5 Applications of NFTs only long-time NFT players will know

NFT is a term that is becoming increasingly popular in the digital and blockchain space. Understanding NFTs is one thing, but do you understand why people buy NFTs and what users will receive when owning NFTs? Let's find out details in the article below!

1. What is NFT?

NFT is a form of token, created and tradable on the blockchain. However, each NFT is different and distinguishable, while tokens are not.

For example: When going to the exchange, 1 BTC is converted to 38,000 USD, then take this 38,000 USD to buy back 1 BTC. People will not be able to distinguish whether the original $BTC and the newly purchased $BTC are the same or different?

But with NFTs it's different. When everyone owns 1 NFT, that NFT is unique in the world, there will not be a second NFT similar to yours.

In English, NFT stands for Non-Fungible Token (Non-Fungible Token).

Perhaps people will ask the question: For example, if the same photo is uploaded to create an NFT on the blockchain, doesn't that mean there are two identical NFTs?

The answer is: NO , they will still be different.

Specifically: Even if 2 NFTs have the same image and smart contract address, those 2 NFTs will still be different. This difference is distinguished in the Token ID part.

Each NFT will have 1 unique ID Token in each collection. Please use me to check the Token ID to distinguish NFTs in a set.

Example 1: Pudgy Penguins (images of various NFTs)

NFT of Pudgy Penguins — *Pudgy Penguins NFT Collection*

Example 2: Open Campus Publisher NFT Season 2 (images of the same NFTs)

2. Application from NFT

2.1. Make a representative photo

Since 2021, when NFTs exploded, using NFTs as avatars was almost universal. NFTs can be animals (like penguins in the Pudgy Penguins Collection , Gorillas in the Bored Ape collection…), anime cartoon images (eg Azuki …). This is probably one of the most popular and widely used applications of NFTs in the cryptocurrency market.

Azuki's NFTs — *NFTs in the Azuki collection*

Why do users take NFTs as avatars?

The answer is that they want to belong to a certain community.

In Maslow's hierarchy of needs, this is one of the most important human needs. Setting NFTs as avatars helps users “feel a sense of belonging” to the NFT community in general, and that collection community in particular.

A very popular example is the BAYC Gorilla's avatar: Each Gorilla ranges from a few hundred million to several billion VND (peaking at 1 billion VND for 1 NFT). To own those NFTs, that person must have a lot of money, so those who own these NFTs are people with money. So if you want to become rich online and flex in a sophisticated way, then own a BAYC NFT.

In addition to the BAYC community, the market also has the Punks community (representing the early OGs in the crypto market), Pudgy Penguins (those who love cuteness).

In the uptrend of next season, I am sure that there will be many new collections released, creating communities with their own qualities, so NFTs as avatars will continue to develop and spread widely.

2.2. NFT is like a ticket to join a community

This is a fairly common application in everyday life. You can understand it simply as follows: There is a community of very good business people, who often have meetings to exchange business opportunities with each other or listen to the experiences of other entrepreneurs. Therefore, they need to regulate that only anyone with a card authenticated and issued by the association can participate in these meetings.

These tokens can be understood as NFTs in the cryptocurrency world. When you buy an NFT of a project or community, you will have the right to participate in that project/community's activities, including:

Participate in the project's closed meetings (during those meetings, many alpha news can be announced, beneficial for NFT holders)
For some communities, they may have research documents that are only shared with NFT holders => advantages if holding that NFT.
Participate in events organized by the project (there are huge events where NFT holders get airdrops of more NFTs)
Receive an airdrop from the project (in case the project launches tokens or releases additional NFT sets)
And countless other benefits that the project community will benefit from.

Why pay to join these communities?

Paying a fee to join a community is actually gradually becoming familiar, especially in communities with many good or experienced people. Participating in those communities can actually help users earn a lot of money due to the many opportunities revealed by influential individuals.

As word spreads, the set of NFTs that represent entry tickets to those communities will increase in price even more strongly, and users will still be willing to participate due to the opportunities those communities offer.

2.3. Hold NFT to receive token airdrop

This is an application that has recently been blooming in the NFT market. This benefit is not new, but it is becoming more and more popular as more and more cases are seen receiving thousands of dollars from holding NFTs:

ZTX NFT : purchase price 0.06 ETH (~100 USD) sold at that time, if held until snapshot (~1-2 months) will receive 2500 USD/NFT, held until now will get about 3500 USD.
Shrapnel NFT: Each NFT held airdrops ~500 USD
Memeland (~8000 USD/NFT): holds an average airdrop of about 25 000 USD (divided into many distributions)
….

And it is expected that in the future this is the way projects will deploy tokens.

Holding NFTs initially had the goal of increasing the NFT price and making a profit, but later, the benefits of holding NFTs such as token airdrops became even greater. This may be the reason why the NFT market share has increased slightly recently, especially with newly released collections.

Should I hold NFTs to receive airdrops?

The answer to this question will need to consider many aspects, including:

Your personal position: meaning at what price did you buy this NFT, is it a good price? At the same time, has the project had a token airdrop for any NFT holders?

Growth potential of the project: This idea is closely related to the first idea, whether the price you buy compared to the capitalization of the project at that time is reasonable or not. New collections in the Ethereum NFT market are characterized by very low capitalization. With that capitalization level, the growth potential is extremely good, especially in the upcoming Bull season. Therefore, holding NFTs not only helps users profit from NFT price increases, but also has the opportunity to receive snapshot airdrop tokens.

Basic analysis of the project: Like tokens, among the NFT projects on the market there are also many junk projects. Therefore, applying fundamental analysis to analyzing NFT projects is especially necessary.

In addition, holding NFTs of the project, especially gen0 or gen1, also has the opportunity to receive airdrops of Gen2 and gen3 collections from the project or receive Whitelist airdrops from ecosystem projects.

2.4. Stake NFT to boost points participating in the project

This method is being applied in some projects, especially some DeFi or SocialFi projects. Specifically:

Users buy NFTs that the project releases
After that, users participate in using the product (especially when the project does not have a token) and earn points.
If the user holds NFTs, the points will be multiplied by the number of NFTs held.

The projects being used are also quite diverse. There are 2 case studies that I know: Open Campus and Affine DeFi. These points are expected to later be converted into tokens when the project is officially deployed.

In addition to the benefits above, some other reasons users buy NFTs include:

Speculation (aimed at making a profit when prices increase in a short period of time)
Participate in a project game under construction
Collect: NFTs represent real-life works of art
Or long-term investment in NFTs representing real assets (RWA..)