All About Utility NFTs, the Unique Tokens With Practical Applications
One of the broad classes of non-fungible tokens (NFTs) are utility NFTs.
Utility NFTs are built to give their token holders certain perks, like passive income earning opportunities.
Read more about the various types of perks utility NFT holders enjoy.
Utility NFTs are a class of non-fungible tokens designed not just for collecting but also for utility. Find out how they can enhance sectors including gaming and fashion here.
Binance NFT Marketplace offers a wide variety of NFTs, but did you know that there’s a special class of NFTs designed for utility and not just collecting? From virtual real estate to VIP passes, utility NFTs introduce new ways of interacting. Here’s a short list of practical applications utility NFTs are used for today.
What Exactly Are Utility NFTs?
Utility NFTs are a broad class of NFTs with specific practical applications. Just like any other NFT, they are typically created with smart contracts and are unique. They also share the same properties of immutability, transparency, and security.
Unlike regular NFTs, however, the core focus of utility NFTs is not their collectibility, but the real-world applications, rewards or perks they offer NFT holders.
Applications of Utility NFTs
As a ticket for exclusive events and merchandise
Possibly one of the most relevant uses for NFTs is as digital versions of tickets that allow access to exclusive events. Already, some projects have been using their utility tokens to offer their holders exclusive access to closed-door events. Thanks to the uniqueness of each NFT, event organizers can verify these digital VIP tickets just like they would traditional tickets, without any fear of ticket fraud.
In the gaming industry
Undoubtedly, NFT gaming has become a hot sector within the blockchain industry. Since NFTs are the building blocks of this ecosystem and the metaverse in general, it’s no surprise that utility NFTs are used to facilitate monetary transactions and general gameplay in the gaming world. This includes using NFTs to represent exclusive in-game assets and collectibles, or as items of value that can be cashed out in a play-to-earn (P2E) model. For those who have not played blockchain games before, game NFTs can be sold on a secondary market like Binance NFT Marketplace for fiat currency.
In the fashion and art industry
Projects have also introduced utility NFTs in the fashion and art industries. Online auctions may sell digital copies of real-world luxury goods in the form of NFTs, after which successful bidders will receive their physical loot. Users may also be able to try on virtual outfits in the fashion metaverse in the near future, thanks to augmented reality (AR).
Additionally, unlike traditional NFTs where the token itself is the artwork, a physical art piece could be sent as proof of purchase, allowing art fanatics to curate and show off their valuable collection in real life. This is a popular way to add utility to an NFT — since NFTs are all about creating unique digital assets, their real-life counterparts being similarly unique pieces will increase the value of both the NFTs and their corresponding physical products.
For virtual real estate
As we move towards a new era of the Internet, metaverse projects have started introducing virtual land represented by NFTs. To own a parcel of land, you simply need to do your own research (DYOR), invest, and receive your NFT plot. Some projects may also allow virtual real estate holders to become virtual landlords and rent their land to someone else. If you’re interested in owning virtual land, you can check out out our article on How to Buy Land in the Metaverse.
As a vehicle for passive income
Different projects offer different ways for NFT holders to grow their crypto, including renting virtual real estate (as mentioned above). P2E games may also offer passive income opportunities through staking, where users can lock up NFTs in smart contracts to generate rewards. As more creative passive income opportunities arise, NFT owners may find their digital assets increasingly useful.
Cool Utility NFTs on the Binance NFT Marketplace
Origins by Alan Walker
This NFT collection features three high-production value music videos from Alan Walker’s Origins album. NFT collectors and Alan Walker fans are treated to an online Alan Walker Origins NFT scavenger hunt. Fans can collect all the different NFT music video segments from the collection to piece the whole music video together, and all NFT holders can earn a share of the revenue from the music video streaming on YouTube.
Mystery by Franck Muller
This Mystery Box Collection has 28 NFT designs on four different rarity levels. NFT holders stand to win NFT watches to be worn in the metaverse, physical Franck Muller timepieces, a chance to attend private Franck Muller events in Dubai, Miami, and Singapore, and a private tour of Watchland, the Franck Muller factory in Geneva.
The Muhammad Ali Experience Mystery Box Collection
This Mystery Box Collection consists of six video NFTs of six rarity levels. Depending on its rarity, each video NFT will unlock a different perk — namely, a Membership Access Card to the upcoming Muhammad Ali Experience Museum and Muhammad Ali Experience Metaverse Museum, digital Muhammad Ali artwork, a print and canvas signed by Muhammad Ali, and one exclusive signed physical canvas by artist Mike Bundlie and Lonnie Ali, Muhammad Ali’s wife, which features $500 worth of gold flakes.
Even if you’re not an avid NFT collector, you might want to consider owning one of these utility NFTs as it may come with a useful perk. Be it earning passive income or having exclusive access to events and items, utility NFTs have a variety of uses and will likely see even more uses emerge.
In addition to ownership of a unique NFT asset, an NFT’s utility gives it more value. NFT creators and platforms can continue to introduce new utilities in future to help foster an exclusive community of NFT owners. With the evolution of Web 3.0, the utility of NFTs will grow in prominence for both their creators and owners. If you’re an investor thinking about adding NFTs to your portfolio, consider the utility of NFTs as they have more uses and value than purely collectible NFTs.
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