- Caitlin Strempel
What are NFT Utilities?
We often get explosive blockchain news that leaves us wondering how much we understand the industry. The recent headlines have been about people selling NFT utilities for millions of dollars. Unfortunately, many of us do not know what these digital assets are.
If you are one of them, you are in the right place. Read on as we tell you everything you need to know about NFT utilities.
What are NFTs?
NFT stands for non-fungible token. When an asset is non-fungible, it is unique and irreplaceable. If you traded it for another commodity, you would have to give it up in exchange for a different one.
NFTs may be anything digital such as music, digital art, tweets, or a film. They differ from fungible assets in that they are one-off, can't be lost, copied, or reproduced without the owner's authorization. They can only have one exclusive owner at a time.
These NFTs prove ownership of digital assets. They are stored on the blockchain infrastructure and assigned unique metadata and identification codes that work like their fingerprints. With these codes and metadata, you can track their transactions and control their supply.
If you have a digital asset like a video, music, or a piece of digital artwork, your NFT helps you prove that you own it. They act as your digital signature or receipt that can never be removed or forged.
How do NFTs Work?
When you mint or avail your digital assets, you provide them singularly or in limited edition. This creates scarcity that amplifies their value.
You benefit from loyalties when users download your NFT. This protects you from unauthorized resales that lock you out of the transaction and deny you revenue from loyalties, as a user cannot resell the asset.
Your NFTs can't be copied. However, if your user accounts passwords are weak, or your platform has slack cybersecurity measures, the NFT utilities can be hacked.
What are NFT Utilities?
NFT utilities are redeemable attractive perks business owners add to their products or services to increase their value. You can enhance the value of your NFTs by going beyond the scarcity-enforced value that comes with traditional NFTs.
These NFTs with added features for value addition are what make NFT utilities. Previously, NFTs comprised digital collectibles that drew their value from their uniqueness and scarcity.
However, the emergence of NFT utilities potentially raises the value of NFTs, as buyers gain more from the NFT beyond the prestige of owning them. For instance, a film marker may add benefits like access to exclusive unedited scenes and handwritten scripts to attract more fans.
Types of Utility NFTs
You can offer physical goods as a utility to your NFT customers. For example, when Kings of Leon released the album When You See Yourself, they attached a special album package as an added benefit. Buyers would also get an exclusive audiovisual art as a utility for this NFT.
North Star uses utilities to boost the value of its products. Buyers can authenticate a product before buying it or track its exchange from one buyer to the other when purchasing a resell product. This additional experience boosts the product's worth, placing it among the luxurious goods.
In gaming, you can offer players collectible swords, digital fashion clothes for their avatars, or deco items for their virtual homes. You can allow the players to trade in these utilities for a commission.
For instance, you can buy virtual land on Somnium Space and create avatars, fighting gear, and costumes to sell to other players. Whatever you create on this Virtual Reality (VR) world can't be replicated, and it allows you to earn cash as you continue enjoying the games on the platform.
Free consultation calls, delivery, and limited after-sale services for products are some of the services you can add as utilities to your business. You can also add a free demo for customers buying your NFT to boost their understanding of the product and its appeal.
People may be interested in your NFTs, but they may lack sufficient funds to purchase them. You can offer financing services to attract more buyers. You can also launch virtual training to help reduce the learning curve for users of your products.
You can use subscription membership to limit access to your special edition products, NFT releases, or exclusive offerings. For instance, Official customers only access products from the company through the organization's NFT marketplace that they subscribe to.
You can only buy products made by the brand with the company's $OFCL exclusive to members. You can offer lifetime membership or allow members to renew their subscriptions. The membership may also be used to access virtual and physical products. For example, you could wear Nike Air Jordans on your feet and have your virtual avatar wear the same pair.
Bored Ape Yacht Club (BAYC) comes off as the perfect example of using exclusive access as a utility for NFTs. BAYC holders have exclusive access to the club facilities and activities.
You then interact and have fun with superstars and other iconic personalities that own bored ape NFTs. In addition, BAYC owners get exclusive access to future offers such as the mutant ape NFTs.
Why are Utilities Important to Your NFT?
Attaching utilities to your NFTs shifts the NFTs' value from their uniqueness to their usefulness and relatability. Combining uniqueness and usefulness in NFTs makes them luxurious, attracting iconic buyers to get a higher ROI. Use them as part of your digital marketing strategies to gain customer loyalty.
Besides, your customers benefit from special invites to events graced by superstar NFTs owners and exclusive membership to subscription-based services. They can also earn income from selling utilities for a commission.
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