More likely than not, you’ve heard or seen the word NFT during a dinner conversation, podcast, twitter binge, or news show. It’s a two billion dollar trending word, so the question to be asked is, “Does it meet the hype, or is it a bubble waiting to pop?”. Wherever you are on your journey with NFTs, you may find that the answer to the question above might not be so black and white. Take a look through the table of contents to navigate this post, and spend your time on a particular topic that interests you the most.
This article at a glance:
What are NFTs?#
NFTs is short for Non-Fungible Tokens, where non-fungible means a blend of non-interchangeable or unique, and token stands for a digital asset. Put together, non-fungible tokens are unique and non-interchangeable digital assets that exist on a blockchain.
A tangible example would be creating a serial number on a trading card or collectible item to authenticate its originality and become a one-of-a-kind collectible item. Like any other collectible item, the token’s value starts with the creator but can grow depending on society’s perception of its value. Another example is if Leonardo da Vinci were alive today and created a digital copy of the Mona Lisa. He would then generate a digital certificate that authenticates and makes his digital copy of the Mona Lisa the only one of its kind.
NFTs are commonly tied to digital assets such as art, pictures, and video highlights for the time being. Still, there is a growing possibility that the market will grow for NFTs linked to physical assets. Examples of these digital and physical assets can be found in the example section of this post.
How big is the NFT marketplace?#
In Q1 of 2021, NFTs saw $2 billion worth of trading, which is over 2000% of an increase since Q4 of 2020. A high-profile NFT company such as OpenSea raised $23 million in their Series A round led by Andreessen Horowitz (a16z). According to a16z, sales volumes are now reaching $100 million every week. The NFT marketplace is growing with other companies such as Rarible and NBA Top Shot.
Who buys and sells NFTs?#
The short answer is anyone. Successful individual sellers for NFTs are generally famous artists, high-profile influencers, or businesses with a large social following. Buyers are composed of many individuals or groups, from high-profile investors like Mark Cuban to your local neighbor with internet access.
Where are NFTs sold?#
There are many NFTs marketplaces to buy and sell. Each platform holds different types of art and collectibles with secondary markets that have a variety of NFTs. Here are some examples for the top NFT marketplaces:
- OpenSea
- SuperRare
- Nifty Gateway
- NBA Top Shot
- Foundation
What is blockchain?#
Put simply, a blockchain is a decentralized digital ledger system. To illustrate the security of this system, imagine Person 1 creates a unique stamp code for Item 1, claiming ownership of Item 1. Person 1 then distributes this information to 100 unique individuals saying that this item belongs to Person 1. The security of blockchain lies in that you would have to go to 100 individuals and remove what information they have on Item 1’s ownership in order to replicate the Item 1.
NFTs Examples#
The NFTs craze started with some high-profile sellers and buyers that range from individuals to companies like Taco Bell. Here are a few examples to get you started:
1. Taco Bell#
On March 7th, Taco Bell tweeted out a release of 25 NFTs branded NFTacoBell. These NFTs were tied with 25 unique GIFs that each sold between the range of $300 - $4000 in the form of Ethereum (ETH). The whole supply took 30 minutes to sell out.
2. Nike#
On December 19th, 2019, Nike secured a patent for tokenizing shoes under the name CryptoKicks. According to the patent, owners will purchase shoes that unlock an identification code to a unique NFT. The NFT will create a digital representation of the product that will record the specific attributes of the shoe, such as color, design, and style. While Nike has yet to use their patent, there is high potential for creating NFT linked shoes to preserve authenticity and uniqueness.
3. Beeple Artwork#
On March 11th, 2021, Mike Winkelmann sold his NFT digital artwork titled EVERYDAYS: THE FIRST 5000 DAYS for $69,346,250 in the payment form of ETH. Developed over 5,000 days, Mike Winkelmann started his journey on May 1st, 2007, and finished his product on January 7th, 2021. The bid started at only $100 but quickly ramped up between February 25th, 2021, and March 11th, 2021.
4. CryptoKitties#
Started in December 2017, CryptoKitties is a virtual cat NFT trading game reminiscent of trading playing cards. Over four years, the NFT has seen over $40,000,000 in transactions and caught the eye of venture capitals such as a16z and Union Square, collectively pumping $12,000,000 in the original game’s development.
5. Nyan Cat#
On February 19, 2021, the Nyan Cat GIF sold for 300 ETH, now valued at $740,556.00. Chris Torres created an NFT version of the popularized 2007 GIF and ventured into creating several other NFT memes and GIFs that sold for around $40,000.
Business Use & Benefits#
There’s no doubt that people are heavily invested in NFTs, so what are some ways that your team can leverage NFTs for your benefit? Let’s walk through 3 examples for how your team can use NFTs in the near future.
Partner with an artist#
NFTs are changing the way artists can sell their art. As a business, you can partner with different artists selling NFTs to get more exposure for your brand.
1. Develop brand partnerships
Find ways to partner with an artist selling NFTs to have your brand present during NFTs auctions or other events. This can develop your brand’s exposure through NFT marketplaces and drive up sales for your company’s NFTs.
2. Draw from fan bases
By partnering with artists, you can build meaningful relationships with prospective customers during in-person or virtual events. Having your brand present at these events can drive organic reach and create engagement opportunities for your sales team.
Create and sell NFT GIFs#
Taco Bell’s creation and selling of NFTacoBell achieved several different goals for their company. Here are a couple of takeaways from their experience with NFTs:
1. Drive PR buzz
There will be increased awareness and desire for people to jump on the bandwagon with any new trend. Companies like Taco Bell and Pringles generated free press by creating and selling NFTs tied with GIFs. This natural communication of their company increased their brand awareness and attracted the attention of early adopters.
2. Generate customer engagement
The creation and selling of NFT GIFs can create another channel for customer engagement. Creating and selling NFT GIFs can help gauge your brand popularity and develop new ways for your customer to interact with your company. Note that NFT GIFs sales and resales can also create a new revenue channel for your company. Thanks to the blockchain function in maintaining a secure line of ownership, this revenue stream can be created and give a percent of future resales back to the original owner.
Sell NFTs for a good cause#
Find ways to sell NFTs for charities. Celebrities like Lindsay Lohan, Mark Cuban, and Mike Shinoda minted their own NFTs to sell for charity. Lindsay Lohan’s NFT ended up selling for 33 ETH ($57,290) and had portions of the resale go back to the actress to be donated to charities accepting Bitcoin.
1. Develop brand image
Creating and selling NFTs can serve multiple purposes with one action. While your business can sell NFTs and raise funds for a charity, this can also develop your brand image. You can position your company as a thought leader by using new trends to deliver charity to various communities.
2. Improve customer retention
Since NFTs will preserve the information of original ownership, your NFT will be tied to your brand for generations to come. Developing a loyal customer base can start by promoting your brand image as one that supports multiple causes. From the customer’s perspective, they could be paying for your company’s products or services while also benefiting a good cause. The image of helping charities can help improve their retention and secure a loyal customer base.
Wrapping up#
There are risks and costs associated with the development of any new trend. While this article’s primary purpose is to keep you up to date with the latest trends on NFTs, there is also a risk with investing in digital tokens linked with cryptocurrency. While buying NFTs might not be the best investment option for many companies, small costs behind creating and selling NFTs can be a viable possibility if your company has resources for new marketing ventures.
One thing to be sure of is that NFTs are here to stay. Despite cryptocurrency volatility, blockchain is too big to disappear, which assures NFT marketplace continuation. Whether their value declines or increases over the years, the benefits associated with building and selling NFTs for your company can outweigh the small monetary risks associated with NFTs development.
While there is still room to grow, NFTs can create excellent engagement channels for your existing and potential customers. Continue to research ways to leverage NFTs within your team and help your company stand out.
Happy learning!
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