As social beings, we are used to trades. And here we are not even talking about financial markets yet. We are talking about trading resources, knowledge, tools… The more aware we are of our dealer nature, the more we understand that token gating, NFTs, and all other Web3 aspects are not surprising tech miracles. They are inevitable advances.

 

Maybe you are one of those confused by these terms. Explaining that NFT is an acronym for Non-Fungible Token or that WEB3 is the third era of the Internet doesn’t say much for you, right? That is why we won’t do it.

 

To make it clear to you once and for all, from what these concepts mean to how you can get the most out of them, we will look at the world and people’s behavior to the point they are obvious to you. Do you doubt it? Give us 5 minutes and make your own conclusions.

Let’s get back thousands of years. You know, when we lived in the wild, threatened by predators and nature itself - what a party! 

 

If you remember History classes, you will note that being in groups was a huge advantage because, despite our physical limitations, we could protect ourselves and hunt bigger animals, for example. More than families, we formed communities. The coexistence made each community develop its own particularities, its culture, its rituals, its communication.

 

If a woman from your group developed a specific method to kill mammoths, for example, who do you think she would teach to do the same? People from other groups (who could become competitors for the food) or her own fellows? Yes, her community. This principle built culture.

 

Could she teach these quirks to an outsider eventually? Of course. But unless this person lived with them, he or she would never be part of that community. Belonging guaranteed you a place in that group - and, again, greater chances of surviving. Belonging became safety - physical, mental, emotional safety.

 

With time, we started to learn what was socially approved or disapproved - things that improve or decrease our status in the community and, consequently, our chances of staying in it.

 

It is evolutionary psychology: we love anything that reinforces our sense of belonging. (Think about those people you care about and the places you adore. For some reason, they make you feel like you belong, don’t they? Not for nothing!)

As we talked about earlier, we also love trading. I tell you something, you tell me something - it’s reciprocity. I give you something, you give me something - it’s barter. 

 

We love people who give us access to things we can’t get ourselves, as much as we love items that provide us with experiences we couldn’t enjoy without them.

 

If you exchange and nothing changes, what is the advantage?

 

Long before money existed, we traded rice for eggs and cows for knives, for example. Money was only created as an evolution, a way to facilitate these exchanges. Instead of rice and cows, just a few bills are enough to buy your own eggs and knives.

 

If you pay attention, both rice and eggs, cows, knives, and money itself, have one characteristic in common. They are fungible. This means that items of the same category, in equal quantity and quality, have the same value. You can replace one hundred dollar bill with another and it wouldn't make a difference - in the end, the person who owns the bill would still have the same amount of money.

 

Other items, on the other hand, are the opposite. They are not interchangeable. 

 

Think with us: if you replaced a Picasso painting with an identical forgery, would it still be worth the same? No. It doesn’t matter if this good has the same quantity and quality, it does not have the same value.

 

In other words, it is non-fungible.

Money has evolved. If you have a bill near you, take it. You will notice some security items printed on this, to help you identify real or fake ones. But our transactions evolved too and these security items became obsolete: what mark do you print to get paid on online sales, for example? You can’t expect your buyer to send authenticated bills by mail.

 

As all transactions became more and more digital, so did our money. The mid-1990s saw the introduction of online payments. We developed new layers of security to our money online, in systems that helped us later to certify whether the goods exchanged are fake or real.

 

But how to certify that a digital item is real? This question is the kick-off for the inevitable process of NFT’s invention.

 

NFTs are tokens used to grant the authenticity of non-fungible items. Since they can’t be replaced (remember Picasso!), owners need a guarantee that they own the original piece. NFTs are the guarantee.

 

To understand how it works, note that a token is the digital representation of an asset (such as money, property, or work of art) registered on a blockchain.

Given the decentralized nature of blockchain, there is a large margin of safety with the information stored being virtually tamper-proof, which encourages the emergence of a market around NFTs, as already exists for cryptocurrencies.

A common question when someone is learning about NFTs is if they can be physical. There are two possible answers here.

 

The direct one is no. Thanks to its digital nature and the technology evolved to create an NFT, it can’t be physical. In the same way cryptocurrencies can’t be banknotes.

 

Another common question is about the relationship between NFT and cryptocurrencies. Josh Katz, CEO of NFTs marketplace YellowHeart, explained it very well when he said: “Cryptocurrency is transforming the way we make payments, and NFTs are employed to grant digital ownership and authenticity in inventive new ways”.

 

On the other hand, the comprehensive answer to the question “can NFTs be physical?” would be: it depends. Even though the NFT itself is only a digital item, it can provide benefits for its owners that transcend the online world and cause actions in the physical world.

 

These are NFTs that grant their holders privileges, rights, or rewards that they would otherwise not be able to access. These benefits can be digital (as limited content, for example), physical (like accessing an exclusive event), or even phygical (such as digital twins).

 

Token gating, in turn, is the technological, strategical, and creative process of turning a standard NFT into a utility NFT. 

 

First of all, getting access to token gated benefits doesn’t require any extra technical knowledge.

 

Usually, it occurs in two steps: 1. to prove you own that NFT, you connect with your crypto wallet, and then 2. you claim your benefit, using the procedure indicated by the NFT creators. No intermediaries are needed.

 

We could describe it in lots of ways. We could mention the access to early store openings, the use of special discounts on new products, or even the invitations to exclusive members-only events. But it is all secondary.

 

The real point is that non-fungible tokens are assets that represent influence, a sense of belonging, and experience.

 

If you recall what we discussed earlier in this article, you will notice that it is another way of saying “status, tribes, and transactions”.

 

Token gating is the evolution of hunting together, of learning new ways to bring down mammoths, of gathering around the campfire at night. We still crave all this (the status, the tribe, the transactions). The difference is that now we use technology to serve us this.

 

That technology provides us the joy of owning a work of art in our collection and exposing it to friends and family - even digitally.

 

That technology provides us the opportunity to meet people with the same interests as ours, in special environments, protected from “strange tribes”.

 

That technology provides us the chance to have a closer relationship with the artists, creators, and brands we love, not only owning one of their pieces but eliminating intermediaries between you two.

 

Yes, some of these aspects you can find in the traditional world. But the security provided by NFTs is what makes it so desirable. As we said, this is not a tech miracle, but an evolution. The best of several eras with the technological contribution of the present and, why not, the future.

Businesses and creators adopt token gating for reasons beyond tech advances.

 

Brand experience, positioning, customer relations, and community management are some of the areas most benefited by token-gating.

 

For creators, for example, token gating translates to having way more control over who can access their products, profit more due to the absence of intermediaries, and receive recurring income via royalties from secondary sales.

 

What can we infer from these numbers? Nothing is more profitable than experience.

 

And due to its exclusivity quality, besides giving the opportunity to access benefits and enjoy the “consumption adventure” even more, token gating provides an object of desire. A booster of social influence and status.

 

Being part of a select group intensifies customers' willingness to share their position. Considering the numbers we see above (the capacity of recommendation a satisfied customer has and the rates of recommended clients), it is a strategic movement to improve the well-known word of mouth.

 

Decades ago marketers used to do it convincing people to influence just their neighbors, coworkers, and relatives with their purchases (their influence zone). Now it has a global impact. And as we become more and more digital, our objects of influence, the items we use to express our social status, become more digital as well.

 

Owning goods that don’t exist in the physical world might sound weird for some people, but as we transition to the phygital world and build our lives in the metaverse, brands that mature our need to belong also in this context to take the lead. Including financially.

 

As you can now see, NFTs and token gating are not tech miracles. 

 

There is nothing to be afraid of or develop apocalyptic anxiety around learning about it…

 

They are part of our evolution as social beings, consumers, buyers, and sellers…

 

And we are honored to be part of this evolution with you.

 

After all, it is inevitable!