Back in March, we released a blog about the NFT hype and what it is. In this How To Crypto report, we will look at how there is a potential need for NFTs in virtually every business.
But first, for those of you hearing of this for the first time or still not sure what an NFT is, we will start there first. NFT, or Nonfungible Token, is a digital asset, built using the same cryptography as cryptocurrency, that is unique. Bitcoin and other cryptocurrencies are fungible, which means if you send me one Bitcoin and I send you a different Bitcoin back, it is all equal because each Bitcoin has the same value.
Nonfungible means that each can be unique and have different values. Without going too deep into all the technology behind NFTs, just think of them as unique digital assets that you can store in a cryptocurrency wallet. An NFT can have digital properties associated with it such as pictures, animations, audio, and more.
Some of the first use cases for NFTs have been either in the form of collectibles and art. Just like the physical Pokemon cards can vary in price based on how rare they are and the demand for them, NFTs can create this same concept in a digital form. Artists have been flocking to the NFT craze due to the fact that by utilizing NFTs to create and sell digital art, artists now have the whole world as their marketplace so they can reach more potential buyers, especially as the NFT demand grows.
Artists now have the ability to create passive income unlike anything they have ever been able to do before.
In the physical art world, an artist would sell a piece of physical art once and only receive payment from that initial sale.
Say, for instance, an artist sells a piece of art for $1000. That is the only payment the artist will ever receive from that work. If that same artwork is sold 5 years later for $500,000, the artist does not receive anything else. Enter the NFT world and all of that changes. Artists can sell NFTs and receive the initial payment but also set the percentage they receive in secondary market conditions. The average right now is around 10%. Any time in the future that an NFT is resold, the original creator will receive a percentage of each sale.
This is a game changer for artists. Creators of collectibles as well can really reap the benefits even if they create collectible series in high demand and/or traded often. Let’s now look at how to expand your ideas around what NFTs can be and what they can be used for since our goal is not to just rehash what was covered in our last NFT blog.
Now that we’ve looked at some of the first use cases for NFTs, it is time to expand into the reason every single brand and business should be entering or at a minimum exploring the ways they can enter the NFT space. In 3-5 years, every relevant brand will have in some way or another incorporated NFTs into their business model. Many people are under the misconception that to create NFTs, you have to have some great artistic or graphic design skills.
Actually, having an NFT strategy in how your customers or followers can use the NFTs they hold that you create is what you should really be focusing on. Musicians can use NFTs to release limited edition tracks that allows them to not only release new songs, but also to take control of their marketing and brand without having to rely on a big name label to sign them. Even a restaurant or frozen yogurt shop can create and incorporate NFTs to drive their brand awareness. People like to collect things and people like to show off things. For example, Zack’s yogurt shop can sell 500 NFTs that give the holder of the NFT 10% off. They can also create a more rare one that gives the holder a free milkshake every week which sells for more.
Image by BBC
They will benefit from the initial sale of the NFT. But if someone moves away, that person can sell that NFT to someone else and Zack’s will earn a royalty on that sale even though no new NFTs were issued. If you sell physical items, including limited edition NFTs with your items will help with your marketing and even sales of those items. I recently sold a limited number of hats for double of what I normally charge for hats because each of those hats came with a limited edition NFT that no more of that kind will ever be created. Event tickets can easily be created, distributed, and also protected from counterfeits with the use of NFTs as event tickets.
You can even cut out the middleman of ticket and event sites that charge a fee for you to sell tickets to your events on their platforms. For example, you buy an NFT ticket to a music concert. The NFT gives you access to the concert in person, but after the concert that “ticket stubb” NFT is now a piece of collectible memorabilia for you and something that can be passed down to generations over time easily. Motivational speakers have started to sell NFTs that give the holders limited or lifetime access to their events depending on the price of the NFT, and also have other NFTs that give access to them either for video calls or in person meetings for breakfast, lunch, or dinner.
Gary Vaynerchuk, well known entrepreneur and motivational speaker, and internet personality recently released his line of NFTs, known as VeeFriends. The design of the NFTs are hand drawn animal characters, but the magic lies in the utility of each type of NFT. Some give access to events or even to his personal time. He has a set number of them being sold. He will earn a royalty each time one of them has been resold. He even stated in an interview recently that his reason for launching the NFT line is to show businesses and brands how they can incorporate NFTs and give utility to them.
In the next few years, people will be able to display their NFTs on social platforms, maybe even within social wallets, much like we display things on social media today. Most of you reading this will have a collection of NFTs over the next few years and many will be using NFTs in some sort of their business strategy. As humans, we all like to collect things that are unique and show them off.
Habits like this will continue for generations to come, but the technology will evolve to make it more seamless. Just as I collected sports cards as a kid, but kids and grandkids will collect digital sports NFTs, as we have already seen an explosion of interest in NBA Topshots and also Topps, a long established sports card company, is now selling Baseball card NFTs on Atomic Hub on the Wax platform. If you want to stay relevant over the next few years in business and marketing, you should stay up to date with what is happening in the NFT space.
Below are some resources to help you explore the NFT world.
Content written by Blockchain Wayne and the Analysts at NWC