When you start researching and working with NFTs, you’ll see one word that pops up quite a bit – that word is Utility. Almost every successful NFT project has some sort of utility that seems to be the center of the project’s marketing efforts.
But what exactly is Utility in the non-fungible token space and how important is it to the success of a new project. Let’s get into it!
What Is NFT Utility?
In the NFT world, utility relates to the uses of an NFT, or collection of NFTs outside of their use as pieces of digital art. So, what uses are there for NFTs? Some of the most common include:
- Memberships. One of the most common uses of NFTs is to act as tokens of membership. For example, if you own a Bored Ape NFT, you’re automatically a member of the exclusive Bored Ape Yacht Club – a club that’s taken over various spots in New York and continues to be one of the most active communities in the NFT space. However, the BAYC isn’t the only exclusive membership unlocked by NFTs, there are tons of them on the marketplace.
- Place Holders. Another common use for NFTs is as a placeholder for other projects. For example, there’s a company called BlockBar that sells NFTs attached to bottles of wine and spirits. Like any other NFT, BlockBar NFTs can be bought, sold, collected, and traded. However, when you redeem a BlockBar NFT, you get the bottle of liquor or wine attached to the piece of art.
- Contracts. Recently, stories hit the tape surrounding the first mortgage NFT. You see, NFTs run on contracts and if this/then that propositions. So, it was only a matter of time until a mortgage was created. The deed is held by the NFT and when the mortgage is paid off, it’s automatically transferred to the homeowner. On the other hand, if the homeowner misses payments, the deed automatically goes to the issuer of the loan.
- Event Tickets. Finally, multiple events have used NFTs as tickets for entry. These include sporting events, concerts, and much, much more.
Is Utility Important to the Success of a Project?
This depends on the type of NFT project you’re working on. No art-only NFTs have any utility and many of them just so happen to be some of the most expensive pieces of art on the blockchain.
However, in many cases, utility is indeed very important.
For example, I’m not sure the Bored Ape Yacht Club would have grown to become anything nearly as successful as it is today if Bored Ape ownership didn’t act as membership to the exclusive club.
As the Bored Apes hit the tape, many influencers in the NFT space started to latch on, which led to excitement among NFT enthusiast. Next thing you know, celebrities were starting to pay hundreds of thousands of dollars for their own apes.
Once this happened, everyone, NFT enthusiast or otherwise, wanted to be part of the Bored Ape Yacht Club. In what seemed like no time flat, the collection became one of the most successful to ever see the light of the blockchain.
Will Utility Automatically Make My NFT Project Successful?
Utility is one piece of many successful NFT projects, but it’s not the end-all, be-all. There are several aspects to creating a successful project (all of which we’ll teach you in this course). However, utility is definitely an added benefit that can greatly increase sales if incorporated and marketed properly.
See You Next Week
That’s it for today, my friends. Come back next week to learn the difference in doxxed and un-doxxed NFT teams and why it matters when you create your first project.