What is an NFT Utility?
NFTs with utility solve multiple problems we had no answer to before. Non-fungible token (NFT) has existed since 2014 and went public in 2017. Currently, the founders of these NFT collections are exploring the possibility of using them to solve real-life challenges. The solution is called NFT utility, or in other terms, NFT use cases. Web3 entrepreneurs are developing NFT with utilities to address the community’s needs. Whether this is to make NFTs as social tokens as proof of membership of an exclusive DAO, a means to record documents, sports highlights, podcasts, music albums, and blogs into the blockchain, or a digital asset for blockchain gaming to earn while enjoying playing. Depending on the niche the entrepreneur wants to focus on, NFT utilities are essential to the project’s success. NFT enthusiasts will be drawn to the NFT if the project’s plans are promoted online on social media like Twitter and Reddit or through blue-chip NFT influencers. It will be a massive hit if the community understands the roadmap and wants to join in with the project’s vision. Like other known utility NFT projects available in the market, to name a few, Bored Ape Yacht Club and Cryptopunks.
Importance of Incorporating NFTs with Utility
Startup founders and Web3 businesses are looking into integrating NFTs with utilities into their collections to provide their community or followers a purpose to purchase their NFTs and not just flip them to gain personal profit. NFT enthusiasts are maturing in choosing which NFT collection should their long-term investment be. They are becoming keen on what useful NFT utility they could benefit from in the long run. With the race to provide better use cases for the community, sooner or later, this will be the trend in the space. Artists can incorporate augmented reality into their artwork which will make it dynamic. Developers are creating Smart Contracts within the NFT collection that could provide passive income to its holders. Some projects use NFTs to give holders exclusive discounts or vouchers for real-life events, services, and products. Here is a short list of what has been recently used in the market:
- Gaming assets: These are utility NFTs that consumers use to be able to play blockchain games and, in return, earn from them. These could range from in-game accessories to play characters and use land plots to generate profit.
- Social spaces: These are utility NFTs used to provide holders the privileges of being part of a community. NFTs can be used as a badge to access exclusive real-life and virtual events and services. These unique NFTs can also be used to vote within the community.
- Fashion: Clothing and accessories can be digitized through NFTs and worn by holders as phygital assets ー both real-life and virtual clothes and accessories.
- Virtual Estates: These are 3D-designed NFTs that are in virtual realities. Holders can use these to host events, e-commerce, and gaming environments.
- Intellectual property: Holders can use their NFT art as their own. Holders can use it for their business logo, characters in their story books, or other products that can associate the artwork with real-life activities.
For a broader list of use cases, refer to Token Use Cases: 9 Astounding Use Cases For Tokenization And How Your Business Can Take Advantage Of The Technology.
There are endless possibilities that founders could do with NFTs with utilities. Marketing these unique collections needs consistent effort by project owners. For people to discover it through their social media accounts, utility NFT projects need to use an active social media page or account or hire blue-chip influencers to promote the project to their respective networks.
Steps in Creating an NFT Utility
Building an NFT project requires some technical knowledge and expertise in blockchain and smart contract development. Here are the basic steps to create NFT utility:
- Define the utility: The first step in creating NFT utility is to define what utility or use case the founder wants to incorporate into the NFT. This will inform the design and development process.
- Choose a blockchain: NFTs are typically created on a blockchain, which provides the necessary infrastructure for storing and managing the NFT. Founders need to choose a blockchain that supports NFTs, such as Ethereum, Binance Smart Chain, or Solana.
- Design the NFT: Once a blockchain is chosen, founders will need to design the NFT. This includes determining the metadata associated with the NFT, such as the name, description, image, and any additional attributes specific to your use case.
- Develop the smart contract: The next step is to develop a smart contract that defines the rules and logic of the NFT. This includes the utility or use case that has been defined, such as access to exclusive content, voting rights, or royalties.
- Test and deploy the NFT: Once the smart contract has been developed, it must be tested to ensure it works as intended. This involves testing the NFT on a test network before deploying it to the mainnet.
- Market and distribute the NFT: Finally, project owners need to market and distribute the NFT to the target audience. This may involve partnering with NFT marketing agencies and influencers to help promote the NFT and create demand for it.
Creating an NFT utility requires a deep understanding of blockchain and smart contract development, as well as a creative vision for how NFTs can be used in new and innovative ways. It may be helpful to work with experienced blockchain developers or consult with industry experts to ensure the NFT utility is well-designed and effective.
NFT utility is essentially a must for current utility NFT projects due to the demand of the consumers. It adds more value to the project and becomes relevant to the daily needs of its holders. Creating and promoting these unique digital assets needs professional assistance from well-experienced NFT agencies.
Tokenminds, as an expert in NFT development and marketing, can assist its clients in developing and marketing their projects. Utility NFT project owners can visit their official website at www.tokenminds.co and can schedule an appointment with them to see the best possible steps to bring the best out of their amazing projects.