Non-fungible tokens NFTs (1) have had a meteoric rise in popularity along with sky-high valuations, leading to serious and persistent concerns about the market bubble as many projects lacked practical use or function. The ownership of digital works of art like CryptoPunks is one of the most well-known uses for NFTs, and NFT utility is a crucial component since it provides value and functionality to the technology (2).
With NFTs able to help businesses in numerous industries with their operations because, at their heart, they have evidence of ownership and proof of provenance, play-to-earn P2E games (3) are another use case that gained enormous appeal in 2021. Due to giving NFT owners commercial rights for their assets, the collections also have access to a solid branding plan that supports their public image.
Although it provides value and usefulness to NFTs, helping them to stand out among the crowded digital asset projects, the market requires more use cases for NFT technology to become widely used. For instance, picture-for-proof PFP (4) initiatives significantly increased NFT in 2021, but a large portion of that growth was based on speculative activity by investors looking to profit.
The owners of each Ape are given access to events and copyright rights for monetizing their NFTs, making market leaders like BAYC (5) useful. In addition to imitating well-known initiatives and promising hazy future developments for holders, many copying enterprises lacked value.
As many have entered the NFT market without a clear strategy or vision, jumping on the hype train, or pursuing quick money grabs, companies that wish to leverage NFTs also requires a strong strategy that spans their business model and industry for specific use cases. The ensuing NFT unrest appears to have caused a great deal of uncertainty among both investors and customers.
However, the market has reached maturity and is showing signs of turning toward utility, with investors growing more astute and anticipating more use cases for their NFTs.
According to Kameshwaran Elangovan, co-founder and COO at NFT launchpad GuardianLink (6), users have progressed beyond just thinking about speculative profit and have begun considering long-term investments. As a result of users' increased knowledge and awareness of the many ways NFTs can be advantageous, the market and available NFTs have shifted in favor of NFTs with utilities rather than those that are merely gimmicks.
People will need more than the promise of high-quality art to persuade them and boost their confidence in investing their hard-earned money, according to Ted Mui, CEO of the P2E blockchain game Chibi Clash, as the market shifts towards a focus on utility. This is why it is said that a bear market is for building (7).
Owning digital art is still relatively foreign to most people. At best, it's a cool concept, so this is where utility comes into play and may also be why NFTs are being adopted into wider society. The utility will allow the mainstream to attach a more tangible value to owning an NFT, as this will ultimately be the catalyst for more wide-stream adoption.
Digital ticketing is a possible use for NFT in the real world since NFT tickets are essentially digital assets that store a user's credentials for admitting them to an event (8).
Additionally, they can offer ticket holders extra perks like access to the backstage area, merchandise, and other items to make the fan experience more immersive. NFT tickets also have the potential to pay artists, event organizers, and other stakeholders recurring royalties for their support in forging a stronger bond with the fans.
Additionally, smart contracts can enable NFT tickets to hold a fixed price, preventing ticket scalpers from driving up prices on the secondary market. This will result in the NFT ticketing market having an expected worth of $68 billion by 2025, which also presents a practical use case. Using NFT tickets also makes it easier for everyone to follow the transactions on the blockchain ledger. This makes it easier to know when and where the ticket was purchased and sold.
Suppose a ticket is transferred to a new owner. In that case, the organizers can also add up the conditions resulting in a royalty payment, allowing them to decide how royalties are allocated following secondary ticket transactions.
Since each NFT is unique and makes it easy to show digital ownership, as they are ideally suited for use in expressing land ownership, metaverse real estate (9) has also gained popularity as an NFT utility. On the platform, a piece of virtual land that users own is known as the NFT virtual land.
The value of a plot is based on several factors, including its utility, uniqueness, the project it will house, and market speculation. As a result, users can use NFT land for various reasons, including working, socializing, gaming, and advertising their enterprises. Additionally, users can purchase NFT land directly from a project through a land sale or on secondary markets via NFT exchange platforms.
However, users should fully comprehend the potential hazards and advantages of the virtual property and the project developed on it before making any purchases. These benefits include allowing other users to build on the virtual land and providing rest areas. The possibility of losing money if the value of the virtual land declines over time is one of the dangers associated with investing in it.
The potential solution to the problem of investors looking for quick liquidity and immediate returns will derive from emphasizing utility more. While cryptocurrencies and NFT will always appeal to those trying to make quick money, utility promotes ownership over impulsive flips. Also, it strengthens various use cases over the usage and holding of NFT.