Rights, rewards, privileges brighten the future of utility NFTs

NEW DELHI: NFTs or Non-Fungible Tokens are here to stay. From a trading volume of $200 mn in 2020, it has climbed to over $12 bn in the first quarter this year! That sounds exciting, isn’t it? But hold on, the latest buzz is around the possible utilities of NFTs in the future.

So, let’s understand what utility NFTs are. The domain of NFTs is still in the early stages of exploring any value-based real-world use cases for NFTs. They are cryptographically unique, with a capacity to serve more than just images on a blockchain network. The value of an NFT utility token can transcend the mere boundaries of investment into the transformation of how we work, interact, and play.

In a nutshell, they are NFTs with applications beyond the representation of unique digital assets and refers to the facility of privileges, rewards, or rights to owners.

For instance, consider utility tokens from the music industry. Kings of Leon, an American rock band, released their album as an NFT collection last year, and utilised platforms such as iTunes and Spotify to offer different utility NFT variants in the album.

The album included an NFT featuring digital artwork and a digital music download option, which owners could redeem for a limited edition vinyl copy.

Another NFT variant in the album release also facilitated top seats at Kings of Leon concerts and shows. Lo and behold, the release of this music fetched around $2 million in sales.

The example of adding NFTs with a new approach in a music album reinvented the way buyers discovered utility with non-fungible tokens.

Now, enthusiasts could redeem NFTs for real-life record copies of the album. The utility NFT owners could also get exclusive rewards like best seats at shows of the band.

The album release as a series of NFTs provides a solid case for utility non-fungible tokens.

The uses of utility tokens also account for a significant share in determining the future of utility in NFTs. Let me share some of the notable sectors which are gradually opening up to these prospects. For now, gaming, virtual real estate, fashion and social spaces are the early adopters.

Crypto Baristas - a collection of NFTs enable its NFT holders to avail discounts at online stores or future café locations as well as on merchandise.

The VeeFriends NFT collection launched by Gary Vaynerchuk allows its holders to use them as tickets for the VeeCon conference.

This also includes collectibles with different advantages, such as mentoring sessions from the internet icon.

Utility NFTs are still in the nascent stages and would take time to shape up as a major force of change.

But, the prospects for utility would become more prominent in the future of NFT owing to the multiple use cases of the utility NFTs. So from replacing season tickets, to health insurance cards and loyalty cards, the list goes on. Businesses can also use NFTs for advertising purposes by offering discounts to owners. The party has just begun!

(The writer is Founder, India Blockchain Alliance)