The Utility of NFTs for Beginners
The Key to Success for a Non-Fungible Token
I have spoken with many artists and collectors who initially complained that collections without any artistic value are sold easily. Once you study the secondary possibilities that a non-fungible token and its smart contract give you, the art takes a back seat.
It is easy to get lost in this new NFT universe. One of the big problems for collectors is, that you can’t find quality, due to the high number of NFTs and NFT marketplaces.
When you understand the world of NFTs, you begin to realize that utility is everything. Whenever someone buys an NFT, their ownership is registered on the blockchain forever so there is a record of who the possessor is.
An NFT serves to authenticate, they give you identity and access within Web3.
It may, at first, be difficult for new comers to understand words like airdrops, rewards, staking, attendance tests, rewards, NFT keys, bounties, grants, etc. That’s completely understandable.
Another important aspect is, people think that an NFT only can be a JPEG. But it can be 3D designs, books, movies, music, films… And not only related to art, an NFT can represent real estate, a contract, insurance, a ticket to a concert, etc.
In short, an NFT is a digital asset that represents real-world objects. They are bought and sold online, frequently with cryptocurrencies, and are often encrypted with the same underlying software as many cryptos.
In this article, we will not delve into the technology behind it, but it is advisable to understand the fundamentals of blockchain to give more value to NFTs.
NFT Utilities
The utility of NFTs can vary. Thanks to Web3, you can connect your wallet to many sites. You have to understand that the NFT serves as a “key” thanks to these tools.
The utility of a token depend on its Smart Contract. The image of NFTs as simply speculative must stop. This technology is here to stay and, if you understand the usefulness of NFTs, you will have an advantage
Today, these are the utilities that are most often given to NFTs:
DAO Membership
In the previous two articles, I talked about “What is a DAO?” and “Why DAOs will change everything?”
The word membership, becomes vitally important, when it is understood that in the future even countries will be governed by DAOs.
Holding an NFT, can give you access to whatever the organization decides. It also gives you voting power over a DAO’s governance. Currently, many DAOs use tools like Snapshot, (voting) Collab.land (exclusive access in Discord) and Gnosis Safe (joint treasury).
You can take a look at projects like DeveloperDAO, an innovative devs community that, to access, you need an NFT.
Metaverse Key
You’ve probably heard the word Metaverse lately and yes, in ten years the way we relate will have changed.
Every object in the metaverse can be an NFT. Buildings, clothes, weapons, vehicles, lands…Designing that, takes work, and there will be people, who simply want their avatar to be in the latest fashion. The possibility that NFTs give you is, to exchange these assets.
It can be said, that Decentraland, is the one who has shown the way. In this metaverse, you can even implement tools, that allow you to give access to private places. Think of the possibilities…
Real World Key
NFTs will not only serve as a key inside the metaverse, but it will also link with the real world, through various forms of tech, such as QR codes.
In the future, concert tickets, flight tickets will be NFTs. No more hotel bracelets. You can also give restricted access to your club members. Tokyo, as always, at the forefront, already has places that work like this.
One of the ecosystem’s greatest gurus is Gary Vee, a pioneer in bringing real-world utility to NFTs. With his project Vee Friends, you can see, that an NFT could give you access to talks and conferences in real life.
Merchandising
There is still controversy over who owns the rights of an NFT. In many cases, the license belongs to the creator, but as we can read in this article, if you have a Bored Ape, you own the copyright.
Collections like BAYC demonstrate how, a simple JPEG, can become an empire, while naming its holders, as the true owners of that empire. On this website, you can see how some of its members add value to the collection at the same time they create their own merch business. This, opens up a world of possibilities for brands!
For instance, Nike could sell 100 copies of its logo, and holders, could create their own clothing collections with Nike’s approval. In that case, owning that NFT, entitles you to collaborate with Nike.
Projects like, NFT Merch or Uniqly, facilitate this entire process, and you can get merchandising from your NFT with a few clicks.
Crowdfunding
Thanks to blockchain, raising funds has been made easier and more transparent than ever.
Would you like to create a video game but don’t have the money? Create the characters, weapons, and scenes and sell them via crowdfunding. Game items and supported resources, like NFT, can accumulate significant resale value, if the game becomes more popular.
For example, on the WAX Blockchain, the authors of the NFTs, receive a small commission from all transactions that take place, between individuals, in the secondary market.
With these recurring benefits, developers have a small share of the secondary market, and are incentivized to continue working on the game.
With this model, it is feasible to make a free game, with new NFTs for sale every few months, which add variety to the game.
If you come up with a trustworthy project and continually update people on what you are doing, you can raise funds and build a loyal community at the same time.
Also, consider learning about Mirror, a platform, that allows you to create posts explaining your project to potential investors. A spectacular example is what LinksDAO did, raising more than 10 million euros in 48 hours by launching a membership NFT.
Art Exhibition
While all the above-stated utilities may not necessarily be related to art, some creators are incredible, and their designs have high artistic value.
In a few years, VR glasses will give you the feeling of being immersed in the Metaverse. Artists will exhibit their digital art just like in reality. You could talk to the artist through his avatar, while, a DJ is playing music in a pool party.
The true value of this is, that you can go to exhibitions, on the other side of the planet, from the comfort of your home
Additionally, NFTs can be exhibit in real life. Companies like Blackdove have created virtual canvases to do that. You can connect your MetaMask wallet and display your NFTs.
Identity
Lastly, a use that can be given to NFTs is to identify the holder. Thanks to Web3 many digital identification problems that we currently have can be solved.
Through smart contracts you can register licences, certificates or qualifications. Imagine using this technology to power online ID cards, like a digital driver’s license. In the future, resumes will be an NFT and, it will be impossible to forge them.
One of the big problems with Web2 is centralization. The users of the platforms do not own their publications. Through blockchain and NFTs that is over. At the moment NFTs give you ownership of 3D designs, videos, songs, photos or tweets. Also like Real Estate companies, they work on the idea of verifying NFTs as physical assets.
The next step is to apply it to people. Obviously it is necessary to implement non-transfer between certain NFTs.
Lens Protocol is an example of how Web3 has been designed to favor creators. The Lens Protocol is a Web3, smart contracts-based social graph on the Polygon Proof-of-Stake blockchain designed to empower creators to own the links between themselves and their community, forming a fully composable, user-owned social graph. In this Twitter thread they explain what their vision is.
https://twitter.com/LensProtocol/status/1490782756938391561?t=VcDxQ2m_-bNsMqYUJNSUlQ&s=19
Not only can it serve as an identity for the real world, but an NFT will be your identity within the metaverse. It is still early to implement all these utilities, since the metaverses are still in their initial stage, but in 5-10 years, your avatar will be a non-transferable NFT to which other NFTs are associated such as certificates, virtual clothes, real estate , etc... Gamium is a project that is currently working on it.
Today many NFTs are purely speculative, but reading Vitalik’s latest article, you realize the enormous possibilities that NFTs offer.
CONCLUSION
The phrase, “do not judge a book by its cover”, could be updated, to these times, and say the same about the NFTs. It is important to understand minimally what a smart contract is, and how blockchain works. It is not just a design, it is all the work that comes behind it.
This space is changing rapidly. Almost every week, we have new tools that help creators and collectors to continue giving value and utility to their NFTs.
In a few years, the Metaverse will be very present in our lives. There will be people who spend more time there than in real life. We will use it to work, to communicate, play sports and have fun. NFT technology is a key part of the Metaverse revolution.
Whether you are an artist, collector, gamer, designer, developer or just an internet user you must understand, that utility is the most important thing.
Author´s Bio
KAF is a consultant and writer helping people get closer to NFTs, DAOs, Defi, and metaverse.
BanklessDAO is an education and media engine dedicated to helping individuals achieve financial independence.
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