Utilities can be assets if they can be bought and sold. The commodities markets in traditional finance are proof of this. You can buy and sell contracts in the “utilities” space (gas, electric, oil, etc). However, access to those utilities is not what is bought and sold. In fact, there are few to no markets where access to a utility (and utility here is defined as anything that allows a person to take some action) can be bought, sold, or traded.

NFTs change this.

Right now, we are living in a speculative bubble. When I see tweets like this, it reminds me of the 2017 ICO days.

And I wince. I know what's coming next. Fortunately, when the speculative market for NFTs comes tumbling down, there is already an established utility for NFTs that will prevail.

Owning an NFT can provide access. I recently wrote a tutorial for Pinata about how to use NFT ownership to gate access to content. This type of functionality can be used by small projects and big companies. There are major brands interested in doing this right now. There are existing crypto projects that have already enabled this. Membership and members-only benefits have been a thing for a long time, but what’s been missing is the ability to transfer the membership and all its benefits to someone else.

The closest example to this capability that I can think of is a warranty on a new car. When you buy that warranty, you have the ability (usually) to transfer it to the new owner of the car when you sell the car. Assuming the warranty is still valid, of course. There is a lot of complexity and gotchas in this example, but it’s close to what we’re starting to observe in the NFT space.

Autograph, the company started by Tom Brady among others, just had their first release. It’s a Simon Biles NFT, released in partnership with DraftKings. The interesting thing about the NFT isn’t just that you have access to a cool piece of art and sports memorabilia, it’s that you get extra benefits by owning the NFT.

The Simone Biles Carbon Signed is an official Autograph Preseason Access Pass. Each edition includes Simone Biles’s authentic signature, signed individually and personally by Simone Biles. Holders will be granted VIP access to our first Limited Edition Simone Biles Drop and gain access to Autograph’s private community on Discord. Terms per Autograph’s Terms Of Service.

Autograph and DraftKings represent larger brands experimenting with the utility of NFTs. But why stop there? Hulu and Disney and Netflix could issue NFTs for their subscriptions. Remember when Game of Thrones was still on the air and people would literally sign up for HBO just for the GoT season then cancel their subscription? What if those subscriptions were NFTs and people could sell their subscription to someone else? A ton of people share Netflix passwords now. What if access was NFT based. Instead of sharing the password, you transfer the NFT. The person would have to transfer it back for you to get access again.

There are flaws with these ideas of course. After all, I’m literally typing them as they pop into my head. But you can start to see the power of NFTs as a utility. I think about an old episode of Friends a lot when I think about this concept.

What if instead of quitting the gym, Chandler could have transferred his membership to someone who was actually interested in the gym? Sure this doesn’t exactly benefit the gym, but there are ways to make this mutually beneficial. An NFT can have royalties encoded into it. If a gym member (yeah, we’re sticking with this example) wants to transfer their membership, they can do so, but the fee the original holder of the membership charges for that transfer is reduced by the gym’s royalty rate. In this way, the gym retains a recurring membership (the new holder of the NFT) and makes a little off the churned member (the original owner).

Again, the idea is half-baked, but these are the ideas I would love to see people working on NFTs start to explore. Making money is fun. I love it as much as the next person. But when the bubble bursts, and it will burst, creativity is what will remain. NFTs, unlike a lot of other blockchain promises, have a chance to impact the real world, not just the blockchain world. But we have to move past speculation to enable these new use cases.

Why can’t we do this without NFTs? Subscription models and access today are not open. I can’t just transfer my gym membership. I can’t just sell my Netflix subscription. NFTs create an enforceable, nearly autonomous, and open way of owning access, verifying access, and transferring access.

So, let’s start exploring the utility of NFTs. Scarcity plus utility is a killer combination.

We’ve seen a couple of examples above, but there are many more. Bored Apes Yacht Club may at first look like a crazy dive into the speculative asset space. But once you get past the current prices and dive into what it means to own a Bored Ape, you realize this is a utility NFT. Owners of Bored Apes can create derivative works. Many people have already done so. Additionally, owning a Bored Ape gets you access to a private members club.

Another project pushing the creative boundaries is Loot Project. Started by Dom Hoffman, one of the co-creators of Vine, Loot Project seems innocuous (even pointless) on the surface. Each NFT from the project is an image of text. The text represents traits for your adventurer character. It is modeled very much after tabletop role-playing games. The kicker is, just like with BAYC, each NFT is completely under the control of the owner. Derivative works are not only allowed but encouraged. What’s more, parallel works have sprung up. Want a custom avatar that matches the traits of your Loot Project NFT? You might check out Loot Character. People have been able to create NFTs that represent the items listed in the original Loot Project NFTs and sell those separately.

Speculation is the first sign of progress. The 2017 ICO craze gave way to better blockchain use cases. DeFi has found its footing. DAOs have recovered from The DAO hack. NFTs are likely in a bubble, but the speculation we see now will give way to more and more practical and interesting use cases like these early examples have shown.

Here’s to the future of NFTs!