What is Happening With NFTs?
Written by Courtney Raguso, Social Media Content Creator
What is an NFT?
NFT stands for “non-fungible token.” Based on blockchain technology, an NFT is considered to be a digital certificate representing one kind of asset, otherwise known as a special kind of crypto asset in which each token is unique. These assets can include digital art, collectibles, virtual real estate, trading cards, memes, gifs, video clips, audio clips, tweets, and even this blog. Pretty much any type of media that can be tokenized. Unlike fungible assets like Bitcoin and printed money, which are worth the same amount, NFTs are unique because they can be used to authenticate ownership of these types of digital assets. Once tokenized, these assets can be bought, sold and traded using cryptocurrency. The NFT below, sold for a record $69 million.
How do NFTs work?
Understanding how NFTs work starts with understanding fungibility, which is basically another word for interchangeable. Any two items that can be evenly exchanged are considered fungible. As we said earlier, dollar bills are fungible because if you compare two bills that are both $100 bills, their value is the same. However, NFTs work similar to when you are comparing something like baseball cards. You won’t find two Jordan Fleer 1986 rookie cards equaling the same value. Even though they may look the same, their distinguishing factors tell otherwise, such as their centering, coloring and overall grading. Just like a one of a kind rookie card, the metadata on a NFT provides a certificate of authenticity, allowing us to tell them apart.
When it comes to creating an NFT, as we said earlier, you can make one from any type of content whether it’s a photo, drawing or video clip. It can be original or repurposed content. Creating your own NFT doesn’t require extensive knowledge of the crypto industry. All you need is a piece of digital work, an Ethereum wallet, and some ETH crypto. Once it’s created, you then choose the blockchain you want to issue that piece of content on to become an NFT, which is then accessed using your digital wallet. After that, you are set to upload your file to the Ethereum marketplace of your choosing, such as OpenSea, Rarible, or Mintable. The artwork will then appear in your collection as an NFT on your profile, and you’ll be set to auction! Most NFTs are stored on an Ethereum blockchain, which keeps all records, starting with the token’s creation, ownership and transaction history. So, you just can’t copy someone else’s NFT and call it yours because original items only exist on the blockchain, which proves your sole ownership of the authentic NFT. What makes blockchain technology a game changer is that it can be employed to democratize the management of digital assets, facilitate true distribution on a global scale, and reduce payment frictions via micropayments.
When buying and selling these types of assets, it all comes down to what you believe will hold or gain value. It works similar to collecting or trading cards. Some NFTs may gain considerable value in the upcoming years. It’s just about the timing of the buy, who you’re getting it from, and the history of the work. Most NFTs will not be worth much more than they are worth today however, because of the current supply and demand issue and the amount of popularity, this type of asset is gaining to the point of oversupply. Many are sold in Etherium crypto currency, which is considered to be the largest and most well-established, open-ended decentralized software platform. What makes this type of currency different from others like Bitcoin and Dogecoin, is that Ethereum enables the deployment of smart contracts and decentralized applications to be built and run without any downtime, fraud, control or interference from a third party.
Why are NFTs important?
As the digital age advances, the things we do, own, and talk about will also evolve. People are social creatures and if you look at our past behavior, we tend to communicate through our purchases and what brands we support. It’s similar to owning a limited Yeezy sneaker from StockX or buying a special skin on Fortnite to show off. It’s about expressing yourself and finding others with similar interests; that’s how communities are built. Similarities and interests are what bring people together, and online communities and niches have become very popular. NFTs have grown immensely over the past year alone amounting to an estimated $338 million in growth. Digital assets are now conversation starters and just like an influencer can build a community on Instagram, so can an artist on a blockchain. One CEO, Gary Vaynerchuck, believes that this is just the start of NFTs and that this will be a bigger deal than anyone could have ever thought. In fact, he went as far as stating, “Like the internet in the 1990’s or social media in the early 2000’s, NFTs will go down in history as one of the most significant things to happen in modern technology and culture at large.” Right now, we are in the early stages of this new revolution.
NFTs have raised fascinating philosophical questions about the nature of ownership. Understanding this concept is closely linked to human behavior because we all love sharing what we have, especially if it’s unique or a one of a kind artifact. Scarcity and exclusivity is a huge psychological factor that comes into play when considering the value of an NFT as well as a love for the feeling of nostalgia. Years down the road, someone will want to purchase an NFT of a meme they remember was trending when they were in high school and want to own it, even if it’s not necessarily considered valuable by most people. In fact, most kinds of collecting isn’t based on inherent value at all, but more so the story behind it. When it comes to the value of NFTs, you’re focusing on these three factors: utility, access and social currency. That’s what brings the value.
NFTs represent a massive cultural shift, and they are absolutely not just some new trend. Back when the introduction of the internet and social media happened, there was a lot of doubt and pushback on the idea of its long term success. This is history repeating itself. Like the internet in the 1990’s or social media in the early 2000’s, NFTs will become mainstream after everyone’s skepticism proves false. The internet is a fad! Social media is just for kids! What a lie that was. Back in the early days of Facebook when Farmville came out, people were spending their real money on digital assets for the game, including virtual seeds and animals. Yes, those are also considered NFTs. It sounded silly at the time, but if people are spending their money on something like that, you can bet they’ll be spending on something more than just entertainment, but something that will elevate their status in the digital world and a way to communicate who they are. It’s similar to the same reason people buy the new iPhone or a luxury car: status and social currency.
When it comes to investing in these types of digital assets, you have to keep in mind the creative value behind it. This is a huge opportunity for artists and brands alike to cultivate a real community with real excitement and dedication behind their work. Art is something that will no longer be seen as just a hobby, and be viewed as a more practical option as a career path. NFTs also mark a major shift for IP ownership because artists will be able to receive royalties from their work as it gets bought and sold on the internet.
What are brands doing with NFTs?
All aboard the NFT train! You may have guessed it, many brands are using NFTs to engage with their audiences and promote their products. It makes sense for businesses to capitalize on this opportunity because it offers many benefits including increased brand loyalty, engagement and long-term connection with consumers. Plus, it offers an opportunity for brands to really drive innovation by utilizing these new technologies. One way you can get started is with exclusive NFT incentives by offering NFTs that can unlock special giveaways, rewards or pricing. For example, an event ticket sold as an NFT could be embedded with a predetermined time for a personal meet-and-greet with the founder of a company or a brand’s celebrity spokesperson. Take it a step further and you can donate the auction proceeds to a charity or cause. Doing this will show that your brand is a valuable asset to the community and is essential for attracting new customers, especially the younger millennials and gen Zers. You can also instill brand equity by making collectibles for people to sell and trade. In a post-pandemic world where virtual ecosystems have grown to become the norm, brands can use this shift to their advantage with more digital offerings which will offer customers a new way to invest in their favorite companies.
Today, brands are learning the virtual landscape of the internet, competing in a whole new post-pandemic world of digital consumerism filled with virtual events and experiences. As new trends and technologies arise, brands need to decide their approach and how they can capitalize on these new opportunities. When NFTs started growing in popularity, so did more and more brands, influencers and celebrities decide to make their own. Here’s a few brands that created their own NFTs.
For some brands, it’s the trend of 2021. For others, they see a long-term value proposition in the digital scarcity that NFTs offer. Pizza Hut sold an NFT for $0.18 and has been re-listed for $9,000. They used this opportunity to promote a special offer on four popular recipes, with each week releasing a new pizza slice as an NFT. The first one has obviously been very successful. Kellogg’s-owned Pringles also recently announced the release of 50 limited-edition NFTs called Crypto Crisp with 10% of the sales going to the artist. Taco Bell also launched 5 of their own NFTs with the proceeds going towards their youth career foundation. They were on sale for $1.79, but resold for nearly $200,000. It doesn’t stop there, and there are NFTs selling for even more money including the Overly attached girlfriend meme sold to 3F Music, the avid collector of NFTs, for $411,000. Twitter CEO, Jack Dorseyalso, sold his first tweet as an NFT for $2.9 million, saying he’ll convert over $2.9 million to bitcoin and donate it to COVID-19 relief in Africa.
Mainstream artists have also gotten involved in the space such as EDM artist 3LAU who sold the world’s first-ever crypto-album, making $11.6 million in under 24 hours. On his own custom-made digital-token auction site, he sold 33 NFTs which were redeemable for anything from special edition vinyl 3LAU albums, unreleased music, to special experiences. You’d be surprised to see just how many NFTs sold for millions of dollars. Our society’s culture has changed so much in the past year. Smart wallets and the tokenization of digital assets will be a real game changer for brands, artists, consumers and collectors. NFTs have become one of the hottest crypto trends of 2021, with overall sales up 55% already since 2020, it’s something you should consider learning more about and getting involved in. NFTs can be made by any talented graphic artist like our own. Through ownership of exclusive NFTs, collectors can feel a deeper sense of connection with their favorite brands, which will translate into increased customer loyalty for brands. NFTs have opened up new ways of brand storytelling and consumer interaction, and using something like graphic art is just one more way brands can communicate to their audience. If you can create memorable ad campaigns, or collaborate with NFT creators, it will be well worth the investment.
At MSM DesignZ, we put in the time and energy needed for success, so you can ensure you are using every dollar for maximum return. With over 20 years in the business, we have watched marketing evolve from traditional to digital. Whether you need a website refresh, more attractive email, or a quality online presence, we can do it all. When we take on a client, we put in 110% and treat every brand as if it’s our own. We will always continue to place our clients’ needs at the heart of our operations. From web development to social media management, we’ll work directly with you to build a personalized strategy to not only retain but also gain business. We are assisting in all areas for our clients. Visit our contact page at https://www.msmdesignz.com/contact/, and we’ll work with you to devise a custom plan that will keep your brand alive and well. We look forward to working with you!