16 Jul NFTs: What are they, how do they work and am I missing out?
You have probably heard the term NFT in the news lately. You may have read about one selling for millions of dollars, such as a burned Banksy selling for $1.3 million. It is enough to get your attention, but what is an NFT? NFT stands for Non-Fungible Token. It can be confusing to wrap your mind around, but this post is going to walk you through it and identify where the opportunities are for you and your organization.
Fungible. Fungible means that it can be exchanged for something else, a commodity. Dollar bills are fungible, so is gold, silver, even diamonds. You can swap out an equal amount of gold with another equal amount of gold.
Non-Fungible items are unique and cannot be exchanged as a commodity. Other examples include a fine work of art, a uniquely numbered item, or sports memorabilia.
This may not feel real or tangible, but that follows a trend of how all media is trending. People don’t physically own music, movies, or books. They live in the digital world, and you might not even own it, just have access to it. With this lack of ownership, it is no wonder that people are craving digital certification of owning something, even in the virtual world.
How is this real?
Sticking with the sports memorabilia example, when you purchase an autographed item, how do you know it’s real? The value of sports memorabilia relies on confidence that what you are purchasing is real. In that case, there is someone who has the credibility to vouch for the validity and provide a certificate of authentication.
In the NFT world, rather than rely on one person, it relies on the blockchain. Using the blockchain, a decentralized community of people all work together to authenticate an item. When people sell and buy NFTs, their unique identifier gets encrypted into the token to denote ownership. Using encryption, the entire network can see the ownership information but can’t access the NFTs without the key that the owner has.
How Companies Are Getting in the Game
An approach many companies are taking is to pair an NFT with a physical item. This gives the purchaser something tangible in addition to their digital asset. Nike for instance has rolled out the Cryptokick token. In addition to purchasing the token, the buyer also gets the opportunity to design their shoe. This is a very cool and unique opportunity for someone.
Pringles took a purely digital approach. They partnered with an artist to design CrytpoCrisp, a limited edition, gold-plated digital Pringles can. As of this writing, one can be yours for $800. For that price, you would own a piece of history. Like any artwork, that graphic can be duplicated, downloaded, and recreated. Owning the NFT is like owning an authenticated original.
Nike and Pringles are high-profile examples, so how does that apply to your brand? Can you benefit from NFTs?
You probably won’t become a millionaire creating NFTs, but it is a great opportunity to set yourself apart from the marketplace, reward your most loyal customers, and offer a unique experience.
Join the Trend
NFTs are all the rage right now. Most people have heard of them, but it is too confusing to understand. Not you, you’ve read this post! By creating an NFT you are demonstrating your knowledge of cutting-edge technology. You are generating trust with your customers. You are showing that you know your stuff and stay on top of all of the latest trends.
This is also a great opportunity to reward your most loyal customers. The brand evangelists. You may not have a Nike shoe they can customize, but what is something special about your business that a diehard fan would really appreciate. It could be something from the office, an opportunity to meet someone or to be part of an upcoming promotion.
Finally, it is a way to highlight what is unique about your business. You can show off your unique capabilities such as making a one-off product, offering a luxury service, or showcasing a piece of the company’s history.
Don’t overthink it. It could be as simple as having a local artist create a drawing of your office. It could be an experience of being at the opening of a new branch. It could one of your widgets, plated in gold in a glass case. It’s something only you can offer, and that will bring value to whoever purchases it as an NFT.
Could NFTs become a revenue stream for your company? Yes. In the end though, they are more likely to be great promotion, generate media interest, and grow your brand credibility. Give it a try, you may surprise some people. Charmin is selling toilet paper-themed crypto art, anything is possible.