For most of us, NFTs refer to unique digital collectibles. However, the technology behind NFTs can create a wide range of other applications. The line between the digital and physical worlds is becoming increasingly blurry. As multiple technologies converge to create immersive environments, the forms of NFTs are also evolving.
Enter utility NFTs. They are functional assets with specific purposes that bring added value to their owners.
Without further ado, let’s look at some popular approaches to deploying NFT utilities.
Redeemable NFTs
These NFTs are linked with real-life assets, like artwork, clothes, watches, or beverages. Owners can redeem them to acquire those physical items.
There have been several experiments with redeemable NFTs.
Artist Damien Hirst launched an NFT art collection, “The Currency,” where each NFT represented a physical art. Hirst gave the collectors two options. They could either keep the NFT and burn the original or redeem and burn the NFT for the physical print. The collectors had one year to decide. In the end, 5,149 NFTs were burned out of the original 10,000 NFTs in exchange for the physical art prints.
The Blockbar is an NFT marketplace focusing solely on rare spirits. Each NFT is backed by a physical bottle stored in Blockbar’s warehouse. Owners can redeem the NFTs in exchange for the actual bottle at any time. If redeemed, NFT is burned.
Wearable NFTs
Utility NFTs are widespread in the fashion world. They sometimes work similarly to the previously mentioned redeemable NFTs. An example was the partnership between the RTFKT studios with the artist Fewocious in which the artist designed sneaker NFTs which were redeemable for the physical sneakers.
The fashion industry establishes a web3 presence also by offering digital wearables like sneakers, hats, or sunglasses to dress up avatars.
For instance, collaborating with Mythical Games, Burberry released a wearable NFT collection designed for the Blankos Block Party game. The collection includes in-game NFT accessories like pool shoes and armbands that players use to style any Blanco, the game’s toy characters.
Gaming and metaverse NFTs
Burberry’s in-game collection is just one example of how NFTs can be utilized in blockchain games. Apart from functioning as accessories, skins, or other wearables, NFTs can also perform in-game actions.
One such action is breeding which is used to create a new NFT offspring from two base characters. The most well-known blockchain game with breeding is Axie Infinity, in which players craft new Axies and trade them on the marketplace for real-life profits.
Gaming NFTs can have other use cases, such as renting, leasing, and staking.
NFTs play essential roles in metaverse projects as well. You can learn more about this topic here.
Ownership incentives
You can receive perks simply by being an NFT owner. An example is the Cryptobaristas project which offers NFT holders real-life benefits like discounts at select cafes and merchandise discounts.
Community incentives are also common. An NFT ownership can bring you access to exclusive discord channels, for example. Another use case is to get a whitelist spot for future projects. Some collections distribute additional airdrops to their current NFT holders.
Furthermore, NFT tickets are becoming popular. For example, owners of the VeeFriends collection by entrepreneur Gary Vee can attend the business and marketing conference VeeCon.
Another NFT ownership utility is unlocking exclusive content, as happened with the world-renowned director Tarantino’s NFTs. They granted access to hidden content with secrets to how the iconic movie Pulp Fiction was shot, deleted scenes, and other never-seen-before materials.
What else is there?
NFT utilities can range from voting rights and non-transferable certifications to saving the planet.
They add value through specific use cases, moving beyond the realm of collectibles and engaging their owners in novel ways.
