https://hbr.org/2021/11/how-nfts-create-valueBut NFTs don’t just provide a kind of digital “deed.” Because blockchains are programmable, it’s possible to endow NFTs with features that enable them to expand their purpose over time, or even to provide direct utility to their holders. In other words, NFTs can do things — or let their owners do things — in both digital spaces and the physical world.
In this sense, NFTs can function like membership cards or tickets, providing access to events, exclusive merchandise, and special discounts — as well as serving as digital keys to online spaces where holders can engage with each other. Moreover, because the blockchain is public, it’s even possible to send additional products directly to anyone who owns a given token. All of this gives NFT holders value over and above simple ownership — and provides creators with a vector to build a highly engaged community around their brands.
It’s not uncommon to see creators organize in-person meetups for their NFT holders, as many did at the recent NFT NYC conference. In other cases, having a specific NFT in your online wallet might be necessary in order to gain access to an online game, chat room, or merchandise store. And creator teams sometimes grant additional tokens to their NFT holders in ways that expand the product ecosystem: owners of a particular goat NFT, for example, were recently able to claim a free baby goat NFT that gives benefits beyond the original token; holders of a particular bear NFT, meanwhile, just received honey.
Thus owning an NFT effectively makes you an investor, a member of a club, a brand shareholder, and a participant in a loyalty program all at once. At the same time, NFTs’ programmability supports new business and profit models — for example, NFTs have enabled a new type of royalty contract, whereby each time a work is resold, a share of the transaction goes back to the original creator.
The Bored Ape Yacht Club, for example, comprises a series of NFT ape images conferring membership in an online community. The project started with a series of private chat rooms and a graffiti board, and has grown to include high-end merchandise, social events, and even an actual yacht party. SupDucks and the Gutter Cat Gang similarly began building communities around NFT image series and associated online spaces; the former has bridged into a boardwalk-themed metaverse game, and the latter has focused on real-world benefits like extravagant in-person events.
People often take on membership in these collectives as part of their personal identity — even using their favorite NFT image as their public profile picture on social media. Each NFT community has different personalities and purposes, and there are so many by now that almost everyone can find a group they can call their own. In this way, NFT ownership provides an immediate shared text that people can use to connect with each other.
And moreover, in many of these communities, ownership also conveys partial or full commercial rights — or even some degree of governance in how the community is run — which means people members can build properties on top of their NFTs that grow the value of the overall brand. Crucially, this creates a channel by which engaged fandom can feed back into the brand itself: “Jenkins the Valet” is a Bored Ape member-created project that has effectively become its own sub-brand. Individual SupDucks members have created art and character identities around their NFTs that have been absorbed into the SupDucks metaverse. And community-created fan projects have built out parts of the Gutter Cat Gang story arc.
All of these benefits make owning the associated NFTs more valuable — and almost paradoxically, this increase in the value of ownership comes in a form that helps separate the value of ownership from the purely financial opportunity of reselling.
Building on this phenomenon, a few well-known brands have recently introduced NFT series that serve to identify, reinforce, and expand their existing communities of brand enthusiasts. The popular streetwear brand The Hundreds, for example, has built an NFT project around their mascot the “Adam Bomb,” and directly rewards their community of NFT holders with improved access to the brand through connection with the founders and early access to new product releases.
Many emerging NFT applications, meanwhile, are seeking to more explicitly blend online NFT ownership with offline use cases. A few restaurants, for example, have started using NFTs for reservations. And the ticketing industry has a major opportunity here: By issuing tickets as NFTs, venues can give a variety of benefits to purchasers, creating more of an incentive to buy, as well as providing the venues an opportunity to collect royalties on secondary sales.
Other companies are exploring how NFTs could be used in establishing and recording people’s identity and reputation online. MIT recently started offering blockchain-based digital diplomas, which are effectively non-transferable NFTs. Meanwhile, both established players like Facebook (now Meta) and new ventures like POAP and koodos are providing ways for individuals to create and share NFTs around activities, affinities, and interests.
NFTs as a way to pay for access to the cool people makes sense.
Perhaps we should make a Scrutable NFT that people need to buy in order to post here.