How NFT Token-Gating Will Change the World

No matter how you feel about NFTs, there is no doubt that they can be used for a multitude of purposes and have proven their practical application in various industries. One of these is ‘token-gating’, which is well on its way to becoming one of NFT’s most enduring use cases.

What is Token-Gating?

As the name suggests, 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 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 benefits 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 Coachellaone of the most popular music festivals in the world, released limited edition NFTs that gave access to free merchandise and upgrades at the 2022 festival, as well as more expensive ones that act as lifetime passes to the festival.

Even the restaurant industry is engaging in 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 get a table at the restaurant, which usually has a 12-week waiting list for reservations, within 24 hours. Needless to say, this application of NFTs goes beyond just music and entertainment.

What all this means

Companies offering special benefits to certain categories of users is not a new concept at all. From loyalty schemes that give users points to pop stars giving fan club members first choice on concert tickets, this has been a means of community engagement and reward for a long time. But NFTs are poised to change this whole process as they become more widespread.

This is because, unlike its more “traditional” predecessors, NFT token-gating has the power of blockchain technology at its side. Firstly, this means that records of ownership and any transfers of this ownership are permanently recorded on a blockchain. As a result, the chances of fakes or dupes entering the market, especially for high-profile benefits that are street protected, are quite low.

The use of NFTs also means that there is easier collection, security and verification of the assets used to unlock fringe benefits. Physical tickets are lost, but an NFT stored in a secure wallet is much easier to access at any time, and the transfer is hardly limited by physical locations.

A quick look at the applications of NFT token gating will show what is perhaps their greatest strength; community involvement. From music festivals to restaurants to streaming app users, virtually every corporate brand has gotten the memo that the best way to ensure continued patronage is to create a community that customers feel connected to online.

For corporate brands, however, the challenge is to create 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 that provides tangible benefits to holders while being unique. Something like… an NFT!

Therein lies the truly disruptive nature of token-gate NFTs; they offer not only material benefits, but the opportunity to build active communities around those benefits, and given the success that early iterations of this have seen, we can only expect more to come.

Challenges ahead

Although the corporate world is going full speed ahead with NFT token gating and exploring the benefits 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 difficult if they are not based on self-storage. Take the Coachella NFTs that ended up on the now-defunct FTX exchange after its collapse last year. As of this writing, the assets have not been recovered and the buyers are still in limbo. This of course means that corporate brands leveraging NFTs need to do due diligence and offer some sort of solution to avoid a repeat of the incident.

Needless to say, even though NFT token gating is on its way to changing the world, there is still work to be done.

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*All investment/financial opinions expressed by NFT Plazas are from personal research and experience of our site moderators and are intended as educational material only. Individuals are required to research all products before making any type of investment.