This week at Tapx Talks we’re discussing the topic of ‘What is NFT utility.’
It’s no secret that NFTs have exploded in popularity over the last year, but what are they really? What are they bringing in? What is NFT utility? Why do we need it?
We dove deep to try and find the answers to these questions with our amazing panelists:
Irina from Unique Network, Max from Vinci Protocol, Alex from Vault Hill, and ToxSam from Crypto Avatars.
Before we start unpacking NFT utilities, here is a short introduction of the projects who joined the talk:
Unique Network is a scalable blockchain for marketplaces, games and dApps with advanced features, built for Polkadot and Kusama. It allows creating things like nesting, refundability, scheduling, and sponsoring of transaction fees — all the advanced features that will help to bring NFTs to the next level.
Crypto Avatars is a protocol that aims to get your NFT and your identity across different metaverses. For example, if you have a Bored Ape Club NFT, you can get your collectible from Decentrealand to the Other Side, to other metaverses without changing your identity.
Also, they are allowing artists to create their own unique avatars so they can sell them to other people.
Vault Hill is the first human-centered metaverse with NFT marketplace where creators can monetise their works of art and earn royalties, and brands can give their customers digital assets as NFTs.
Vault Hill Metaverse is a place where our digital and physical lives converge, imagination is limitless, and each visit helps you explore your humanity. In the near future, they’ll provide their view on how to shape our relationship with technology.
Vinci Protocol is a pool-based money market with NFT assets as collateral. NFT holders can deposit their NFTs on the Vinci platform as collateral to take out loans, meanwhile, money lenders will earn yields by providing liquidity.
Now, let’s move on to the topic of the discussion.
What is NFT utility?
Tox Sam of Crypto Avatars says that in a technical sense, NFTs itself has utility since it is a digital asset that is completely transparent — everyone can see its price, who is the owner, when it was sold & bought, etc.
From the user’s perspective, he adds, the utility is to give people the value they are looking for. One of the use cases that he believes will level up NFTs is ticket NFTs.
Tickets can be traded on secondary marketplaces as NFTs and in this way, the organizers of the event or an artist can get revenue once the ticket is sold.
He adds that utility is also about having an effect that people can see in their real lives, not just on the blockchain. At the end of the day, most of the folks who are going to be using NFTs in the future probably are going to be using them the same way that they are using the Internet today. We use it every day. It looks like magic, and just a few percent of the population really know what’s going on behind the screen.
So the more we can give utility and the more we can give user experiences on top of the NFTs, the easier it is going to become mass adopted.
Irina of the Unique Network believes that the NFT utility is very subjective. Since they are called non-fungible tokens meaning they’re unique assets, there will be as many utilities as people or industries or companies or projects will give them.
For somebody, utility would be having a physical item attached to a digital item. For example, you have digital artwork or you buy comics and then you receive a character from the comics and you can put it on your desk and just appreciate it as a piece of art.
Or it could be access to an exclusive community like the Bored Apes Yacht Club that gives you the opportunity to then have all the perks that that club offers. It could be a concert ticket or a book, and much more.
There are a lot of interesting debates happening in this space, she adds. Irina says she really likes how brands are using the NFTs features in loyalty programs giving the next level of ownership or trying to add value via communities.
I think the biggest utility that any NFT project brings to any brand or any community or any initiative is actually the community itself.
When brands launch the NFT collection, they no longer treat their customers as just customers. They really want to learn about the people who follow them, who is buying the product, and who is joining their community or ecosystem. And it is a new way of connecting with each other via technology.
Alex of Vault Hill agreed with Irina on the point that NFT utility is completely subjective, as many things in the world are. We are still discussing whether gold is valuable or not. Whether Bitcoin is the only crypto that has value or not. So this discussion will always exist, he says.
What I think is that ultimately what gives utility to an NFT is up to the holder. But there are things that we can do to try to drive that perception towards people feeling that the NFT that they are buying or they are getting actually has utility.
Alex shares some base questions that can help a person identify NFT’s utility:
- What can I do with this NFT?
- Is this something I would like to hold? Why? For what purpose?
- If it’s only for holding, can I display it?
- If I can display it, can I use it for something else?
We are in the early stage of NFTs evolution. The more we evolve in the token standards, the more opportunities will start to open to add more value elements to NFTs.
Max of Vinci Protocol agrees with the speakers that NFT utility really depends on the person who holds it and sees its value.
For example, World of Warcraft players or other super highly motivated computer game players can have their favourite game assets as NFTs and these NFTs can come with real-world items like wearables. For those players, NFTs will have utility, because they are fans of the game.
Max says that the utilities NFTs have now are still a drop in the ocean compared to what we can have in just a few years when we will have more trust in this type of ownership which of course, comes with adoption.
Is the phrase “NFT utility” being abused by some projects in the NFT space today?
Alex says that unfortunately, the phrase is misused now and will be misused in the future as well. But it happens every time with all the hype technologies. For example, the word metaverse is also misused.
We haven’t even agreed on what the metaverse is, so everyone uses it as one wants. Same thing with NFTs utility. We haven’t agreed on the meaning, but every project uses this phrase providing it with different senses.
It’s been misused, yes, but potentially it is not bad. That’s something that might be interesting to discuss because the more utility we add to the NFTs, the better deal would be for the user that actually gets them — Alex.
However, we can also say that the phrase NFT utility is not misused, it rather becomes a hyper-personalised message to a specific community.
Projects provide NFTs with the use cases their communities are interested in.
So, the right thing to do is to ask who our users are and what they value. And then start working in that direction to give them the utility they are looking for.
Now we’re still in the exploration phase of NFTs and many businesses are trying to apply this new technology. But most companies don’t really care about the fundamental idea behind non-fungible tokens and blockchain ethos, says Irina. They just tend to kind of squeeze it in a way and just follow the same processes and patterns as they used to in the web2 space.
So it becomes very important to continue pushing the education and explaining to users and businesses what web3 is, why it differs from web2, and why NFTs are web3 and more.
Then we’ll see more companies breaking this hype pattern and stop misusing NFT technology. With education will come understanding and people will start questioning brands of the utilities the NFTs have, if they are really beneficial or if it is just hype.
What we’re seeing now is a kind of abuse of an NFT utility. For example, the recent NFT drop by Tiffany: the extraordinary price tags that are attached to the NFTs and web3.
But the blockchain value proposition is about democratisation. It’s about giving ownership and access to everybody. About the fair internet.
And this isn’t happening if we continue with the sectors that traditionally have been very exclusive. Now we keep dragging this same model into web3 space and building more exclusivity. But what we need is to build more inclusivity.
On the other hand, there are people who are ready to pay 30ETH for Tiffany NFT. Maybe it’s just a market drive, says Irina, but then we’re not doing much innovation and disruption with web3.
Alex thinks that there will be some sort of natural selection in terms of the NFTs that will keep being valuable and the ones that will actually die off.
We are starting to see now that communities are looking for NFT projects that actually have a road map, that they are building things, and what value they deliver.
Max adds that there will be a lot of use cases that we didn’t imagine before. For example, the soulbound tokens will be a great thing in the upcoming years and they will have a massive influence on NFT utilities as well, he says.
We can see the new use cases and new senses being added to NFTs and it’s obvious that NFTs aren’t going anywhere. The use cases will evolve, we’ll step forward from NFTs as profile picture collections to something more meaningful and valuable.
NFT scams: how to spot them
NFTs are risky, there are a lot of scams and frauds in the space. So here are some tips from our speakers on how to find a reliable NFT project:
- It’s important to know the team behind the project and record their history in crypto space: how long have they been in space? What have they delivered on previous projects? How easy it is to reach the team? Can you actually communicate with the founding team on Telegram, Discord, or LinkedIn? If the team is unreachable, then it might be a red flag.
- If it’s a creator who sells and NFT, you can ask for the portfolio. Again, the story behind the person and the artwork.
- If it’s a loyalty program or discount program from a reliable platform then check the backers.
- Don’t just jump into anything right away. If you hear an influencer or saw an Instagram post on some NFT drop, do your own research before buying.
- Also, mind money management and risk management. You should always be prepared to lose your money if you participate in this activity.
- Education is always the key. Do your own research. Always check the roadmap, and whitepaper, and don’t hesitate to reach out to the team.
- If you come across the shiny thing that is promising you big returns, there are high chances you’ll be scammed.
- See how the project is doing on the marketplaces. How bids and floor prices look like and if there is a demand for these assets?
- Join the community of the project you’re interested in. If the community seems good and fair, then that’s the project for you.
- Enter the project of your own will, not because someone advised you to do so.
Is it possible for the real estate market to adopt NFTs in the future?
It was a question from the listeners, and our speakers had some great answers to this query. So let’s see what they are thinking of using NFTs in real estate.
Alex believes that it is very likely to happen. Even though at Vault Hill they are in the market of virtual real estate, they are looking forward to the NFT market being developed enough to be able to cater to traditional real estate.
He sees this as a good change that can potentially speed up and simplify the process of buying and selling properties.
Max also believes that NFT technology can and will be applied to the real estate market pretty soon. A lot of cool things are to come, he says, and one of them is, of course, the digitalization of real estate ownership with traceable smart contracts, transactions, and proof of ownership that always stays on the blockchain.
Irina says that she’s really excited to see real estate moving into the NFT space. She has been working with the foundation for international real estate and blockchain expertise for almost two years now and they are doing a lot of work in educating real estate companies on how to approach tokenisation.
One of the great examples of projects that are working in this field is Solid Block.
Owning a Solid Block NFT allows you access to hotel rooms as well as other benefits. It’s a real utility and really exciting stuff, says Irina.
She also adds that once we give more rights and more possibilities to people, especially young people, to own property or start building capital to be able to buy real property, that would be a big and very positive step to make our world a better place.
It was an amazing discussion. Thanks to our speakers for joining us and sharing their thoughts on what is NFT utility and how the NFT technology can be used in the real world.
Our understanding of NFT utilities is still very limited, so there are so many exciting opportunities to explore. It’s great to see that there are projects in the space that can see and unlock the potential of NFTs.