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Utility NFTs explained What They Are And How They Work

Web3 has introduced us not only to a new world of possibilities but to a new set of terms that are not always easily understood. First off there are cryptocurrencies, blockchains, marketplaces and of course the notable NFTs.

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January 12, 2023

To add some complexity there are now also utility NFTs and below we will explain to you what they are, how they work, as well as give some examples as to what constitutes a utility NFT. 

What are utility NFTs?

First off, let’s make certain that the definition of what an NFT is, is clear before we continue building on that concept.  NFT, which stands for non-fungible token, is a word which has been heard quite a lot recently and stands for a unique token (aka crypto asset) which cannot be replicated. A utility NFT is the next step in this emerging landscape, where one needs to consider possible use cases. These non-fungible tokens (NFTs) have applications beyond the representation of unique digital assets.

How do utility NFTs work?

Utility is given to an existing NFT through an extension, another layer on top of the existing NFT (token). Technically they work the same way as a standard NFT, unique assets stored on a blockchain and cryptographically represented. However, the difference is that a utility NFT can have additional features, for example cryptographic security which comes in handy to avoid falsifications, like with tickets or high-end brands. They (NFT owners) also benefit from the blockchain technology in that technical specifications imply that the NFT can’t be altered in any way as well as transparency, enabling NFT owners to verify the origin of their NFTs. 

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How can a standard NFT become a utility NFT? / How to Convert Standard NFTs to Utility NFTs?

A standard NFT becomes a Utility NFT if you add a unique token that offers Real-World benefits. This can be in the form of privileges, rights, or rewards that others can not have access to. This has less to do with a technical feature as already mentioned but more with the application of the NFT technology. Basically, if you have an NFT collection or NFT you can create a token and this token “feature” will give it a specific utility. 

What makes utility NFTs so special?

Utility NFTs tend to keep their value far better than collections based solely on art or publicity, making them a less risky investment. They offer a value beyond their claimed scarcity.

Applications of Utility NFTs

There are several sectors that have already realized that adding utility tokens is important to their NFTs. The most familiar one is the Gaming sector where NFTs can represent in-game resources, weapons, or virtual goods that players can buy and use in the game. Brands can use utility NFTs as a new revenue stream and an innovative way to connect with consumers.


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What are some examples of utility NFTs?

A good example of a utility NFT is Concert tickets. You sell concert tickets as NFTs and the utility you add to them is the entrance to the concert. Alternatively, you can do what a band already did once which was to release their album as an NFT and then the utility NFTs added were things like digital artwork or digital download of the music (the token) which could be redeemed as a physical real-life limited edition of said album. 

Fundraisers and charities are also a space where utility NFTs have good usage. This allows non-profits to diversify from their usual channels and have access to new funding sources.

Another example of an NFT utility-based project is JNRY Club, which provides the holder with access to future drops, private communities, and early access to partner projects. As the project evolves, holders of the token will be rewarded with one free mint on two future NFT projects that are currently underway. 

The future of utility NFTs

There definitely is a future for utility NFTs as more and more utility NFT projects are being developed. As the realm of NFTs evolves it is already becoming evident that adding utility to them is of importance, as it adds value, allows entry to members-only events, etc. Basically the sky's the limit with how one uses utility. 


Utility NFTs are on the rise. They can allow a business to offer more targeted promotions, hold fundraisers, offer exclusive experiences, early access to products etc. creating a different kind of value proposition. 

A platform such as Certhis, which enables one to connect utility extensions to one’s NFT collections easily, will allow brands and businesses to easily jump on the bandwagon of this expanding and what is on the way to being an important feature in the future of NFTs. 


What NFT has the most utility?

Let’s start off by saying one needs to be interested in the specific  NFT project, one which would provide you with utility relevant to your interests.  An NFT which has a utility token added to it will provide the targeted community and target market group an added value on top of the NFT ownership. It won’t only be “look I own an NFT”, it will be “look what I get because I own this NFT”.

Does NFT have any utility?

NFTs are unique digital assets and don’t have any utility unless creator adds the extra “layer” providing utility. How one uses utility is only limited by our imagination. 



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