Non-fungible tokens (NFTs) seem to have exploded out of the ether this year.
Over the world, art people, baseball fans, collectors ... are racing to pour millions of dollars to buy items represented by NFT codes. But are NFTs worth the money—or the hype? How Brands can create value by using NFTs.
What is an NFT?
An NFT is a digital asset that represents real-world objects like art, music, in-game items, and videos. They are bought and sold online, frequently with cryptocurrency, and they are generally encoded with the same underlying software as many cryptos.
Although they’ve been around since 2014, NFTs are gaining notoriety now because they are becoming an increasingly popular way to buy and sell digital artwork. A staggering $174 million has been spent on NFTs since November 2017. For instance, famous digital artist Mike Winklemann, better known as “Beeple” launched the Nifty Gateway e-commerce platform many digital artworks in the form of NFTs and earned millions of dollars. He sold several works at Christie's for $69.3 million.
Individual images—or perhaps the full collage of images—can be viewed for free on the internet. So, why are people prepared to spend millions of dollars on something that might be easily screenshotted or downloaded?
The value of NFT is not in the products themselves, such as photos, songs, or tweets, but in their exclusive ownership, as confirmed by the NFT chain code. As a result, the item becomes one-of-a-kind. Although there are innumerable free-floating copies on the Internet, only NFT buyers own the rights to the original item. Dan Kelly, president of the Nonfungible.com platform, said that an owner of an NFT is like the owner of the original Mona Lisa. Although there are many copies of this work in the world, only one person owns the original, he said.
In the coming years, NFTs will be how we show off the businesses we love, the causes we care about, the movies we adore, and even the things we are happy to own in the real world. NFTs will be a tool to establish an identity beyond a name and a display picture since we value online identity more than offline identity.
Establishing brand identity
In the last decade, a brand's social media played a critical role in establishing its identity. In the coming decade, NFTs would play the same role because many customers value their online identity more than their offline identity. Using NFTs, bands can communicate their identity, tell their story & prove their social commitments. Irrespective of what products or services you sell, NFTs are what you will use to establish your digital identity & to engage with a growing generation of users.
Driving brand engagement
NFT provides a blank canvas on which marketing departments can unleash their creative potential in a way that has never been seen before in order to increase engagement. And the trends are already being formed by market leaders. Coca-Cola donated the proceeds from the sale of unique digital NFT paintings to the Special Olympics. Mattel ran a promotion to sell digital 3D Hot Wheels models. Disney has released a slew of Marvel NFTs. Limited-edition digital sneakers were sold directly on Asics' website, with earnings going to the company's in-house digital artists who created the artwork. Taco-themed NFTs were offered by Taco Bell and sold out within 30 minutes of its release. NFTs are a type of semiconductor.
NFTs are a powerful brand engagement tool because they can help companies generate new revenue streams and deepen their relationships with customers in new ways. They blur the borders between consumer and investor by allowing your supporters to own a piece of your brand's history, which they can use to unlock unique perks and resell at a profit in the future. NFTs have the potential to produce revenue for any company. In addition, NFTs provide a way to generate exclusivity: a way to provide one-of-a-kind experiences.
Creating a Positive Customer Experience
The barrier to using NFTs is that the non-tech-savvy population has problems to entry. Most NFTs, for example, are listed, bought, and sold on blockchains using bitcoin. This necessitates the knowledge of how to open and use a crypto-wallet. However, things are improving. There are now mobile app-based user experiences that do not require an understanding of blockchain or cryptocurrency to produce, distribute, or buy NFTs. There are platforms that allow brands and businesses to establish and manage NFTs for a range of marketing goals. Marketing and brand executives may assist brands in creating a consistent NFT experience for their customers.
NFTs can be the future of how brands will engage with their customers in the digital world. However, It's important to understand that NFT is a very new technology, brands will need to be open to experimenting with this new form of media. Fortunately, the cost to entry is now low and the user experience brands can offer to their consumers is ready for prime time. Brands can consider NFTs to use effectively and seize the opportunity.