If you missed our previous post where we discussed what NFTs are, you might want to check it out first! As a memory refresher, the term "NFT" stands for "non-fungible token" and refers to a digital item that is unique in some way. They're different from virtual currencies like Bitcoin because they aren't one-to-one transactions, but instead, represent ownership over something specific. This could mean anything from a physical object like an automobile or real estate to a digital asset like an avatar or physical artwork. In this article, we'll explain how utility NFTs work and why they're a useful development in our world today.
What is a Utility NFT?
A utility NFT is a digital asset that can be used to access a digital service or product. Unlike other NFTs or cryptocurrencies, utility NFTs are not designed to be traded for profit—they’re meant for use on the platform they were created for.
Utility NFTs are sometimes called "tokenized products," because they often represent an actual product or service available on the network in which they exist. For example, if you have a jewellery business, you might create a collectible item like an antique piece of jewellery and make it into a digital token that allows owners access to exclusive discounted offers from your store.
How do Utility NFTs work?
Utility NFTs function similarly to other NFTs from a technical standpoint. They are held on a blockchain as distinct digital assets that are cryptographically represented. NFT owners may easily demonstrate that an NFT is held in their wallet and no one else's thanks to the immutability and transparency of blockchain technology.
Utility tokens generally don't represent anything tangible; they only give you access to a service provided by the token owner. Utility tokens are most commonly used in gaming applications, where users can purchase them through their games in order to unlock new features within the game or help pay for in-game purchases.
However, there are also many real-life applications for utility tokens that have yet to be utilized in our everyday lives—in fact, we've barely begun scratching the surface of how people might use these digital assets!
Examples of utility NFTs
Utility NFTs are used for everything from collecting art to gaming to real estate. They can also be used for charity.
Let's take a look at some examples that have already proven their worth in the real world:
CryptoKitties— A game that allows you to collect, breed and sell digital cats built on Ethereum blockchain technology. This one is so popular it has become an established brand in its own right, with millions of users all over the globe.
DubaiCoin— A utility token designed exclusively for use by businesses based in Dubai (UAE). It allows these businesses to transact with each other without needing cash or government-issued currency.
ArtNome— A platform where artists can share their work with potential collectors while receiving payment via cryptocurrency. Artists can also use this platform as a means of fundraising, allowing them to sell shares in their artworks instead of selling off pieces outright.
KodakOne— A blockchain-based image rights management platform that allows photographers to register their work and receive payment when it’s used by publishers. This is a great example of how cryptocurrency can be used for charitable purposes.
How to get started with buying and selling utility NFTs
The easiest way to get started with buying and selling utility NFTs is on the OpenSea marketplace. You can also try Cryptokitties, Rare Bits, or CryptoPunks if you are interested in other platforms that support selling these tokens.
Utility NFTs are changing the way we think about ownership in real life. We think that as blockchain technology continues to gain traction, utility NFTs are going to become an increasingly important part of the ecosystem. They’re a great way to monetize something that might previously have been used only for community building or other non-profit purposes. The possibilities for what you can do with your utilities are endless, and there's no doubt that these tokens will play a major role in our lives going forward.
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