Unless you’re coming off a major digital detox, you’ve likely heard the term “NFT” being thrown around. From fast-food chains to musicians to sports teams, it seems like every big brand has been jumping on the NFT bandwagon.
So what exactly is an NFT? Why are they everywhere and how do they work? More importantly—whether you’re a consumer, marketer, or brand—why should you care? Let’s take a look.
NFT Basics
The acronym NFT stands for “non-fungible token” and is related to the blockchain and cryptocurrency space.
Non-fungi-WHAT?
I know, it doesn’t exactly roll off the tongue or make things clearer, so let’s dive a little deeper.
At its root, “non-fungible” means something that is unique and cannot be replaced. Something fungible, on the other hand, can be exchanged or replaced because its value is what defines it rather than its unique properties. For example, any form of currency could be viewed as fungible, because we can trade a dollar for a dollar. On the flip side, that painting you did is non-fungible because it’s a priceless one-of-a-kind item.
The “T” in “NFT” stands for “token”, referring to a unit of data created and stored using blockchain technology, which represents ownership of a unique item. While these can be real-world tangible assets like event tickets or vehicles, they are most commonly used to represent digital assets such as photos, videos, and audio.
How do NFTs work?
NFTs are units of data that are part of a digital ledger called a blockchain. While technically any blockchain can implement its own version of this technology, the large majority of them are part of the Ethereum blockchain. NFTs are different from other tokens (ie. cryptocurrency) on the blockchain because they are unique (non-fungible) and not divisible. They give consumers the ability to assign or claim ownership over tokens, with the blockchain acting as a public ledger.
That said, multiple copies of an NFT can exist—similar to how you can make prints of a painting—but blockchain technology allows us to determine which token is the original. This keeps owners protected from people trying to duplicate their property to pass it off as their own. Exclusivity is the name of the game, and that’s what makes NFTs truly valuable and desirable.
Want to get your hands on some NFTs of your own? OpenSea, Rarible, and Nifty Gateway are a few of the most popular platforms to access NFTs. On these websites, you can trade cryptocurrency (and other currencies) for whatever digital collectibles your heart desires.
The rights to the infamous Nyan Cat gif was sold as an NFT in February 2021 for 300 ETH, the equivalent of $587,000 USD at the time.
Some common use-cases for NFTs
Despite the technology being created in 2014, NFTs didn’t really hit the mainstream until early 2021. The NBA was one of the first big brands to get into the NFT market with NBA Top Shot, a sort of digital basketball card documenting unique moments of the NBA season that fans can purchase and own. To date, people have already spent more than $230 million buying and trading these virtual NBA collectibles. Today, the interest is only increasing.
Right now, it’s hard to say where NFTs are going to go. The use cases seem almost endless. If you’re a creator, not only does this offer a whole new platform to earn money, but it provides a way to protect your work and prove ownership. Platforms such as UREEQA are available to help creators do just that.
For consumers, you can purchase NFTs to show your fandom. You can buy NFTs to become the sole owner of something completely unique. You can buy NFTs to unlock bonus perks or experiences. Some use NFTs to invest—buying in on the appreciation of an asset like any other real-world collectible—while others use them to flex their wealth.
What do NFTs have to do with marketing?
With the story of NFTs still being written, we’re just beginning to see how they can be used to benefit brands and their marketing. Here are a few examples:
Generate extra revenue
No matter what you’re offering, most businesses have the shared goal of making money. Despite being a fast-food restaurant—far from being a creative or tech-based industry—Taco Bell’s taco-themed NFTs sold out within 30 minutes of launch. If that shows anything, it’s that NFTs could drive revenue for any business, regardless of how weird the fit or strategy may seem.
Engage your fan base with exclusive experiences
So far, one of the most lucrative ways organizations are using NFTs is with brand activation. With NFT exclusivity, you can offer unique experiences, products, and other items to your most engaged customers to foster brand loyalty. Earlier this year, Microsoft released a game called Azure Space Mystery that rewarded players with NFTs that could unlock extra levels and collectibles within the popular game, Minecraft.
Nike took this concept even further by blending digital assets with tangible real-world products. After acquiring the patent for CryptoKicks, Nike began pairing physical shoes with digital versions in the form of an NFT. So, when someone purchased a pair of Nike shoes, they would also receive a digital version of that same shoe. From there, owners of these NFTs could combine their digital shoes with other digital shoes to mashup the designs. They could then opt to have the hybrid digital shoe manufactured into a physical product. This cycle could take place multiple times, resulting in a sort of blockchain ancestry tree for a series of custom shoes.
Protect your intellectual property and maintain ownership
From sports jerseys to makeup, counterfeit products are an issue for businesses and their customers. A study back in 2019 showed that 26% of people surveyed had been tricked into purchasing a fake product within the last year. On top of this, there’s copyright infringement happening every day. With blockchain technology and NFTs, it’s easy to track the origin of products and images so ownership can be easily validated. This protects creators and owners while ensuring they receive the credit and money they deserve.
If you search “Does Facebook own my content?” you’ll get over 4 BILLION search results. With images and videos being monetized and distributed by third-party social media and streaming platforms, who owns the content has become a bit murky, to say the least. Alternatively, by distributing that same content as an NFT, you can maintain and prove the ownership of your digital assets.
NFTs: Hot or not?
NFTs are hot hot hot right now, and any venture into this space is bound to get you some attention and awareness. Though there are certainly challenges that come with navigating a new space, we expect to see the popularity of NFTs continue to rise as more and more brands find creative ways to utilize them.
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