16 Apr 2023
How NFT Utility is The Key
With the emergence of Bitcoin ordinals many have wondered what the fate of NFTs will be. In this article we will discuss the one thing that NFTs bring to the table that ordinals don't: Utility.
With all of the talk about Bitcoin ordinals and NFTs recently ( you did read my last outpost entry right anon?) I wanted to take the opportunity to expound on the key difference between an ordinal and a NFT: programmability.
While ordinals may seem like the superior NFT, they are not NFTs in a strict sense, as NFTs are smart contracts. In order to demonstrate the significance of this difference, I will highlight two particular Stacks NFT projects in this article: Sigle, and Stacks Parrots. Let’s get to it.
Sigle is a decentralized blogging platform that was released on Stacks in 2021. The team released the Sigle Explorer Guild collection as a way to help fund the development of the project. However, the Explorer NFTs are more than a work of original art based on the likeness of a legendary author. The owner of a Sigle Explorer is granted lifetime use of the platform indefinitely. So while anyone can publish on Sigle for free, to gain access to the entire suite of capabilities one has to pay a monthly subscription. Unless of course one has at least one Sigle Explorer NFT in their Hiro or Xverse wallet.
The owners of Sigle Explorers can publish their work, track their analytics, send newsletters, monetize their content, and receive a custom domain. Since Sigle is decentralized, the author has full control over their content and is unable to be censored or have their work taken down. In addition to this functionality, Sigle is also able to inscribe directly onto Bitcoin. At the time of this writing Sigle is also working on becoming a cross platform project, and soon will be available to Polygon users.
Like Sigle, the Stacks Parrots NFTs are also able to unlock functionality for their holders. The owners of Stacks Parrots NFTs have their very own virtual NFT gallery that acts as a showcase for all of the NFTs held in the same wallet. The gallery adds a new dimension to owning NFTs. It is quite fun, almost has a video game quality, to tour your gallery and check out the new additions to your collection. In addition to touring your own gallery, Stacks Parrots owners can invite others to tour their gallery.
In addition to the virtual gallery, Stacks Parrots NFT holders have access to their own mobile NFT music player app called Parrot Radio. This app allows the Stacks Parrots NFT owner to listen to their music NFTs, as well as view all of the NFTs in their collection.
In addition to the projects mentioned above there are several other Stacks NFT projects that are using NFTs to combine art with NFT use case: This is #1, Nonnish, The Guest, Stacks Degens, Metaboy, and Project indigo are just some of the projects that are bringing content/use cases to the blockchain that can only be accessed via NFTs.
So while I could take the art from any of these collections and inscribe it onto Bitcoin, I would not be able to access any of their functionality in this way. The smart contract is the key to making these projects useful beyond the art/collectibility.
Since roaring onto the scene Bitcoin ordinals have disrupted the NFT market in a profound way. The reality is that having art inscribed onto a Bitcoin ordinal is the superior way to own art. No blockchain has the recognition or security of Bitcoin, and as such it makes sense to see people start to question why anyone would buy anything but an ordinal if they want to collect digital art. It is a valid question, and the answer is simply NFT utility.
During your tenure in this space you will quickly learn that this space indeed moves quickly. Just a few months ago there was Bitcoin, and there were NFTs, and the two did not mix. Now existing projects need to adjust their strategy to determine how to remain competitive and relevant in the face of this new innovation. I am of the opinion that the NFT projects that have built their project around utility will fare better than the pfp model of NFTs that helped launch the very first NFT bull run.
There are other factors to consider of course, chief among them will be the expense of ordinal inscriptions in the future. It is not inconceivable that due to the soaring popularity of ordinal inscriptions, and the value of Bitcoin, that we could see inscriptions becoming cost prohibitive for some market participants. If this was to occur then one would expect to see a resurgence of art for art's sake as NFTs.
In the short term, it will be interesting to see how NFT projects evolve in response to the emergence of ordinals. This evolution of crypto is always interesting, and rarely ever plays out like you may intuitively think it will. However, I am sure that regardless of what ordinals do, the NFT projects that provide utility for their owners will continue to thrive.
Rest assured that your Flagship Captain will stay keenly focused on the new developments in the Stacks ecosystem and keep you in the loop. Thank you so much for reading, and I look forward to seeing you all in the Stacks Outpost on Discord. Until next time, Captain Jack signing off.
Disclaimer: Nothing on this site should be construed as a financial investment recommendation. It’s important to understand that investing is a high-risk activity. Investments expose money to potential loss.