NFT is an acronym for “non-fungible token”, and as the name suggests, these tokens are unique digital assets. However, even though you might be familiar with the concept of NFTs, it might not be quite clear how developers use these tokens in practice. Thus, in this article, we will dig deep into these digital assets on the blockchain. Along the way, we will look at five potential areas for non-fungible tokens and discover everything you need to know about NFT use cases!
Even though people generally associate NFTs with digital art and large collections such as Bored Ape Yacht Club and CryptoPunks, there is much more to these tokens. Further, there are many different use cases – all of which can potentially disrupt well-established industries. However, as mentioned, this guide will focus on five interesting examples of NFT use cases in 2022. If you follow along, we’ll hopefully inspire you to create your own innovative NFT projects.
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Nonetheless, let’s kick off this article with a brief summary of the five NFT use cases that we’ll take a closer look at!
Five Potential NFT Use Cases
NFTs have taken the world by storm in the past couple of years and have quickly emerged as one of the blockchain industry’s most prominent features. NFTs are highly flexible, making them attractive tools for innovation in a rapidly growing industry. As there is a significant number of NFT use cases, we’ll take the remaining sections to dive deeper and learn more about NFT utility. Unfortunately, we won’t be able to cover all aspects of NFT development. As such, we’ll focus on the following five NFT use cases:
- Digital Art
- Clothing and Wearables
- Membership Exclusivity
- Music NFTs
- Digital Identity
So, without further ado, let’s continue by taking a closer look at the most popular use case for NFTs: digital art.
NFT Use Cases: Digital Art
Most people probably associate NFTs with digital art. However, this isn’t at all strange since digital art has been receiving an abundance of attention when it comes to traditional media. What’s more, the characteristics of these tokens make them a perfect fit for representing digital assets. In addition, NFTs have been used to represent digital art for a relatively long time, meaning that this is an already established field.
The unique properties of NFTs allow artists to create one-of-a-kind pieces of art with particular characteristics. This means that consumers can be sure that the piece they purchase is distinctive and unique. This assurance is an effect of the immutable records of blockchain networks and the interchangeable nature of NFTs.
Moreover, NFTs additionally highly benefit artists as this is a way for artists to monetize their work. As such, these tokens have greatly impacted the industry and the artists themselves. Furthermore, it’s now possible for artists to monetize their work in new and innovative ways. For example, you can include conditions or parameters in the code for the smart contracts providing the artists with a cut every time holders sell a token.
One of the contributing factors to the increased attention toward the NFT space has been platforms such as OpenSea. OpenSea is one of the most prominent NFT marketplaces, which has grown significantly in recent years. The platform provides a marketplace with an easily navigated UI (user interface), providing a more seamless experience when selling and buying NFTs. If you are interested in platforms such as OpenSea, you can learn how to build an NFT marketplace here at NFTCoders!
NFT Use Cases: Clothing and Wearables
The second category of NFT use cases we’ll explore further is clothing and wearables. This sector of the NFT space has been around for quite some time, presenting some interesting opportunities for the future.
NFT wearables and clothing are most commonly associated with the metaverse and video games. In this instance, developers often use NFTs to represent in-game items of clothing that avatars can wear. However, this isn’t the complete story, as there are other innovative ways to use NFTs within the sector.
Another way in which people can use NFTs within the clothing industry is as virtual wearables for social media. During the early months of 2022, there was a buzz surrounding influencers using digital items to become more sustainable. So, instead of purchasing brand new, real-world items for a particular photo shoot, they would rather use NFT clothing to become more eco-friendly. Even if this use case remains in its infancy, it might evolve into something larger shortly.
What’s more, NFT clothing doesn’t have to be limited to a virtual world or setting but can also affect more conventional brands. One prominent example is GAP which has been experimenting with this for a while. GAP allows you to claim items in their stores if you are the holder of a particular NFT. This concept is in close relation to the next section regarding membership exclusivity.
NFT Use Cases: Membership Exclusivity
One exciting and significant use case for NFTs is providing membership exclusivity to organizations such as DAOs. A DAO is a decentralized autonomous organization, and they are generally the governing body of a blockchain protocol or project. Further, if someone holds a token, they are provided access to a DAO and receive the right to participate in the governance procedures of a project, dapp, or platform.
An additional use case is that NFTs act as indicators or signs that someone belongs to a particular community, shows loyalty towards brands, or has won a competition. Furthermore, these tokens can also provide access to particular events. This isn’t only applicable in a digital setting but can also work for real-life events. A prominent example is Flyfish Club, which is branded as the first member’s only club where access is granted on-chain in the form of tokens. This means that the holders of such NFTs receive exclusive access to a social experience.
However, Flyfish Club is only one example of a real-life use case for these tokens. We’ll most likely see the use of NFTs increase when it comes to, for example, music concerts where the tokens might come to act as the tickets for events.
NFT Use Cases: NFT Music
Not only do NFTs have the potential to influence the administrative side of concerts, but this technology might even have the potential to influence the entire music industry. The music industry is generally highly lucrative for large labels and businesses. Unfortunately, the profitability in some instances comes at the expense of the artists. It’s not uncommon for artists to sign disadvantageous deals where their profitability is based on a penny-per-stream business model.
However, NFTs can potentially make the industry more advantageous for the artists as they can monetize their work in the form of music NFTs. As such, this would allow artists to own their own work, including everything from trademarks to copyright which can be stored in a token’s metadata. What’s more, music NFTs would also allow fans to come together and support their favorite artists directly. This makes it possible to remove unnecessary intermediaries from the equation, leaving a bigger piece of the pie for the artists.
This is one of the most compelling use cases for NFTs, and investors are currently pouring money into music NFT projects. As such, this is definitely an attractive sector to follow, and it will be exciting to see how NFTs might come to revolutionize the traditional music industry. We might even potentially see the emergence of a Web3 Spotify clone in the near future.
NFT Use Cases: Digital Identities
The last of the NFT use cases we’ll explore further in this article is digital identities. Currently, most NFT use cases have been directed toward capturing and claiming ownership of digital assets such as tweets, artwork, videos, etc. We also mentioned that NFTs could be used to capture physical assets, which might increase even further in the future. Moreover, people are now looking at applying the same technology and principles to create digital identities.
Creating digital identities might seem quite far-fetched, but it might soon come to be thanks to NFTs and blockchain technology. The same principles to store concert tickets on the blockchain might also be applicable to virtual identities. Furthermore, the properties of NFTs and the security of blockchains make them perfect for creating digital identities. It might even lead to entirely self-sovereign identities or SSIDs. These are identities that individuals are in full control of. As a result, people won’t need to rely on centralized institutions and governments in the future.
What’s more, identities are vulnerable, and even traditional physical and digital identities are becoming increasingly difficult to safeguard. Now, with the emergence of the metaverse, they are becoming even harder to protect. As such, this is where NFTs enter the equation, as they have the potential to establish metaverse identities efficiently and securely. This means that these tokens might come to play a vital role as the metaverse evolves and the world gets increasingly digitalized.
Fractional and Dynamic NFTs
Two additional types of NFTs that have emerged recently are fractional and dynamic NFTs. As such, we will take this section to take a closer look at what these concepts entail and how they can be used when developing NFT-related projects. So, with no further ado, let’s start with fractional NFTs!
- Fractional NFTs – Fractional NFTs, or F-NFTs, are essentially tokens that have been fractionalized into a number of smaller pieces. This basically means taking an NFT and dividing the token into a specified number of fungible tokens representing a stake in the original NFT. As such, fractional NFTs are an additional way to further democratize digital asset ownership.
- Dynamic NFTs – Traditional NFTs are generally static in that they are immutable and can’t be altered. However, in some instances, it’s highly beneficial to be able to alter the metadata of an NFT. For example, if a token represents an avatar with different skills in a progression-based game, it’s necessary to change the metadata as the player progresses. This is precisely where dynamic NFTs enter the picture, as they can react and respond to external conditions.
Both fractional and dynamic NFTs can naturally be used in conjunction with the other NFT use cases we covered in the article. However, these are only two types of NFTs that might come to play an important role in the future. As such, if you have further interest, there is a lot more to discover on your own!
How to Use NFTs – Summary
NFTs have quickly become one of the most significant features of Web3 development, and as they are flexible by nature, the numbers of NFT use cases are many. As such, even if most people probably associate NFTs with digital art, there is much more to these tokens. For this reason, we took this article to explore additional NFT use cases where we cover the following five areas:
- Digital Art
- Clothing and Wearables
- Membership Exclusivity
- Music NFTs
- Digital Identity
However, these are simply five prominent examples, and there are other sectors, such as DeFi, that can benefit from NFTs. This further indicates the flexible nature of these tokens and that they can influence several sectors of the economy.
What’s more, if you have further interest in NFTs, you have arrived at the right place. Here at NFTCoders, we provide you with relevant information regarding the NFT industry and NFT development. For example, check out our article on NFT game development to further hone your NFT development skills.