The Next Chapter for NFTs: From Digital Art to Real-World Utility
When most people think of non-fungible tokens, they often recall 2021's digital art boom when collectors were rushing to buy an NFT. Since then, the market has processed $73 billion in all-time sales, but the initial hype has given way to a profound evolution. Beyond the headlines of million-dollar JPEGs, the underlying technology is now being applied to solve real-world problems and create new experiences.
In this article, we'll explore the evolution of NFTs from digital art to utility-driven assets, explain how the technology enables real-world applications, and highlight some of the most practical use cases in sectors like gaming, ticketing, and digital identity.
From Digital Art to Utility-Driven Assets
An NFT is a unique blockchain-based digital asset that serves as a verifiable proof of ownership and authenticity. This technology first captured mainstream attention during the 2021 boom, fuelled by digital art. The most famous example is the artist Beeple's 'Everydays' collage, which sold for over $69 million at Christie's.
However, this speculative bubble eventually burst. By 2023 and 2024, NFT trading volumes fell sharply, and the floor prices of many famous collections, like Bored Ape Yacht Club, dropped significantly.
This market correction paved the way for a more sustainable model, where the focus has shifted from speculative trading to utility NFTs that provide tangible benefits and serve real-world use cases. Value is now increasingly determined by an asset's function rather than just its rarity or hype.
How Do Utility NFTs Work?
Like standard NFTs, utility NFTs reside on the blockchain and are powered by smart contracts. Each NFT has a unique TokenID that distinguishes it from any other token, making its ownership verifiable. The utility can be on-chain, where a function is directly encoded in the smart contract (like voting rights in a community). More commonly, utility NFTs serve use cases off-chain, acting as a verifiable digital key or membership card.
NFTs' core function is proving that you are the rightful owner. When you want to access a benefit—like entry to an event—a verifier asks you to digitally sign a message with your crypto wallet. This signature proves you own the private key associated with the wallet holding the NFT. The verifier checks this against the blockchain's public record to confirm ownership and grant access, making the process secure and fraud-resistant.
Think of an NFT concert ticket. It's not just an image; owning it gives you the verifiable right to enter a venue. The smart contract could even include perks like a discount on merchandise or access to a VIP lounge, all tied to the same verifiable token.
Practical Use Cases of NFTs
The shift towards utility has unlocked a diverse range of real-world applications for NFTs across many industries. Here are some of the strongest examples:
Gaming: NFTs grant players true ownership of their in-game items, like characters, skins, or weapons. Unlike traditional games where assets are locked to the platform, NFT assets can be freely traded or sold on open marketplaces. Games like Axie Infinity pioneered this 'Play-to-Earn' model, allowing players to monetise their time and skill.
Event Ticketing: Using NFTs as tickets can drastically reduce fraud and eliminate counterfeit tickets. Event organisers can also programme royalties into the ticket's smart contract to earn a percentage from secondary sales. Projects like the Open Ticketing Ecosystem (formerly GET Protocol) are already implementing this for live events, creating a fairer and more transparent ticketing system.
Membership and Loyalty Programmes: NFTs can act as digital membership cards, granting holders access to exclusive communities, content, or real-world perks. The Bored Ape Yacht Club (BAYC) famously used its NFTs to grant access to exclusive events, while brands like Starbucks have launched NFT-based loyalty programmes to engage customers in new ways.
Digital Identity and Credentials: NFTs can serve as secure and tamper-proof digital credentials. This could include university diplomas, professional certifications, or even a decentralised username through services like the Ethereum Name Service (ENS). Because they are stored on a blockchain, these credentials can be verified by anyone without needing a central authority.
Real-World Asset Tokenisation: NFTs can represent ownership of physical items, from luxury goods to real estate and traditional finance assets. For example, brands like LVMH use NFTs to verify the authenticity of their products, while platforms like Propy have facilitated the sale of real estate where the property deed is represented by an NFT. Also, non-fungibles play a critical role in the tokenisation of real-world assets (RWAs), a $33.84 billion crypto market sector that surged 117% year-to-date.
The Future of Ownership is Functional
NFTs have evolved far beyond their initial identity as digital art. Today, they are functional tools with real-world utility, providing verifiable ownership for everything from event tickets and in-game assets to digital identities and RWAs.
As the technology matures, the focus will continue to shift from speculative hype to tangible use cases. The future of NFTs is not just about what you can own, but what that ownership allows you to do.
Risk Disclosure
Trading or investing in crypto assets is risky and may result in the loss of capital as the value may fluctuate. VALR (Pty) Ltd is a licensed financial services provider (FSP #53308).
Disclaimer: Views expressed in this article are the personal views of the author and should not form the basis for making investment decisions, nor be construed as a recommendation or advice to engage in investment transactions.