One of the buzzwords of 2021 was NFT and in 2022 it now even has a place in the English dictionary, but many people are still confused as to what an NFT is and why some people are getting so excited and enamoured by them.
What does NFT stand for?
NFT stands for non-fungible token. Still no clearer? The term non-fungible means something is unique and can’t be replaced with anything else. It’s like the old football cards we used to collect as kids. If I traded my Glen Hoddle card for a different card, I’d get a completely different player. The cards are unique, or non-fungible. If, however, I traded a £10 note for 2 £5 notes, I’d still have £10. Currency is fungible. The dictionary definition describes NFTs as “a unique digital certificate that is used to record ownership of an asset such as an artwork or a collectible.” So, an NFT is a piece of data recording the ownership of a piece of digital artwork or property. NFTs can be any digital product but the conversation that is gripping the world at the moment is about the ability to sell digital art online as the next evolutionary step in fine art collecting.
But wait. Owning a piece of physical art is a little different from the online equivalent.
Surely, if someone buys a piece of digital art, anyone else can download the digital file as many times as they want. Well, yes. That’s where the lines become blurred, and everyone starts to scratch their head. NFTs are designed to give you something that can’t be copied, and they do, they grant you unique ownership of the work. Look at it this way. Anyone can buy a fine art print, but only one person can own the original, hand painted piece. Another thing to consider is you have unique copyright and usage rights over your digital art. You can use your digital piece of art anywhere online, in your blog, as your social media profile picture, and you have the right to stop other people using it anywhere. There are several markets that have opened up specifically for NFT trading like Binance, OpenSea, SuperRare, Nifty Gateway and Rarible. Take a look. You may be pleasantly surprised.
How can brands make money from NFTs?
NFTs are gathering pace and are selling for vast amounts. We’ve all heard how people are spending hundreds of thousands of pounds on them, and we were all astounded when the artist Beeple sold his “EVERYDAYS: THE FIRST 5000 DAYS” digital piece at Christie’s for over £50m. Somebody even paid £150,000 for a digital kitten! But how can brands develop them into something tangible they can use as a constant revenue stream? Nike is a great example of a brand thinking digitally as well as physically and tying the two worlds together. Nike is looking to employ NFTs as a way of certifying the authenticity of its sports shoes via its own unique CryptoKick platform. Nike say, when you buy your Nike shoes, you will also upload a digital version via a unique code into your virtual locker. The digital NFT version will be tied to the physical item and will then be used for online avatars across all virtual platforms. So, the more Nike moves into the digital world, the more physical products they sell.
Are you ready?
NFTs do take a little time to get your head around and the whole concept is still developing, but if you’re brave enough to step into the arena, you’ll open a whole new world of experiences for your customers. You can use NFTs to open a more intimate relationship with customers who are already experimenting with the metaverse. Taking advantage of both physical and digital properties means you can move way beyond static websites or storefronts and create whole new realms of the eCommerce experience for your customers. From auctioning off limited edition digital products to creating virtual collectible items, people can own a digital piece of your brand, and anything is possible in the world of NFTs.
So, what will the future of NFTs be?
I do think the physical world will take the digital world on board with open arms but maybe not just yet. People need to get used to the idea of NFTs while they continue to explore where the digital world can take them. Fashion brands have already got a head start in the metaverse with avatars wearing and trading unique NFTs. It’s now up to brands to dive in and start creating digital versions of their physical products. It could be the key to a very successful future.