Why Utility NFTs Are Key To Mainstream Adoption Of Web3

Apr. 16, 2023
Why Utility NFTs Are Key To Mainstream Adoption Of Web3

In the past few years, various stars ranging from Justin Bieber to Madonna have released Non-Fungible Tokens (NFTs) collections for their admirers, thereby sparking a significant hype cycle predominantly concerning NFTs.

Without comprehending the benefits that Non-Fungible Tokens NFTs enabled by blockchain technology could bring, one may misconstrue them for being just ‘million-dollar JPEGs’.

The misrepresentation of NFTs has become a major obstacle to the widespread use of Web3 technology. That is why utility NFTs must be introduced in order to promote their acceptance.

Utility NFTs are potentially a catalyst for Web3 mass adoption, providing tangible rewards and benefits to holders. The likelihood of non-crypto natives trying Web3 is enhanced by the reality of its use-value.

What Are Utility NFTs And Their Importance In Web3

NFTs now come in a variety of different forms, including Utility NFTs. These tokens are used for more than just collecting or investing, instead, they provide access rights to decentralized applications and services such as access keys, identity tokens, governance tokens, and in-game assets.

Unlike traditional Non-Fungible Tokens which are used mainly for investment purposes, Utility NFTs fulfill a certain purpose within their respective ecosystems. These NFTs are an important part of Web3 — the new internet. 

Additionally, NFTs can be used for authentication purposes and have become a major force in the digital collectibles industry. They also facilitate secure transactions with smart contracts that ensure transparency and trustworthiness in financial interactions. 

Six Ways NFTs Are Revolutionizing Industries And Driving Mainstream Adoption

Six distinct scenarios show how utility NFTs can give owners advantages, while also reducing the likelihood of inflated market activity. These use cases encourage the advancement of Web3 and improve the utilization of crypto-technology by the mainstream.

1. Exclusive NFT Memberships

NFTs offer a unique opportunity to become part of an exclusive community that can have huge benefits! NFT membership programs create incentives through digital rewards and provide recognition and belonging amongst its network of participants. 

As these tokens are non-fungible, meaning they are each unique in their own right, they make it easy to differentiate between different levels or values within the tiers. 

Membership programs using NFTs allow for incredible transparency, as every transaction and interaction is traceable on the blockchain ledger. This helps verify data security for all users involved and promotes trust in its community. 

Furthermore, since all transactions use smart contracts, there’s no need to worry about costly middlemen fees or complicated paperwork processes — just smooth operations from start to finish!

Here we have compiled a list of the ten best memberships available. From discounts on purchases to exclusive access, these elite clubs offer fantastic benefits and perks so you can enjoy all the best of NFTs. 

  1. Rarible: A decentralized market for NFTs.
  2. SuperRare: A curated market for unique digital artworks.
  3. Foundation: A marketplace for rare digital collectibles and merchandise.
  4. OpenSea: The largest NFT marketplace, including collectibles, art, etc.
  5. Nifty Gateway: Platform for limited-edition NFT drops from top artists and brands.
  6. Bored Ape Yacht Club: Community-driven project based around collectible apes.
  7. CryptoPunks: One of the earliest and most popular projects featuring 10K unique pixel art characters.
  8. The Sandbox: Virtual gaming world where players can buy/sell/trade NFTs.
  9. Meebits: Hand-drawn creatures featured in an NFT project.
  10. NBA Top Shot: An officially licensed platform with collectible highlights from the NBA in form of an NFT.

2. Physical Meets Digital

The term ‘phygital’ fuses physical goods and services with the digital world by enabling transactions of NFTs. This signifies that when a buyer purchases an NFT, they will receive a physical item along with virtual asset ownership.

NFTs are no longer exclusive to digital artwork; they are also being used for tangible property transactions. In other words, NFTs can now be employed as a payment method for physical real estate deals.

Adidas recently released theirs Into the Metaverse collection, a physical product with an accompanying digital component accessible in the metaverse. This is an example of ‘phygital’ technology, where physical goods are interconnected with virtual counterparts.

Adidas and other similar brands have a loyalty rate of 84% among US customers. This strong customer base can be used to promote Web3 technologies, such as phygital NFTs (non-fungible tokens), in order to draw more customers into the fold. Some of the phygital NFTs are mentioned below:

  1. HoloGraffs: Dynamic graffiti artwork merging physical spray paint with holographic, augmented reality elements, allowing for a continuously evolving piece of street art.
  2. VirtuWear: Fashionable clothing items with integrated digital components, such as built-in AR filters, customizable LED designs, and reactive fabric patterns.
  3. SensiScapes: Immersive, multi-sensory environments blending physical installations with virtual reality experiences, incorporating touch, sound, and visuals to create unique, engaging spaces.
  4. AugmenTech: Gadgets and devices that seamlessly fuse traditional technology with blockchain-based, interactive NFT features, such as smart speakers with customizable holographic interfaces.
  5. ARchitecture: Buildings and structures with embedded AR capabilities, allow users to modify and enhance their surroundings with virtual art, messages, and interactive content.

3. Metaverse Marketing Potential

The attraction to physical, digital NFTs is leading companies to explore new ways of branding and advertising in the metaverse. This presents an opportunity for them to create an entirely new consumer base.

As awareness and enthusiasm for the metaverse grows, businesses have a unique opportunity to explore how this new platform can fit into their marketing strategies. By carefully retooling existing sentences while retaining the same message, companies now have a fertile arena full of potential.

Nike and Gucci have enabled the virtual representation of their products, allowing customers to do them in a metaverse. Additionally, This has been made possible by recent developments in AR and VR.

Customers who are loyal to brands may feel inclined to move into the Web3 space, where they can encounter many familiar brands within a digital world.

4. NFT-Enabled Gaming Evolution

NFTs provide gamers the opportunity to purchase assets and features inside blockchain video games, thereby giving them access to the communities they are passionate about. 

Players can now invest in a new way by paying for virtual items that have a distinct identity on the blockchain, ensuring secure and transparent ownership of these assets.

Rather than being bound to one game, Non-Fungible Tokens allow players to carry their items across different games and take control of them instead of the game itself. In comparison with customary in-game purchases, NFTs offer a distinct set of advantages.

Player autonomy is boosted by NFT assets. Blockchain gaming entices the classic gamer to switch to Web3, thus increasing the user base. The longevity and worth of in-game elements are therefore increased. Some famous NFTs games are mentioned below:

CryptoKitties – This game allows participants to gather, breed, and exchange one-of-a-kind digital felines, with each cat embodied as a non-fungible token.

Axie Infinity – In this blockchain-powered game, players can purchase, breed, and fight creatures called “Axies.” Each Axie is an NFT, and players can receive rewards for their involvement in the game’s environment.

NBA Top Shot – A game for collectors where enthusiasts can acquire, trade, and sell authorized National Basketball Association highlights, with every highlight being a distinct NFT.

Sorare – A card trading game that showcases exclusive digital cards depicting professional soccer players, each as a non-fungible token. Players can gain rewards by engaging in the game’s ecosystem, such as exchanging or selling their cards.

5. NFT-Powered DeFi Growth

NFTs can provide holders with exclusive advantages that they might not find elsewhere in a membership setting. Apart from this, the distinctive nature of NFTs allows holders to have exceptional positions and rewards within the decentralized finance (DeFi) environment.

Currently, staking crypto in DeFi may be challenging due to liquidity problems. Fortunately, NFTs are a suitable option that doesn’t entail locking-up protocol tokens for a predetermined period. Thus, alleviating any illiquidity difficulties.

DeFi protocols may provide users with gamified perks like NFT staking boosters, fee refunds, or exclusive allowlist access. For instance, VVSGotchi’s VVS Miner Mole NFT collection provides utility in the form of experience points, giving higher returns to those who stake their NFTs.

Decentralized Finance (DeFi) systems offer the ability to limit the availability of Non-Fungible Tokens. This helps ensure that their worth accurately matches up with the demand for them.

NFTs have the potential to expand DeFi options with their functions, making the system more dependable, while limiting price variability. Consequently, users will benefit from increased utilization and secure experience with DeFi.

6. Health And Social NFTs

Users are gaining back control with NFTs, which allow them to take ownership of their data and gain financially through the gamification of traditional businesses.

NFTs offer a way for people to capitalize on their health records by selling the data to interested third parties. For example, Stepn is a feature-to-earn project that incentivizes users with rewards in exchange for providing details on the steps they take.

Creators will be able to benefit financially through royalties when utilizing NFTs in connection with the wellness sector, providing users with creative new sources of income. 

Instagram is seeking to facilitate Non-Fungible Token transactions for its users, and introducing features that enable them to mint and sell through the platform. However, a new breed of decentralized social networks is also entering the scene.

New developments in the digital landscape are presenting users with innovative options for a fully decentralized social media experience. DeSo and Lens Protocol aim to offer creator coins, tips for content creators, and gas-free NFT minting.

NFTs present users with a way to make money off of activities they naturally perform free of charge, such as health and social media engagement. Additionally, these open up access to two large potential markets that could encourage the adoption and mass utilization of NFTs.

The Future Of Web3: NFTs Driving Mainstream Adoption

NFTs can deliver significant advantages to various sectors by enabling industries worldwide to bypass reliance on status or rapid exchanges. Rather than quick gains, these tokens can offer a meaningful and lasting value proposition.

Furthermore, if everyday users bear in mind all the services that the given technology can provide. Users can take advantage of Non-Fungible Tokens NFTs without worrying about their volatility and value changes.

NFTs possess the ability to be the main trigger for Web3’s ascent to significance. This can result in enhancing and strengthening existing features, instead of creating a completely new network from the ground up.

Kashif is a crypto-journalist with over 4 years of experience in the Cryptoverse. He began his career as a software engineer, but his curiosity towards decentralized technology lured him into the labyrinth of crypto, where he discovered a passion for reporting the latest news and developments in the field.