They can point to anything: A JPG, and audio file, or even a piece of code.

While NFTs tend to fall into different categories, they are by no means limited to one. To separate them into categories is to take a deeper look at their purpose, and why they exist in the first place.

Let's take a look.

NFTs that are minted with the intention of being Art. People use the blockchain to create art in a large variety of ways.

• There are people like Fewocious, who explore multi-media art and sells them to his collectors as 1 of 1 pieces.
• There are artists like Scott Martin, who illustrate whimsical PFPs like the Doodles collectibles.
• Matt Kane uses code to create ever-changing, generative moon scenes called Gazers that are forever in flux.

NFTs that exist to form community. 

Many PFP projects, although represented by Art, were actually built with community as their main purpose for existing. People use different types of projects to foster community, but community is always the priority of these projects. The cover art is just a means to an end.

For example, Bored Ape Yacht Club was created to be an exclusive community. They share similar traits to a yacht club in real life: Expensive, egotistical, and full of rich people. The main difference is that you can’t use a photo of an IRL yacht club membership card to start your own business.

NFTs that represent ownership of a song, an element of a song (a stem), or a share of royalties of a particular song. Web2 listening platforms (like Spotify) are terrible for small artists, paying artists a fraction of what they should be earning for their work.

With music NFTs, you can make a living by cutting out the middle man (like record producers) and targeting a specific audience, as opposed to needing to “get big” in order to make a profit.

Think of it like Patreon, but with the addition of tokens to prove your fandom and reap rewards from.

Some music NFT platforms:

Sound.xyz has a listening party feature where you can listen to a new song as it is debuted to a live audience.

Royal you can own a piece of your favorite songs, get a cut of royalties, and other perks decided by the artist.

Catalog lets you put out 1 of 1 music NFTs (a more intimate experience than selling 10,000 NFTs for your new album).

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NFTs that allow you access to a thing like community, events, perks, games, or tools. NFTs will soon replace tickets, representing admission to an event or space. The very first NFT.London conference happening this November provides the option for conference-goers to purchase NFT tickets, but within 5–10 years, it will be the default. Tools like tokenproof make this easy!

NFTs that exist within video games.

In some Web3 games, NFTs exist to represent digital items within the game, but in others, NFTs encompass the entire game. The game Axie Infinity was built to run entirely on the blockchain. Axie Infinity is similar to Pokemon in that it is a game in which you have to have the best Axies to win fights against other Axie creatures. Each and every Axie exists as it’s own NFT, with it’s own skills and trait! It is a play-to-earn game, meaning the more battles a player wins, the more cryptocurrency they earn to use within the Axie Infinity universe.

NFTs that exist as an item of clothing or accessory in the metaverse.

In virtual worlds, one typically has a "body" (avatar) that can be customized with different articles of virtual clothing, called “wearables”. One may also have a home to fill with items they enjoy. In these worlds, you can interact with other users, do work, and play games. Since NFTs represent ownership of digital assets on the blockchain, it only makes sense that “wearables” and other digital items exist as so.

OnChainChain is a fully on-chain (made of code, no image) high end piece of metaverse fashion that provide owners with the ability to wear it across multiple NFTs & platforms. The ability to wear the same OnChainChain everywhere allows the user to become recognizable even while changing avatars across the metaverse. 

Fashion and wearables are largely seen in virtual worlds such as Decentraland. There are already high fashion brands entering the space (Gucci, Burberry, Balenciaga) selling wearables avatars to wear in these virtual worlds, of which you can verify the authenticity and ownership via the NFT.

It’s not only virtual: Nike has established a “digital twin” for some of their sneakers, so owners can verify the authenticity and uniqueness of the shoes they own in real life.

NFTs that can be redeemed for rewards, prizes, or actions.

Similar to how NFTs will replace tickets, they’ll also replace coupons and discount codes. As time goes on, more and more digital experiences will connect to your wallet, and all you’ll need is a particular NFT in your wallet to qualify you for the discount or perk.

‍BFF, a community focused on teaching and onboarding women into the NFT space, released a 10k NFT project this year that rewards holders with perks like discounts on product sites, free gifts, 1 on 1 sessions with BFF founders, and even invites to IRL parties!

NFTs that represent an internet domain, like the website you’re on right now.

ENS (Ethereum Name Service) is trying to change the entire way the web comes together with its new form of DNS (Domain Name System). For context, a domain name ending in “.com” or “.edu”, or 300 other options, are all part of the DNS, while a “.eth” address is an ENS.

ENS provides the same service for Web3 as DNS did for Web2. For example, instead of typing 104.18.4.127 to get to visit Coin Gecko, you can simply type “coingecko.com”.

In ENS, instead of typing out a long wallet address numbers, you can just type “kellie.eth”. The difference is, any ENS domain is controlled and owned by smart contracts, meaning, you have full control over your address.

ENS does not face the same security issues faced by a DNS system, since ENS records are secured by the Ethereum blockchain. DNS is NOT decentralized. Since it stores records of domains on a centralized server, it is prone to threats. ENS is not the only one who does this — Unstoppable Domains does as well, with ".crypto" and ".nft" domains.

NFTs that represent a location in a virtual world. Decentraland is the most popular virtual world, with over 300,000 monthly active users. Voxels is another virtual world that existed long before Decentraland, and is still a favorite of “OG” metaverse explorers to date. The basis of these worlds relies on it’s land — yes, virtual, but land.

A single parcel of land in Decentraland goes for about $1,000. Once you own a parcel of land, you can build anything you’d like on that parcel of land: A storefront, a home, or even a space station! These are referred to as “scenes”. Once you own the land, you may construct any scene you wish. You can also host virtual events in your scene if you wish!

NFTs that are meant to be collected in the way people used to collect sports cards.

In fact, a large amount of collectibles in the NFT space right now are virtual sports cards. The project NBA Top Shot set the precedent for many sports-related collectible projects. NBA top shot is an ongoing collection of NBA “moments” — actual video clips of game highlights, set in a trophy-like rotating 3D frame. 

Unlike other NFTs, collectibles aren’t meant to have other utilities, such as reward redemption or membership passes. Instead, they are meant to be enjoyed as a true collectible, and if you’re lucky, celebrated if you score a rare one.