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From medical coverage to credit cards services, the potential of utility NFTs going forward

Utility NFTs are a broader concept of NFTs with specific practical applications.  (iStock)Premium
Utility NFTs are a broader concept of NFTs with specific practical applications.  (iStock)

  • However, the NFT market itself has seen a broader shift and stepped into the realm of utility and tangible exclusivity.
  • Abhay Aggarwal founder and CEO of Colexion explains that the utility associated with non-fungible tokens (NFTs) is gradually evolving into a diversified set of use cases.

Over the past few years, the blockchain market has evolved and is not just about cryptocurrencies anymore. There was a time when many investors went gaga over cryptos like Bitcoin, Ethereum, or Ripple, but since last year, a host of digital assets have entered making the blockchain industry even more diverse and unique. One of them is non-fungible tokens (NFTs) which sparked interest from commoners to celebrities, big brands, and companies. NFTs are immutable, transparent, and highly secure. However, the NFT market itself has seen a broader shift and stepped into the realm of utility and tangible exclusivity. Notably, in recent times, a rapid rise is seen in developers switching towards NFTs in utility and tangible.

Abhay Aggarwal founder and CEO of Colexion explains that the utility associated with non-fungible tokens (NFTs) is gradually evolving into a diversified set of use cases.

According to Vikram R Singh, Founder and CEO, Antier, recently, there has been a substantial increase in NFT developers switching to utility and tangible NFTs. Utility NFTs are unique digital assets that grant their owner privileges, rights, or rewards that are accessible only to them.

Singh highlights while tangible assets are conversions of real-world assets into NFTs that can be redeemed for the physical item or sold further, the item is stored with the marketplace, which lists the NFT on its platform. In both cases, these utilities or physical assets are cryptographically represented and the unique digital assets are stored on a blockchain.

An example of a utility asset would be 'concert tickets. The Antier founder explained that each paper ticket is extraordinary, or non-fungible, as it has its ticket number. The utility in this situation is access to the show. Rather than providing 800 paper tickets, the show coordinator could give 800 utility NFTs. Each of the 800 NFTs would be exclusive and nonfungible; each giving its proprietor the same utility that is "access to the show".

At present, Utility NFTs are in their initial phases.

However, Singh said, " a few imaginative new use cases are arising consistently, making it an extraordinary utilization of blockchain innovation universally. In the future, there is immense potential for such NFTs, from medical coverage cards to credit cards, with NFT holders having the option to get to medical services, limits, or access to occasions."

"Organizations could boost deals with NFTs that can be redeemed for limits or gifts from now on, committing paper markdown tokens to the set of experiences books," Singh added.

Meanwhile, highlighting NFTs performance in the past few years, Ramkumar Subramaniam, CEO & Co-founder, GuardianLink said, "We got to admit that NFTs made the news not because they were a technological marvel but more because they were looked at as short-term investments that would create massive profit. More often than not, the biggest marketing point for NFTs was the fact that it fetched this many times returns on the first investment over a certain stretch of time then the utility day brought and the metaverse it enabled."

Further, Subramaniam said, "We always believe that even the worst things have something good in them. This has been the case with NFTs as well. Since there were so many projects that only relied on this short-term spike, people got their much-needed enlightenment with respect to investing in NFTs. We might not say that the initial craziness over NFTs has completely died but we can surely say that it has lost its initial luster. This has prompted a lot of brands and companies to create NFTs with real utility."

GuardianLink co-founder believes this is the perfect time for the change in the perception of NFTs. He added, "People now start to look beyond just pictures and stop wondering why certain pixelated images and certain quirky images of anthropoid creatures get sold for millions of dollars."

NFTs gained popularity last year because of their uniqueness in buying and selling digital assets in the blockchain market. Unlike normal cryptocurrencies, NFTs are cryptographic assets on a blockchain that are not exchangeable because of their nature of being distinguished from each other. In simple words, NFTs are not replaceable or interchangeable with any other cryptocurrency avenues.

They have cryptographic tokens. Some of the examples of NFT are unique digital artwork, limited fashion-line, in-game items, an essay, digital collectibles, or tickets that give access to an event or a coupon, and even a domain name among others. Each NFT has a respective owner with a public record and is easy to be verified. NFTs, give a broader panel to content creators who can sell their work anywhere while accessing the global market.

On the other hand, cryptocurrencies are fungible and they can be exchangeable or replaceable for another.

Meanwhile, utility NFTs are a broader concept of NFTs with specific practical applications. They are typically developed with smart contracts and also share properties of immutability, transparency, and security just like any other NFTs. However, as per the Binance website, unlike regular NFTs, the core focus of utility NFTs is not their collectibility, but the real-world applications, rewards, or perks they offer NFT holders.

Even big brands have taken an interest in NFTs.

Subramaniam said, "The entry of big brands like Louis Vuitton, Bulgari, Hermès, and Nike into NFTs and metaverses has also got people thinking about what more could NFTs be than just images. These brands are planning proper metaverse experiences including but not limited to fashion shows, exclusive digital merchandise, and a lot more. Jump.trade, through its marketplace, launched the world's first P2E cricket NFTs that enabled you play Meta Cricket League, and you can earn real cash prizes from playing the game, opening a different kind of utility."

Talking about NFTs as a long-term investment pool, Subramaniam said, "In all of this, one thing that has stayed intact with respect to NFTs is their dimension as an investment. The only difference is that instead of looking at speculative price spikes as pointers for investing, people have started to look at long-term utility as appointed. This would mean that we will be looking at a lot of purpose driven NFT collectors and investors in the near future. Sometimes, it is important for a tech to go through its adolescence in terms of perception to ensure that it ends up in a territory of maturity."

Moreover, Abhay Aggarwal founder and CEO of Colexion said, "Blockchain technology ensures that NFTs remain immutable, transparent and highly secure. Apart from their value as collectibles, NFTs provide users access to benefits, prizes and real-world uses. NFTs have effectively streamlined monetary transactions and general gameplay in NFT gaming and the metaverse, where NFTs form the ecosystem’s foundational element. NFTs are being used as exclusive in-game assets, collectibles or valuables that can be redeemed under the play-to-earn (P2E) paradigm. This has led to many traditional gamers transitioning to NFT gaming. NFTs have displayed potential for other extensive use cases in practical applications such as being used as digital tickets for exclusive access to special events held behind closed doors, driving customer engagement for brands."

The fashion and art industry have leveraged utility NFTs through various projects. Aggarwal added, "A development in Web 3.0 and the metaverse highlights an extension of the digital token’s utility as a medium for owning virtual real estate where smart contracts function as lease agreements between users engaged in trading of NFTs."

"With such a wide range of advantages, it is indisputable that this certainly marks a turning point for NFTs," Aggarwal added.

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