{"id":75571,"date":"2023-12-20T14:27:50","date_gmt":"2023-12-20T14:27:50","guid":{"rendered":"https:\/\/kryptodata.se\/what-are-utility-nfts-and-how-do-they-work\/"},"modified":"2023-12-20T14:27:50","modified_gmt":"2023-12-20T14:27:50","slug":"what-are-utility-nfts-and-how-do-they-work","status":"publish","type":"post","link":"http:\/\/kryptodata.se\/what-are-utility-nfts-and-how-do-they-work\/","title":{"rendered":"What Are Utility NFTs and How Do They Work?"},"content":{"rendered":"

Coinspeaker<\/a>
\nWhat Are Utility NFTs and How Do They Work?<\/a><\/p>\n

Of the many blockchain-based products that have hit the market over the years, non-fungible tokens<\/a> (NFTs) are some of the most controversial in the world. Some critics claim that NFTs don\u2019t ‘do’ anything useful, have no value, and thus, are not worth buying. Meanwhile, NFTs fans usually counter these claims by pointing to utility NFTs as evidence of their use. Indeed, utility NFTs have been some of the most profitable types of NFTs and have gained mainstream adoption. In this guide, we will explain what utility NFTs are and how they work.<\/p>\n

Utility NFTs Defined<\/h2>\n

A utility NFT is an NFT that is designed to give the holder access to specific utilities. This utility can be real-life or virtual perks, the power to make decisions in certain ecosystems, or can be used to redeem an experience. A lot of the most famous NFTs are collectibles, meaning that their value is subjective.<\/p>\n

Take NFT art, which could be sold for millions at auction but could also be seen as worthless by some. But utility NFTs are tied to specific utilities so whoever buys them knows what they are worth. Naturally, utility NFTs have been used to deliver value by companies and specific projects.<\/p>\n

How Utility NFTs Work<\/h2>\n

To understand how utility NFTs work, you need to understand how NFTs work in general. To create an NFT, its digital signature is recorded on a specific blockchain and this keeps a record of the asset\u2019s creation and its ownership. By doing this, the creators know which NFT was given to whom.<\/p>\n

After the NFT has been created, the developers can assign benefits to specific batches of assets and distribute these benefits based on the information on the blockchain. If a certain collection of NFTs gives the user access to an event, these benefits are given to whoever presents them with proof of ownership.<\/p>\n

Ultimately, once an NFT has been created, its developers can assign whatever benefits they want to them and manually or automatically distribute these benefits. And as these NFTs change hands, these are also recorded permanently on their underlying blockchain.<\/p>\n

All in all, utility NFTs work similar to any other type of NFT except that they have a specific utility associated with them.<\/p>\n

Types of Utility NFTs<\/h2>\n

As more utility NFTs are introduced into the market, a few distinct types can distinguished here, depending on their use:<\/p>\n