Currently, utility NFTs are most popular in computer games, which are based on the Play-to-Earn (P2E) concept. Players may get some digital rewards for their actions in the game, as well as receive real financial benefits. The user's contribution in the form of time and effort is paid back with digital currency and NFTs.
Another example of using utility NFTs are social events. They can give their owners an opportunity to participate in private meetings or lectures of like-minded people in the offline space.
Also utility tokens are gaining their popularity in the fashion industry. Due to NFT technologies, designers will soon be able to create exclusive digital fashion shows with famous models. Probably soon something similar will happen in the sports industry – in the future utility NFTs will provide access to some elite digital or offline sport events.
Examples of utility NFTs
An interesting project by Gary Vaynerchuk (or Gary Vee). This is a collection of NFT pictures that was created with the aim of giving users a new experience. Each of the 268 characters drawn by Gary Vee represents a positive quality that the artist admires in people. You can work with these NFT tokens just like with any others – trade them on the exchange, exchange them for digital currency, invest, etc. Plus, some VeeFriends owners will have access to communicate with the creator himself – the world's largest investor and best-selling author New York Times.
This is a series of utility tokens that unites coffee lovers. The Coffee Bros project has launched a unique NFT collection that aims to “enhance the coffee drinking experience worldwide, build strong relationships with local communities, and strengthen the county’s economic system”. Crypto Baristas users receive discounts on the company's products, namely the products of the first NFT-funded cafe in New York.
This project aims to support women in the Web3 space and empower them on NFT platforms. Users get access to unique events and invites to conferences all over the world. The mission of the project is to draw attention to women in the art sphere, in particular, in the NFT community.
In general, the concept of creating NFT tokens that benefit not only the digital but also the real world is quite attractive and promising. It allows you to connect more and more users to the crypto community, which means expanding the market and gradually blurring the boundaries between the traditional and digital economy.