By Kameshwaran Elangovan
During the years 2021 and the early part of 2022, non-fungible tokens, or NFTs, became a household name. People kept wondering as to why pixelated images of aliens and quirky images of primates would be valued at thousands of dollars if not millions. However, the later parts of 2022 failed to carry forward the intensity of craziness about these NFTs.
This led to the much-needed filtration of the demand, production, and the basic idea behind NFTs and NFT projects. While certain premium profile picture NFTs and celebrity NFTs still held high their value proposition and monetary awesomeness, the passive impact of crypto winter on the NFT marketing landscape led to a lot of consumers and creators reconsidering what NFTs had to offer.
Stripping the NFTs of the aura that had been bestowed on them by the skyrocketing of prices, they are just tokens that capitalize on the immutability of the digital distributed ledger called the blockchain. Unlike other tokens, the inherent uniqueness makes the non-fungible token one of the best candidates for representing a lot of assets. Come to think of it, the most prized assets in this world are non-fungible.
Since a specific digital asset becomes uniquely identifiable, it could also be the unlocking mechanism for accessing certain privileges or products or digital spaces. In short, the NFT could be the gateway to certain utilities. This direction and vector of thinking ushered in a new era for NFTs… Which brought in utility in addition to the uniqueness.
The introduction of utility NFTs was a major redefiner for the entire NFT market… For both consumers and creators alike. While the possibilities with utility NFTs were theoretically infinite, the best benefit of this NFT class was capitalized on by games and brands… And to represent both of them with an umbrella term, we could say utility NFTs found their best uses in a proper digital ecosystem/metaverse.
There are a lot of traditional luxury brands that have always stayed at the top of their line when it comes to traditional transactions and brick-and-mortar businesses. However, the intensity of their business was not proportionately pronounced in the erstwhile digital space that comprised e-commerce and the like. The primary reason for their inhibition can be attributed to the fact that the erstwhile digital era did not promise exclusivity. In fact, it was the exclusivity that made these brands and their products extremely special in the first place.
It was both surprising and not so surprising to see these brands enter into the digital space in the Web3 realm because of utility NFTs. With utility NFTs, it was possible for brands to create exclusive engagements knowing that the holder of the NFT did not carry any first copy or counterfeit of the token itself!
Web3 is all about equity and level playing grounds. therefore, the utility offered by NFTs has not only been explored by premium brands but even a lot of small players who have embraced this new technology.
Perhaps one of the best cases for utility with NFTs catalyzing engagement comes in Gaming metaverses. With gaming assets being presented as NFTs because of the multiple advantages like longevity and tradability, gaming assets are probably the most prominent use cases for engagement with NFTs that present users with utility. Every person who purchases a gaming NFT can be assured that they have the eligibility to play the game limited to the performance and capabilities of the specific NFT they purchased.
What makes NFTs in gaming even more special is the fact that the basic utility can be enhanced by add-ons which, of course, are also presented as NFTs with utility. Therefore, there are multiple layers of engagement that can be enabled by NFTs in a gaming metaverse. There are games that even open up utilities beyond just those for gamers. Advertising assets in the gaming metaverse can be sold as NFTs, and they present passive revenue opportunities for holders… Which could be considered one of the most promising and novel cases of utility for NFTs and gaming metaverses… And a new realm of engagement as well.
With certain crypto assets taking an uptick in their value, and with people realizing the potential of NFTs, utility NFTs can be considered one of the most practical and popular segments of digital assets right now. With utility being kept intact and at the epicenter, it would not be surprising to have even image, celebrity, and video NFTs have their uniqueness and immutability inherent to them but in addition, provide a utility either for brands or for games or for both!
The author is co-founder and COO, GuardianLink