Why does utility matter for NFTs?
Utility is often defined as the usefulness or enjoyment a consumer can get from a service or good. We buy products every day that sit on our shelves and collect dust because they failed to provide utility beyond initial usage. For NFTs, utility is especially important to ensure the longevity and success of any given project. In today’s NFT market, utility has often taken a backseat to the initial hype and marketing of a launch. Thousands of projects have flooded the space promising benefits and perks but later failing to deliver. As the market continues to mature, utility will be crucial to gain customer’s trust and create strong communities.
So how do you create utility for your NFT project? Creating utility for NFTs typically means creating and extending value beyond a simple image or gif. The practical application of this, however, varies quite a bit.
Types of Utility
The use cases of bringing utility to NFTs are endless. However, we compiled a list of the Top-3 easiest ways to drive additional value for your NFT holders.
- NFTs as proof of authenticity: NFTs can be bundled with physical goods in order to provide more real world utility. Instead of only having a digital asset, imagine if the physical good was given as well. These use cases allow for customers to verify authenticity as well as potentially pull these products into digital worlds later on.
- Gated content and perks: NFTs can be used as the key in order to unlock a variety of different use cases for brands. They can be used as a VIP program that can open early access to product drops and discounts. They can also be used to gain access to certain parts of the website like discord servers or even exclusive content.
- Voting rights: In some cases, NFTs are used for participation in a brand’s decision-making, similar to a shareholder. Integrating NFTs and decentralized autonomous organizations (DAOs) enables groups of NFT holders to vote on different things related to the company. DAOs strengthen security and increase capacity. The members of these DAOs can voice their thoughts about new products, markets, and payments. By holding these NFTs, customers are given exclusive access to the brands they love which can foster long term loyalty.
Utility in the future…
As technology progresses, NFTs will unlock new paths towards utility. One of these paths is through the metaverse. A “metaverse” is any virtual space where people interact with AI or other people. In the not so distant future, what you wear and buy in these virtual worlds will be just as large of a market as what you buy in the physical one. NFTs will allow your brand to sell digital products alongside physical ones. These digital products will open up a whole new revenue stream in the ecommerce industry.
Wrapping Up
Utility is only one piece of what makes NFTs valuable, but it is a key factor that needs to be thought about before launching any project. The use cases we outlined above are just the tip of the iceberg, and more use cases are being implemented each day. Think about something you purchased that has provided value long after purchase. Now imagine how you can bring that same experience to your project, and you are well on your way to preventing your NFTs from collecting dust in the virtual shelves of the metaverse.