NFTs are not just a JPEG ⋆ ZyCrypto

by James · May 8, 2023

Many people are still trying to wrap their heads around the idea of non-fungible tokens. While NFTs have generated a lot of excitement, especially in the arts, music and entertainment industries, there is also a lot of confusion and criticism. Some discredit NFTs as overpriced JPEGs bought and sold online for ridiculous prices. They have also become synonymous with what is known as “NFT art”, a common name for a new generation of digital art.

But a deeper dive into the capabilities of NFTs reveals that they are far more than just expensive JPEGs. NFTs are set to become one of the primary building blocks of Web3, with the ability to disrupt almost any industry. One of the most exciting use cases for NFTs is their ability to give holders exclusive access to various types of experiences, communities and benefits.

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Unlocks access with NFTs

NFTs have been widely used by a new generation of innovators to provide special benefits to holders. Recently, we have seen more and more NFTs leveraged as subscription models or for membership in exclusive clubs. By using NFTs as a substitute for a subscription, businesses and organizations can give holders premium access to various new products, services and scarce benefits that others cannot have. NFTs can act as digital passports, similar to a physical ticket, unlocking all sorts of benefits.

In one case, world famous DJ Steve Aoki created an exclusive members club for NFT holders. The club is called A0K1VERSE, and NFT-holding members get access to physical and digital rewards, including tickets to his concerts.

Another pioneer is Starbucks – yes, the coffee shop chain – which last year launched its own NFTs with the promise of a range of benefits for holders. While it remains to be seen what those perks will look like, commentators have predicted that the company could give holders first dibs on special drinks or coffee blends that other customers can’t have, free monthly items, coffee recipes and physical merchandise.

NFTs that merge the physical and digital worlds

NFTs can provide both real and digital benefits. One of the world’s most famous NFT collections, Bored Ape Yacht Club, hosts exclusive parties and gatherings for holders, while clothing brand GAP recently partnered with Frank Ape to create a gamified experience where NFT owners can transform physical hoodies into metaverse collectibles.

Augmented reality-powered metaverse startup Peer aims to provide a mix of physical and digital benefits to NFT holders. Peer’s AR metaverse will overlay a gamified digital layer on the real world, allowing people to explore their physical location on foot and find various digital collectibles along the way. Users will be able to create digital content as an NFT, and monetize it through Peer’s metaverse. Alternatively, a business or service provider may “drop” collectibles at various locations in a city, offering real bonuses such as discounts to anyone who can complete the set.

In a recent podcast, Peer founder Tony Tran said that the metaverse will exist as a three-dimensional extension of the web, with NFT-based content existing everywhere and connecting everything. “It’s really like an amalgamation of the current web as we know it, all the data on the web, plus all the connected devices, and mapping that to the real world.”

Real-world experiences with NFTs

Experiences are another key tool for NFTs and run the gamut from the virtual to the physical world. Culinary enthusiasts have embraced a project called the Flyfish Club, a private gourmet restaurant that will launch later this year, where only NFT holders will be able to participate. Those who have a Flyfish Club NFT will receive unlimited access to the private 10,000 square foot dining room in New York City. They will also be entitled to a number of other one-off experiences that the club intends to organise.

We are also seeing an increase in the number of event-based experiences. Gary Vaynerchuck has created a Vee Friends NFT experience that provides access to a Vee Con experience as well as ownership of digital art.

NFTs are an excellent way to create community spirit, and there is no better example of this than Ukraine, which has used its tokenized assets to rally support from around the world. The Ukrainian government has issued NFTs that act as war bonds as part of its fundraising activities, and artist Artem Humilevskiy created a series of NFT-based self-portraits that emerged as a powerful symbol of resistance. Meanwhile, Time magazine created a Web3 community known as TIMEpieces, centered on the “Make Art, Not War” exhibit, with proceeds going to humanitarian efforts in Ukraine.

Decentralized Autonomous Organizations, known as DAOs, are another type of community that allows members to collectively manage Web3 projects ranging from DeFi protocols to climate activists like Klima DAO. Fans of these projects can acquire NFTs to effectively become part owners of the project and vote on governance decisions.

NFTs provide value

Not all NFTs are created equal, and there are reasons to be skeptical of many of these tokenized assets, especially those that are literally just a JPEG. But the utility of NFTs is evolving rapidly, and they are set to disrupt many industries in the years to come. One of the key drivers for this is the value NFTs provide in terms of access to exclusive experiences, products, rewards and communities. It is these benefits that will come into focus as the NFT space grows, and there will be much to look forward to as the technology becomes more widespread.