There will come a time when every NFT minted doesn’t double in price weekly.
Many NFT critics point to 6 or 7 figure prices for JPGs as a sign of insanity and they write off the entire idea of NFTs. The more reasonable thesis is that collectables is simply the first use case for NFTs. It’s understandable to see the stories about innovation take a back seat to stories about million dollar pictures of monkeys. That doesn’t takeaway from the fact that blockchain is an industry defining innovation and NFTs will be a large part of the space.
As NFT collectable prices eventually slow, innovations will increase. NFTs will be valuable, not just for their resale value, but because of functionality they provide.
What can NFTs do in the near future? Soon NFTs will have built in functionality that allows for access, data collection, engagement and more. Here are some interesting functional tokens that will likely exist soon and a few crazy ideas that NFTs make possible.
Disclaimer: I understand the examples below blur the lines between NFTs & smart contracts in general.
NFT as a login This is likely already happening, although I haven’t seen it specifically. Many websites use a wallet as authentication and some sites will even display the NFTs in the wallet. NFT as a login takes it to the next level. Why is this interesting? This type of interaction allows a class of users (NFT owners) to have differentiated online experiences. In it’s simplest form this could be a patrion or substack like experience for NFT owners.
NFT Lottery If NFTs can be programmed for randomization, then purchasing (or earning) an NFT can be an entry for a drawing or randomized contest/sweepstakes. Imagine an NFT where at a specific time or when an action is taken, this NFT grants the owner access to a wallet that might contain other NFTs or crypto. Why is this interesting? NFTs could provide a trust-less and exchangeable game of chance. Think of the McDonald’s Monopoly game if that were guaranteed to be fair & honest.
Configurable Royalties The NFT creator (minter) can set a royalty upon creation. NFTs could be minted to allow for a flexible configuration of how royalties. What if every previous owner receives a royalty. What if royalties could be assigned to different wallets when conditions were met. Why is this interesting? Many crypto products are valuable because of the community around them. Collective royalty would create new communities based on previous ownership. Right now NFTs are just files, but what if NFTs need to be maintained in the future. This configurable royalty would incentivize maintenance by the current owner and training/assistance by all previous owners.
AMA NFTs The idea of an NFT being a ticket to an AMA (Ask Me Anything) is pretty obvious. More interesting - what if the NFT is the AMA. How could this work? When the NFT is transferred to a new owner, that new owner is able to input text into the NFT. This text can then be relayed to the creator of the NFT and they can respond. Why is this interesting? This NFT model allows for incentivized AMA’s, or potentially any interaction. The NFT minter could set a royalty for each sale and that royalty is essentially the price for a service the minter provides.
Self-Destructing NFTs This might be best thought of as a game. What if an NFT self-destructs if it isn’t bought/sold/transferred every 48 hours. Would it garner attention with people watching to see how long the NFT would keep going? Would a line form? What if every subsequent sale increased the price by 10%. At some point the proverbial music would stop.... but when?? This might draw a lot of attention. Why is this interesting? Mostly this is fun and engaging, but combining this concept with other functionality above or below could be powerful. What if an AMA NFT burned itself if it didn’t transfer after 72 hours. That would be a natural end to the event and provide a strong value signal as to what it’s worth to get a question answered by the creator.
Morphing NFT Collection A group of NFTs or single NFT could change over time. Take an artist like Grant Hafner. What if every time an NFT transferred ownership, one color stripe changed from day to night or vice versa. Or similarly, what if in a collection of 100 NFTs, any time any NFT in the collection is transferred every NFT is updated? Why is this interesting? This idea might make it more valuable for owners of NFTs in a collection to align and hodl the NFTs collectively or transfer them more frequently. Wouldn’t it be an interesting dynamic for an owner to know their ownership of the object was holding it back (or saving it).
Boomerang NFT With this type of NFT a pre-determined action happens when the NFT is returned to a specific address. The most obvious example is using this token for a deposit or escrow account. Why is this interesting? This could be a fast and low friction way to commit small deposits or advance purchases. This could potentially work for landlords and real estate deposits, but could be more interested for something like restaurant reservations.
Commitment Devices A Commitment Device is a smart contract with ones self. Let’s say someone wants to commit to expressing gratitude every morning. An NFT could be waiting for an inbound text (expressing gratitude) every morning. If the user texts in 95% of the days in their commitment period, they get 95% of their deposit back when their term ends. It’s even more interesting if the NFT can connect to a Fitbit feed to track committed steps or a Github repo to track that someone committing to coding is checking in code. Why is this interesting? This is actually a B2C product and can help people improve their lives. Probably nothing!
NFT as Subscription It’s possible that an NFT could update text, images and potentially video in a subscription type manner. Currently, email & SMS subscriptions or social media follows are the primary way to distribute information to a list. With NFTs the model could change to resemble syndication. Wallets might become readers, but where RSS was open and broadcast, this model could personalized and controllable. Why is this interesting? See next.
NFT Waitlist Something feels very strange when a new Web3 projects ask visitors to enter their email to join the waitlist. Couldn’t an NFT supplant the concept of the wait list? Why is this interesting? Using NFTs as a “ticket” for users to wait in line for a new service benefits the startup that’s launching and the user on the waitlist. The startup can know their users will be savvy (Web3 wallet owners at least) and would generate revenue from early adopters. These user own their spot in line and in the case of a super hot startup, the NFT holding their spot in line is a security they could sell.
Referral NFTs This idea takes Waitlist NFTs one step further. What if NFTs powered the referral program for a web or mobile app. Once the Waitlist NFT is used, it becomes a Referral NFT. Why is this interesting? This could actually be a smoother process (than existing referral codes) for web3 savvy users. The NFT could also easily track back the history from the first referrer or create a streak referral where benefits for the next new signup increase after every referral.
Crowdfunding NFTs This idea is extremely obvious. Crowdfunding usually creates packages, that at some level are redeemable for the product being crowdfunded. NFTs could replace this exact model with coupons. Why is this interesting? This is a D2C web3 use case. This approach could also be used for group buying.
NFT Publishes new owner when it’s transferred This is a simple idea. An NFT can publish (Tweet) the public wallet address of the new owner when the NFT is transferred. Sure this is on the blockchain and publicly accessible, but the tools to digest the blockchain just aren’t easy enough and Twitter. Why is this interesting? I’m not sure.
Sports Bet NFTs One wallet owns 2 NFTs that each cost $100. One NFT identifies team 1 and the other NFT identifies team 2 as the winner. $200 goes into the wallet. Based on the result of the game, the winning NFT can be sold back to the original wallet for the total contents of the wallet. Why is this interesting? Sports betting is becoming a legitimate and legal industry. Decentralizing these capabilities can instantly save the 10% made by casinos or market makers. It’s estimated that Americans bet $100 Billion on the NFL every year.
I took a run at building some of these ideas, but couldn’t make it happen. If anyone is working on ideas like these, it would be great to connect. Please hit me at @FunctionalTok3n.