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NFTs are often renowned for their artistic qualities, making headlines across art and entertainment. However, there’s a lot of untapped potential for NFTs in the business world.
Utility has quickly become one of the main drivers of owning an NFT. Utility adds value to the digital asset and can come in many forms: membership benefits, access to real-life events, premium, and exclusive content, and so on. A lot of this utility can be implemented through a technology called token-gating.
And why do people believe that it is the next evolution of building exclusive communities and experiences in the digital world?
Token-gating is a verification method made possible through blockchain technology. At a high level, you must own a certain token to access exclusive offers. That means that by acting as a digital security guard, token-gating provides exclusive access to holders of a specific digital token into “gated” spaces or benefits.
What’s this specific digital token, you ask? That’s right, NFTs.
NFTs act as the perfect token-gating mechanism. NFTs create digital certificates and thereby proof of authenticity. Since the blockchain is completely transparent and traceable, NFTs on an open blockchain means their history and credentials are verifiable to anyone on the internet. Companies can leverage this to verify ownership of their NFTs, creating a secure method to “token-gate” an event, content, or anything they want.
This technology is game-changing in terms of providing completely new benefits and experiences for consumers. Now more than ever, companies are looking for ways to cut through the noise, and they’re finding that token-gating can play a part in that. In fact, the search volume for token-gating has skyrocketed 1500% over the past two years. Here are four of the many ways that token-gating can add value and make a business stand out:
A simple way to view token-gating for businesses is in relation to loyalty programs. Creating offerings that are limited to certain customers, especially your most loyal customers, is a powerful and proven tool. Token-gating adds value in the form of exclusivity, a critical feature for any company wanting to create special experiences for their customers. Exclusive offerings or events are usually perceived as more valuable for a reason. Who doesn’t love being a VIP? Exclusivity generates buzz, demand, and, most importantly, customer engagement and loyalty.
The thing about token-gating is that it can make anything exclusive. Websites, content, merchandise, and real-life events can all be gated so that only specific users can gain access. The key to that access being their NFT.
For example, Spotify is now launching token-gated playlists. If you hold a specific NFT, you can simply connect your crypto wallet and unlock access to exclusive playlists specifically curated for those NFT holders. As mentioned in the article, this could go even a step further by unlocking exclusive behind-the-scenes content and musician interviews with your NFT.
There are a lot of benefits to token-gating. And one of the biggest benefits on the creator side is that creators are fully in control. NFTs are cost-effective, brand expressive, and with no middleman involved, they’re an accessible option for creators and businesses of all sizes.
On the consumer end, token-gating also gives ownership of NFTs more meaning. One of the best examples of token-gating granting full ownership to NFT holders is Stoner Cats. Stoner Cats is an animated show that can only be watched if you own a Stoner Cats NFT. Not only is the content strictly token-gated through ownership, but there is an added layer as holders also receive the ability to directly influence the show’s creative direction with exclusive voting power.
This level of ownership and verifiability is only made possible through blockchain technology and decentralized hosting, creating a unique and advantageous positioning for NFT token-gating.
Most of today’s subscriptions and memberships involve handing over loads of data and personal information. The security of token-gating is twofold: 1. Access is tied to a token in a digital wallet instead of a person, and 2. Since the verifiability lives on the blockchain, it is undeniably accurate and secure- there is no way to forge ownership. These two features of token-gating set the technology miles apart from traditional exclusive memberships and offerings concerning user protection.
As online security becomes increasingly important to both consumers and businesses, NFT token-gating draws attention in the business security sector as well. Walls can be built to secure documents and databases and become unlocked through owning combinations of NFTs. These token verifications create an alternative method of verifying identity and give the company control over user security.
Token-gating provides opportunities for unique collaborations that can bring brands and NFT projects alike into new spaces. Companies have long since adopted the phrase “meeting customers where they are.” But how do you crack the code of effectively meeting consumers in both the physical and digital world at once? The versatility of token-gating gives digital companies and web3 brands a sense of tangibility, strengthening connections with fans beyond the screen while also innovating more traditional brick & mortars past their physical stores.
For example, Shopify and Doodles collaborated to create a first-of-its-kind IRL token-gated retail experience. In addition to token-gated merchandise on the Doodles website, Shopify brought to life an in-person token-gated shopping experience. The pop-up featured members-only merchandise as well as experiences that could only be unlocked using your Doodles NFT. This collaboration is a great showcase of blending both digital and physical experiences to create something truly unique for the customer.
Another example that really takes NFT token-gating to the next level in real life is the Bored & Hungry restaurant. This fast-food restaurant offers exclusive deals and menu items only to certain NFT holders. Talk about fine dining privileges!
Token-gating technology creates fertile ground for story-driven experiences that give consumers a new sense of investment and ownership. These activations are in addition to the countless events, conferences, festivals, and shows that are now only accessible with NFTs.
Exclusivity, ownership, security, and the fusing of digital and physical experiences are all value-adds, increasing a product’s desirability and value to the consumer. These benefits are just the tip of the iceberg when it comes to how token-gating can make a business stand out and drive more customers. With the constant rise of market saturation and digital noise, businesses should capitalize on breakthrough technologies such as token-gating to get ahead of the game.
Although there are already many successful use cases, token-gating is still a new technology with massive potential. Businesses and NFT projects are jumping at the endless opportunities that token-gating creates to add value for consumers. Token-gating is a true win-win: creating an alternate path for a company to monetize content and perks while also adding value to ownable assets for consumers.