What are utility NFTs?
Utility NFTs are digital assets that offer owners value through attached perks, specified privileges, rewards and experiences.
Nonfungible tokens (NFTs) became massively popular in 2021, initially captivating imaginations with their association with high-priced artwork and exclusive collectibles. Though NFTs have been around since 2014, 2021 was the year that they broke into the mainstream, disrupting digital collectibles and the art world.
They further caught global attention when Beeple sold his NFT “Everydays: The First 5,000 Days” for $69 million at Christie’s. However, NFTs were criticized by many as being worthless with no intrinsic value. This ushered in the era often dubbed NFT 2.0, value-added NFTs, or functional/utility NFTs. It is about attaching tangible value and practical applications to digital assets, transforming them from collector items into powerful tools that unlock access, rewards and unique experiences.
Utility NFTs represent a paradigm shift in the NFT space beyond digital art and collectibles. Unlike traditional NFTs, utility NFTs have practical applications on specific platforms or applications. They derive their value not solely from their inherent scarcity or artistic appeal but from the practical functionalities and real-world applications they offer.
For example, owning a utility NFT grants exclusive perks and benefits within a particular ecosystem, be it a blockchain game, a members-only community or even a loyalty program.
This prompted trending artwork and collectible NFTs to add utility to their artwork. For instance, the Bored Ape Yacht Club (BAYC) was not launched initially as a utility NFT. Yet, evolving today, BAYC has real-world benefits for its holders; it grants access to exclusive social events, merchandise drops and even opportunities to mint rarer NFTs within the BAYC universe.
Similarly, CryptoPunk holders can get a unique handcrafted pendant modeled after their NFT from Tiffany & Co….
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