Digital innovation continues to reshape the world around us, and non-fungible tokens (NFTs) are a significant part of this transformation. These unique digital assets have surged in popularity, particularly as many sectors have accelerated their digital transformation. For many tech-minded individuals, NFTs represent a fascinating investment in distinctive digital assets that hold financial value.
With the rapid development in the world of decentralized finance, a new type of token quickly emerged: utility NFTs. Businesses and creators are jumping into this innovation.
If you’d like to know more about these tokens, how they are currently being used, and utility NFTs ideas for your own project, we’ve got you covered. Here’s what you need to know.
Get to Know Utility NFTs
Let’s step back a bit and start with what non-fungible tokens are. NFTs refer to assets that underwent the minting and blockchain tokenization process. They often come as digital content such as images, videos, and even texts. Each token has a unique code to make it identifiable from other tokens and fake copies.
To understand this process, let’s take a look at one of the most popular NFT collections, The Bored Ape Yacht Club, created by Yuga Labs.
The creators produced 10,000 avatars or display photos showing disinterested-looking apes in different unique poses, clothing, and designs. These tokens were minted on Ethereum, a virtual encrypted ledger where all transactions are recorded – a blockchain.
Once you buy one of these NFTs, this transaction will be noted in the blockchain and will remain there until you sell it to someone else. In short, NFTs serve as proof of ownership of the digital items and their metadata.
Now, let’s get into utility NFTs. These types of tokens not only serve as proof of ownership but also provide a specific function or service within a particular platform, hence the name.
Imagine you’re attending an event like a concert complete with a meet-and-greet experience for VIP ticket holders. If VIP tickets were sold as NFTs, you would be holding not only an event pass but also gaining access to the exclusive fan meeting and other perks.
What you might notice about utility NFTs is that they perform a function within a given environment or application. As a concert ticket, the purpose of this NFT is to authenticate your VIP access, and the environment is the concert and fan meeting.
Utility NFT Use Cases and Examples
Serving as an innovative way to validate your access to an event is just one of the many utility NFTs use cases. The utility for NFTs has expanded significantly since their inception. The possibilities are endless when it comes to utility NFTs.
The secret to leveraging NFTs effectively lies in your intentions and the context in which you intend to use them. The top utility NFTs are those that offer real-world benefits to their holders. These could include access to exclusive online communities, rights to real-world assets, or even a stake in the future earnings of a project.
To better understand their potential, take a look at the range of use cases and NFT projects that are making waves in this space.
When you use tokens as a concert ticket, you are using utility NFTs for event admissions. The great thing about NFTs is that they can be used for different types of events like exhibitions and conferences.
VeeFriends provides one of the best examples of utility NFTs for event admissions. Founded by Gary Vaynerchuk, the project held VeeCon 2022 with the help of utility tokens.
VeeFriends NFT holders were able to participate in the first-ever VeeCon through a ticketing system supported by tokens. The same mechanics apply to VeeCon 2023.
If you’ve previously purchased a token from an eligible series, your ticket will be automatically dropped into your wallet when you buy a ticket at OpenSea.
One of the most common examples of NFT utility is crypto gaming, which often involves play-to-earn (P2E) games. These games reward players with their respective coins and NFTs. Some of the most popular examples of such games are Axie Infinity, Gods Unchained, and Crypto Royale, just to name a few. In these games, utility NFTs can range from avatars, skins, and icons, to rare items, and more. Players can also earn money just by playing, but keep in mind that starting with crypto games isn’t cheap.
Take Axie Infinity, for example. The game is pretty simple: You get monsters, combat with them, and breed them to create a powerful team. In this game, the monsters or Axies are NFTs that you use to fight with other players.
You can earn money by trading Axies in the in-game marketplace or by earning the project’s token, Smooth Love Potion (SLP), by playing and winning.
Evolving Dynamic NFTs
One of the most innovative ideas for NFT utility is the use of dynamic NFTs (dNFTs) in a wide variety of potential projects. Given the name, these can serve as changing assets based on real-time developments.
A great example of this is the LaMelo Ball Ether Card, which was released back in 2021. The basketball player released a series of tokens, which utilize Chainlink data oracles to enable on-chain actions.
One of these tokens evolved and morphed into a rarer version when Ball won the Rookie of the Year award that season.
There is a lot of potential for dynamic NFTs, and the only key is to find a market that checks the right boxes.
Art and Fashion
While NFTs are already a huge thing in the art world, and not necessarily in a good way, utility NFT ideas for art and fashion create opportunities for asset creators and investors alike.
Curious how this happens? Just look at Vivienne Tam’s 2023 fashion show titled Weaving into the Metaverse, which was launched in the Metaverse. If you look closely at the pieces in this collection, you’ll find some of the most popular NFTs such as The Bored Ape Yacht Club, CryptoPunkz, and Cyberkongz.
The most exciting thing about this show is that it connected in-person attendees with metaverse participants. Tam worked with Vatom to create a metaverse version of Hong Kong for the New York Fashion Week, merging the realms of fashion and technology in a groundbreaking way.
Virtual Real Estate
With Meta’s push towards augmented and virtual reality, the realization of virtual real estate is getting closer and closer. Meta has been allowing users to interact in VR, and properties are bound to be next. Virtual real estate as NFT has already become a thing in the crypto scene.
Think of it as a digital deed in the form of an NFT. Virtual contracts are recorded in the projects’ respective blockchains.
These types of utility NFTs make use of a digital platform where investors can purchase digital lots that they can use similar to real-life properties.
Whereas you can put up a brick-and-mortar business in actual property, virtual real estate NFTs let you set up a shop on the platform, where other users can visit your digital shop and make transactions.
Decentraland is one of the most prominent examples of utility NFT projects in the virtual real estate space. This Ethereum-based virtual world lets users purchase and sell digital properties, mingle with players, and explore the world.
You can purchase land in-game with the use of MANA coins. Your plot of land can be resold to another user or exchanged for in-game items.
Creating Niche Communities
Utility NFTs also play a role in creating exclusive communities such as Crypto Baristas. This project is made for coffee lovers who also have a penchant for NFTs.
To benefit from this project, you need to purchase a Crypto Baristas token, which entitles you to exclusive discounts and perks at their NFT-funded cafe and other partner businesses.
In this use case, the project creators brought coffee lovers from all over the world together in a single community where they can share their love of coffee, trade NFTs, and take advantage of exclusive perks.
Top 5 Best NFT Utility Ideas
If you are interested in launching the best utility NFT in your niche, your first step is to come up with an idea. Keep in mind that your project should not only be attractive visual-wise but also function-wise. Have a look at these best NFT utility ideas to get you started.
Trading Cards Reimagined
E-games are not the only space where NFTs can serve a purpose. One of the most brilliant utility ideas for NFTs is to launch virtual trading cards for a sport of your choice. For instance, if you are interested in golf, you could consider the real-world prospects of launching NFT trading cards for famous golfers.
You can release cards for active golfers like John Rahm and Scottie Scheffler complete with statistics and rankings. The best part is that these cards can change every time they play to show their latest numbers.
This way, it is not only a collection of cards but also a way to monitor the performance of holders’ favorite players.
Exclusive Content Access
In the world of NFTs, one of the most practical uses of utility tokens is to use them to give access to insider content and drops. Exclusive drops are not new things in NFT trading and holders who avidly collect your tokens are more likely to want access to these drops.
It can be as simple as having a specific token in your wallet to gain access to new insider content, or having certain ones dropped directly into eligible wallets.
Musical artists and performers can also use tokens to provide admission to ticket holders via NFTs. This raises a good opportunity not only to make VIP content more exclusive but also to release relevant digital assets.
Real Rewards for Digital Investments
Taking a page out of Crypto Baristas, NFTs can also be used to provide rewards to token holders. They just need to present proof of NFT holdership such as a registration or voucher, and they can gain access to exclusive discounts, promos, and other perks.
This can be an attractive project for enthusiasts in the right communities. The challenge here is forming partnerships with establishments that are willing to honor the rewards offered to the owners of your project’s tokens.
Exclusive Event Access
Say you are an event organizer and you specialize in private meet-and-greets. Perhaps your focus is on exclusive tours to a popular attraction. You can leverage NFTs to achieve your goals.
Again, selling tokens that users need to register to an app, so they can get a voucher or code that serves as passes to the event.
This is also applicable to virtual events and experiences. For example, holders can access games just by having particular tokens or tickets in their wallets.
Ownership of Digital and Physical Items
If you are selling rare items, you might want to issue a digital indication of ownership for that. This is one of the best NFT utility ideas because, despite digital collections, collectors across the globe still invest in physical items.
Artists who use actual paint and canvas can sell their art complete with a digital version in the form of an NFT that indicates the physical and digital ownership of it.
Should You Get into Utility NFTs?
Your approach to utility tokens depends largely on your individual objectives, circumstances, and personal taste. If you’re drawn towards an idea with high potential or an already thriving project, it could be beneficial to explore the world of utility tokens.
Individuals who are interested in creating or investing in utility NFTs should take into account the purpose of the project. Is it providing an asset by offering something with a unique selling proposition? Perhaps it offers a service or perk through tokens.
There are many use cases for these types of NFT. Much like a business, these projects need to have a distinct advantage.
If you’re thinking about starting a project, it’s critical to have a well-defined concept. Understanding the objective of your venture and devising a strategy of execution is fundamental. Additionally, those considering adding utility tokens to their financial mix should take the time to understand how these unique digital assets can benefit their overall portfolio.
The Bottom Line
Utility NFTs are practical applications of digital assets that not only let holders invest but also reap the rewards of doing so in more ways than one. With the help of these utility NFT ideas, you can begin the development of your project and show just how these tokens can provide real-world value.
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Will Zhao is a seasoned technology expert and entrepreneur and has spent over a decade working at leading tech companies like Facebook and Airbnb. His expertise spans various domains in the tech industry, including product development and growth, machine learning / AI, and cloud infrastructure. Inspired by his passion for empowering individuals and businesses, Will founded SoftGist to provide expert insights that help people navigate the complexities of technology and succeed in the tech and business world. Will holds a Master of Information Technology from Carnegie Mellon University.