How NFT Token-Gating Will Change the World
Whatever your feelings are about NFTs, there is no denying that they can be used for a plethora of purposes and have proven their practical application in various industries. One of these is ‘token-gating’, which is well on track to become one of NFTs’ most enduring use cases.
What is Token-Gating?
As the name would suggest, token-gating essentially means gatekeeping access to specific products, services, experiences, and so on, and only allowing access to them to people who hold specific tokens (NFTs, in this case). Because these digital assets are based on blockchain technology, tracking and validating their transfer and ownership is much easier and more transparent. This is why we’ve seen several of the world’s top brands offer access to perks via NFTs.
Take Spotify, which is reportedly testing special playlists that can only be unlocked by the ownership of specific NFTs. This development was announced by Kingship, a virtual band made up of NFTs.
This comes months after Coachella, one of the most popular music festivals in the world, released limited-edition NFTs that offered access to free merchandise and upgrades at the 2022 festival, as well as pricier ones that act as lifetime passes to the festival. Even the restaurant industry is getting involved with NFTs. Take Dame, a popular New York-based restaurant that now offers access to its “Affable Hospitality Club” through NFTs. This club allows members to receive a table at the restaurant, which usually has a 12-week waiting list for reservations, in 24 hours. Needless to say, this application of NFTs goes beyond just music and entertainment.
What All This Means
Companies offering special perks for certain categories of users is not a new concept at all. From loyalty schemes giving users points to pop stars giving fan club members first pick at concert tickets, this has been a means of community engagement and reward for a long time. But NFTs are on track to change this entire process as they become more widely used. This is because, unlike its more ‘traditional’ predecessors, NFT token-gating has the power of blockchain technology at its side.
First, this means that records of its ownership and whatever transfers of this ownership take place are permanently recorded on a blockchain. As a result, the chances of fakes or dupes entering the market, particularly for high-profile perks that are being gatekept, are quite low. The use of NFTs also means that there is easier collection, security, and verification of the assets used to unlock perks.
Physical tickets get lost, but an NFT stored in a secure wallet is much easier to access at any time and their transfer is barely restricted by physical locations. A quick look at the applications of NFT token-gating will show what is perhaps their biggest strength; community engagement. From music festivals to restaurants and streaming app users, virtually every corporate brand has gotten the memo that the best way to secure continued patronage is to create a community that customers feel connected to online.
For corporate brands, however, there is the challenge of creating incentives to participate. While for pop star fan clubs, the benefits are obvious, corporate and consumer brands need something to reward participation that can be easily distributed to people online and which offers tangible benefits to holders while still being unique. Something like…an NFT! Therein lies the truly disruptive nature of token-gating NFTs ; they offer not just material perks but the chance to build active communities around these perks, and given the success that early iterations of this have seen, we can only expect more to come.
Even as the corporate world is going full-steam ahead with NFT token-gating and exploring the benefits that it can offer consumers, it must be noted that some challenges still exist. Most of these challenges are very blockchain-specific and apply to other decentralized assets. For example, the security of these assets can be tricky if not based on self-custody. Take the Coachella NFTs that ended up stuck on the now-defunct FTX exchange following its collapse last year. As of this article’s writing, the assets have not been recovered and buyers are still in limbo.
This, of course, means that corporate brands leveraging NFTs will need to do due diligence and offer some sort of workaround to avoid a repeat of the incident. Needless to say, even as NFT token-gating is on its way to change the world, there is still work to be done.
According to https://nftplazas.com/nft-token-gating-2023/
The material in this article is written on the basis of another article.