Exclusivity is blissful. Being allowed into or having something that allows one to enter a place, an event, or a community always brings a great feeling. The concept of exclusivity is also present in online communities, just as it is in the real-time 3-dimensional world we live in.

From online party communities to serious private clubs, communities that require some kind of social status, exclusivity spans across the digital world.Web3 communities are big on using digital assets like non-fungible tokens (NFTs) and other cryptocurrencies as keys to VIP sections or even access to their exclusive events, whether online or in the real world.

This concept is often called token gating, an efficient marketing approach for Web3 communities to achieve exposure. So, what exactly is token gating?

What is Token Gating?

Token gating is a method of verification that enables communities to grant exclusive access to content, events, and community features only available to individuals who possess specific digital assets in their wallets.

These digital assets can be in the form of cryptocurrency or NFTs, and ownership of these assets automatically grants token-gated resources based on the conditions recorded in the tokens they hold. Token gating uses the immutability of the blockchain networks and the distinctive features of fungible and non-fungible cryptographic tokens to limit access to holders for exclusive content and services.

Token-gated exclusivities often require some form of verification to access, like a wallet screening, to decide if an individual possesses the required digital asset in their wallet. To access exclusive content, resources, or entry into an event, users connect their wallet to the platform with the goodies, and this grants the app permission to scan their wallet for required assets.

Token gating has the potential to reshape NFTs and cryptocurrencies into portable and digital membership passes, passwords, vouchers, and more. Some platforms already use token gating, like Shopify, Discord, and Spotify, improving the overall exclusive features on their platforms.

How Does Token Gating Work?

In order to work with token gating, a token must exist, right? Yes, setting up a token is an essential part of the process. Now, to understand how the process all comes together, we would have first to understand the nature of tokens.

Tokens are digital assets that reside on a specific blockchain; they do not have their own native network, unlike coins. Instead, tokens are hosted on blockchains that already exist. Because they follow token standards, tokens on a given blockchain are interoperable (can interact with one another) as long as they are of the same format.

Web3 communities work with blockchain apps and these tokens to implement token gating. The blockchain apps operate through smart contracts. These smart contracts serve as the blockchain’s version of a computer program, and they execute commands based on a predetermined set of conditions, such as verifying a user’s wallet status or contents.

When an individual buys or acquires an NFT or fungible token, it is stored in their wallet. The wallet is typically connected to a specific blockchain network and acts as a repository for the individual’s digital assets. To access a resource that requires a specific asset, the user must then link their digital wallet to the platform hosting the resource. The wallet then gets scanned by the platform to confirm the availability of the asset in the wallet. This verification process is automated and works with smart contract technology embedded in the blockchain network.

Benefits of Token Gating

Some of the happy benefits token gating holds for both creators and users include:

Exclusivity

Exclusive membership equals special access to benefits for holders, depending on the tier and level they are on. Creators can establish exclusivity by creating NFTs and cryptocurrencies in their authentication processes that only allow a particular group of people to access additional layers of their content and events.

This can create more streams of income for creators as users would need to purchase tokens and sometimes renew these memberships if they wish to continue to enjoy the many benefits.

Cost Effective Strategy

Token gating provides an avenue to maximize cost and input. Distribution is totally controlled, and there is little or no need for intermediaries, which may incur additional expenses. This way, all the profits go to the creators, and there is no need to pay off third parties for distribution or manufacturing.

Value for Digital Asset Holders

Digital assets can increase in value with token gating as the projects they are associated with gain popularity and attract investors and stakeholders. This is a double privilege for holders of the specific asset, as they stand to benefit from its exclusive benefits and an increase in its value.

Security

The blockchain confirms asset ownership, eliminating the possibility of creating fake tokens or forging token ownership. This significantly reduces the chances of scams, and as a result, only token holders can benefit from their exclusive access tokens.

Conclusion

The earth as we know it is already ours, one way or the other. However, there are still things that people want, something special, reserved for a few, and such, be it on the blockchain or off the blockchain. Token gating provides an avenue for an escape into an environment of exclusivity with benefits and insightful discoveries.

Token gating is a method that restricts access to a resource or resources to only those who hold a specific asset. It is a package full of advantages for creators and users, and organizations are already implementing the technology into their systems. No code solutions are also being created for creators and projects to token-gate their content to foster adoption across the tech industry.