Unless you have been living under a rock then you have probably heard of NFTs. From Paris Hilton to Jimmy Fallon everyone has gotten involved in this novel technology. But what you probably don’t know is the utility these NFTs bring.
Don’t worry. In this article, I will be covering all aspects of Utility NFTs so you can navigate the space with ease. So without further ado, let’s jump right in.
Utility NFTs are assets that have a function that extends beyond the basic NFT form. They are not just unique pieces of metadata, rather they have various use cases. Rewards and privileges are granted to owners. For instance, they can act as a ticket to enter an exclusive event or grant community members access to merchandise
How do utility NFTs work?
Utility NFTs work like any other NFTs. Simply put, they are unique assets stored on a decentralized ledger. Think of them as digital contracts which are recorded on a public database. Every transaction on the database is open to the public making it completely transparent.
These contracts act as receipts with every NFT being unique and permissionless. Not to mention, the open-source nature of this database means that NFTs cannot be falsified or duplicated.
When it comes to utility NFTs they provide additional value to holders which extends beyond the basic form of digital art or music. Creators provide various perks and privileges to holders.
This could be in the form of exclusive merchandise or linking the NFT to a physical product. For instance, the NFT would act as a receipt that can be redeemed for a physical replica of the artwork.
How do creators fund utility NFTs?
Creators fund utility in one of two ways, royalties, and the initial mint. Firstly, when NFTs are first minted the creators set the price which ultimately determines how much money they receive upfront. The second method is through royalties.
Creators can code royalties into the smart contract whereby a percentage of each subsequent transaction is withdrawn and transferred to the minting address. In turn, the team receives a steady source of income that extends past the initial sale.
Do you want to learn more about NFT royalties? Click here to read my previous article.
The best utility NFT
Bored Ape Yacht Club (BAYC)- this is the most popular NFT collection and rightfully so. One of the many reasons this collection became popular is because of its utility. Token holders of this NFT use it as proof of purchase which grants them access to exclusive events.
For example, the NFT granted users access to a week-long event named Ape Fest in 2021 and 2022. Based in New York this event attracted huge attention with the likes of Gary Vaynerchuk, Jimmy Fallon, and Reddit cofounder Alexis Ohanian attending. Not to mention, there were music performances by Lil Baby and Timbaland.
Another event was a metaverse meetup whereby a 3D version of their NFTs was created and community members could interact in a virtual world. Overall, the utility of BAYC is unmatched and this has turned it into and iconic brand.
Best utility NFT marketplaces
Utility NFTs can be bought on any of the major marketplaces. This includes:
OpenSea – this project was founded in late 2017 by Devin Finzer and Alex Atallah. It is the most popular NFT by far with over 70 million NFTs and over $20 billion in total volume.
This platform has a great reputation with backing from the likes of Andreessen Horowitz. Therefore, you can be ensured that you are using a reliable and trustworthy marketplace.
Overall, it features an extremely intuitive design with support for over 135 different payment methods. There is also support for several different wallets including Metamask and Phantom.
Not only that, but this platform allows users to filter by utility so you can find your utility NFT collections easily and quickly.
Magic Eden – this is another great platform that is cheaper and faster when compared to OpenSea. Marketplace fees are only 2% compared to 2.5% for Opensea and thanks to the Solana blockchain support it is extremely fast.
There is also a launchpad feature that supports the launch of NFT projects. Magic Eden provides full support for creators whether that be consultation or checking the smart contract for bugs. If you want a platform to launch your utility NFT then look no further.
The future of utility NFTs
At the end of the day, this technology is in its infancy. Although the use cases presented are certainly impressive as evident by Bored Ape Yacht Club this will only improve. In the future businesses and organizations will use this technology across the world. NFTs could be used for anything from real estate to brand awareness. The opportunities are endless. I hope you found this article interesting and thanks for reading.
Want to learn about sports NFTs? Click here to read my previous article.