To most people, non-fungible tokens (NFT) conjure up thoughts of digital artworks selling for eye-watering sums, or tradable items from online play-to-earn and metaverse-based games. But clubs, companies and creators are now applying them in a whole new way: as keys to exclusive members-only areas.
NFTs are tokens used to represent ownership of a unique asset located elsewhere on the internet – typically something non-physical – and are stored on a public blockchain like Ethereum, Cardano or Solana. Assets can include anything from concept artwork to virtual parcels of metaverse land.
By tokenizing these items, it makes transferring ownership and authenticating them much easier.
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Taking this concept further, some have begun to use these types of cryptocurrency as badges that people must purchase and present in order to access certain social channels.
The emergence of NFT social clubs
Perhaps the most famous social club encoding membership with crypto tokens as of early 2022 is called Friends with Benefits, a group that attracted the attention of the New York Times in March. It describes itself as “a group of Web 3-focused thinkers, builders, creators, and friends”. It has more than 3,000 members already.
It is situated primarily on Discord, but it also organizes real-world events for its members. It’s a decentralized autonomous organization (DAO), meaning that everything it does is a result of a vote by its members. Owning 5 FWB tokens gets you access to some local events and 75 gets you global access and voting rights in the DAO. You can swap for the tokens through the Friends with Benefits website, which uses the Uniswap protocol. But you’ll still need to be personally approved by a committee of existing members before getting true membership, giving the club a sense of exclusivity.
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Maxwell Tribeca will be an NFT social club much more similar to a traditional physical members club when it launches. It will offer members access to an 8,000-square-foot space in New York City at 135 Watts Street modeled after a Basque eating club, according to Bloomberg.
What you get with your membership is a personal or shared locker in which to store your own drinks, so when you get there, you just pour what you want for yourself, instead of queuing at a bar.
Media attention has also clustered around an upcoming restaurant in New York City that will be open only to the holders of certain NFTs. It’s called the Flyfish Club, co-founded by serial entrepreneur Gary Vaynerchuk and set to open in 2023.
It offers two tiers of membership: The basic one gives you general access to the main restaurant; the more expensive NFT option additionally unlocks the omakase room offering diners high-end Japanese meals curated specifically by the chef.
Both types of Flyfish NFTs have sold out, so any hopeful members would now have to buy through an NFT marketplace. The basic tokens were originally sold at 2.5 ETH each, but by mid-April 2022 they could not be obtained for less than 3.5 ETH on NFT marketplace OpenSea.
So why haven’t clubs made memberships tradable in the past? One reason was probably the burden of checking the authenticity of a membership that could pass through any number of hands before reaching the one that presents it at the door. It was safer for a club to have a direct relationship with every member. Today, that’s where NFTs get to show off their moves, in particular their indisputably authentic ownership.
In the past too, an exclusive members-only club might have wanted to know who its members were before they turned up, in case of attracting an undesirable clientele. These days, those conventions may be unwinding.
But what’s the point?
The point of a NFT is its uniqueness. That makes them perfect tools for signifying things that are already special about their owners. For example, NFTs can be used to identify those who have the right to access certain online areas. In other words, they can work like an online membership card.
Not the mention, by virtue of being stored on a blockchain, NFTs are easy to verify meaning it’s impossible to counterfeit memberships or create duplicates.
For the clubs themselves, the most simple advantage of an NFT membership system is that it saves its members a small amount of mental and physical effort. If it’s a physical club, there is no need to remember a membership card or wait for staff to check your name on a list. If it’s an online venue, you don’t need to remember any login details.
Using NFTs as memberships can be an alternative to the password model. Most of us use different passwords for different services online for the sake of security, but this adds a complication to the user experience. Piggybacking off the security of your crypto wallet, all you have to do is connect your wallet, and the club or service can check immediately whether you have the required tokens.
In fact, any service you use could check all the NFT memberships that you hold, making it easy for you to take advantage of promotional offers and so on.
Another advantage of an NFT membership model is that the traded prices of the tokens show the issuer exactly how highly valued the membership is. Instead of trying to calculate the optimal price to set for newly issued memberships, they can simply be offered at the current market price. If there has been an influx of new interest in the service, it will be revealed by an increase in the traded price of memberships.
Of course, issuers can still profit from recurring payments attached to ownership of the NFTs if they want to. They can also collect a percentage of any resale price and therefore gather significant revenue from growing interest in what they’re doing, without even issuing any new memberships.