Utility Driven NFTs & Their Real-World Applications

Michael Beeple Winkleman walked into the auction house at Christie’s in 2021 selling an item without precedent. One picture, comprised of 5000 other pictures, all digital. He walked out with almost $70 million in his pocket.

Michael found his way into extreme wealth by selling the most expensive NFT ever. Since his incredible success, NFTs have become more popular than ever, with digital “items” regularly selling for thousands or even millions of dollars.

Stories like that epic auction at Christie’s are interesting, but they also aren’t enough to provide context for what is actually going on in the world of NFTs. Far from being a mere novel blip on the art scene, they are a serious commodity that can have a significant impact on the tangible world. In this article, we take a look at utility-driven NFTs and what sort of real-world applications they have.

NFT stands for “non-fungible token.” Fungible means that something can be interchanged with something else, the way one jar of jelly on the shelf at a store is ostensibly the same as the next. In other words, an NFT is a wholly unique item.

Of course, we are being flexible with the word “item.” Traditionally, NFTs have referred to things that exist only in the digital world. They are embedded bits of code in a blockchain server and are tied to cryptocurrency. In fact, NFTs can be used as a stake in cryptocurrency
transactions to earn money for their owners.

In its infancy, it was used as a novel way to collect and trade digital art. Rather than buying a painting that could be displayed in their home, buyers purchased the digital property of the painting which could be displayed…well. Nowhere.

Strange? Apparently not. NFTs make national news by trading for millions of dollars. While buying and selling NFTs is only rarely so lucrative as that now, they have only grown in popularity since their infancy. Big players like Tiger Woods, Kevin Smith, and Tony Romo have all gotten involved in the NFT game.

Interesting though they may be however, they aren’t tangible. A problem? Not necessarily. Enter, the utility-driven NFT.

Utility-driven NFTs are non-fungible tokens that are attached to a physical good or service. We will talk about all of the shapes this can take in subsequent headings. However, it’s important to understand that the potential for utility-driven NFTs can range quite significantly, from somewhat silly things, like items in a video game, to very serious things, like health insurance, or food stamps.

Below, we will look at some of the many ways that utility-driven NFTs can make a big splash in the not-so-distant future.

Utility-driven NFTs in video games are something of a half measure in that they don’t offer you a tangible benefit. However, play-to-earn gaming, where utility NFTs are often found, is playing an interesting part in the broader crypto/blockchain economy.

Niftyville is an interesting example. Framed in an open-world style environment similar to that of the Grand Theft Auto games, Niftyville is a roleplaying game that allows plays to introduce new gaming items through certain NFTs.

The items that the player gains are all digital. However, they can use them within the game to earn real money. The game also features NFT “staking” a concept in which people use their NFTs to basically financially support blockchain transactions in a way that is similar to how banks use deposits not as their own money, but as a liquid asset to support their transactions. Banks pay interest as a thank you for this favor. Niftyville, on the other hand, provides money and other rewards.

A staked NFT is not necessarily the same as a utility-driven one, but they are parallel, and certainly similar in their potential to have real-world impacts.

Currently, NFT art is strictly a matter of bragging rights. As an image that exists on the internet, anyone in the world can save a picture of your NFT onto their computers to look at any time they want. But only you can say you own it.

A booming industry was able to spring from this concept, but
it also isn’t for everyone. A utility-driven art NFT might feature an actual
physical painting that comes with an attached NFT.

NFTs are also often paired with experiences. For example, ownership of an NFT could be paired with access to a concert, a social venue, or as admission to a party. Socially rooted NFTs are only now beginning to take
off. However, they serve as a good opportunity to diversify the interest in
NFTs.

Perhaps most interesting of all, NFTs have the potential to play a serious role in the healthcare system. From an insurance perspective, your Medicaid information could be presented as an NFT when you check-in at the doctor’s office.

A similar concept can be applied to virtually any healthcare information, including data involving specific patient care.

Why does it work? For one thing, the NFT's relationship to blockchain makes information verified and secure—two very important factors in
healthcare. And, because it is all digital the information is easy to transport
and use anywhere.

This same concept can apply to other services, such as food stamps. The vital information exists as the NFT and the service you get in exchange is the utility.

While NFTs have been around for a while we are only just beginning to see their true potential. While there are aspects of NFTs that might be fad fodder—such as the shockingly high prices many GIFs are going for these days, utility-driven assets are useful enough to have major future implications.

When the iPhone first debuted, no one likely figured it would be used in the not-so-distant future to hold virtual meetings in lieu of a physical workplace or call rides from people who show up not in a taxicab, but a Toyota Corrolla.

Good technology can have surprising effects. NFTs might make some artists rich. They may also have the potential to reshape healthcare. Time
will tell.