Does My Business Need NFTs?
NFTs (non-fungible tokens) are a hot talking point in the business world today, mainly because in the last 12 months there has been a real boom in sales. The first NFTs were created in 2015 but they didn't gain popularity until recently. The sale of a digital artwork by Beeple for $69 million in March last year really brought NFTs into the public consciousness and now businesses are looking to cash in on the NFT market.
An NFT is a digital asset that is a one-off, and which has a monetary value. The value is what someone is willing to pay, since there is no physical, tangible item backing up the value (like there is with an asset like property or gold).It is non-fungible, which means the item (essentially a piece of computer code which is secured by blockchain technology) itself cannot be replicated. It is a bit like a work of art by Rembrandt – only one ever exists and it is secured by the knowledge and understanding in the art world of who created it and when.
Not every business need to get into the NFT game so while you may see a lot of activity around businesses creating and selling NFTs it's not necessarily a sign that you should too. Yes, there's potentially a lot of money to be made, but since the value of an NFT is largely based on perception than tangible value, the mere fact of creating and owning an NTF doesn't mean it automatically has value, as it can't be traded or exchanged like cash or physical products.
NFTs are commonly being used by brands as a digital representation of a physical item – big brands create NFT versions of their actual products that customers can use or wear in the metaverse. Nike, for instance, uses NFTs to verify the authenticity of some of their limited edition trainers, and people who buy the physical item get a digital version they can wear in the metaverse. Brands like Coca-Cola have made digital only NFTs of limited edition merchandise for use in the metaverse. This is a smart move – by encouraging their customers to access and use the NFT version they create demand for future NFTs which don't need to have a physical counterpart.
An NFT could be a digital version of a real product, but it could also be an image, a gif, a file or even a video clip that is unique and can be owned by a single person (or syndicate).Video clips of high profile sports stars can sell for thousands of dollars, with some being resold for even more money. When minting an NFT, code can be included that nets the creator a royalty fee each time it is resold, which is a great way of maximising profit if you're the creator of in-demand NFTs.
If your customers participate in the metaverse then NFTs are worth getting involved with. If there is a high celebrity demand for your products this can also make an NFT version of a celebrity favourite a desirable item for your customers. If there are benefits to being able to authenticate items then a corresponding NFT is also worthwhile.
For now, NFTs are applicable to a small section of businesses but as the metaverse expands and more people participate the scope will broaden. For that reason, if you have the ability to create NFTs it could be worth getting in early, particularly if your NFTs could gain value as the metaverse grows.
