In recent months, the term “NFT” has been creeping into many different areas of life. But what exactly is an NFT, and how is it relevant to digital marketing?
In this article we answer five simple questions about NFTs. Questions that even if you’d thought of them, you may have been afraid to ask.
What is an NFT exactly?
NFT stands for Non-Fungible Token. Which in itself probably doesn’t help much!
Non-Fungible means unique. So, at its simplest, a Non-Fungible Token is something that is unique.
However the term NFT is most commonly used to describe a uniquely created digital asset. Think images, GIFs, animations, memes, video or audio files.
And because NFTs are unique, their value is also unique. There is no set price. In that sense they are just as much collectibles as physical items. In fact, in 2021 total sales of NFTs amounted to over $14 billion.
Whilst there can be replicas of NFT artwork – just as with physical art – buying ownership of an NFT is the equivalent of owning an original piece of artwork.
What are some examples of NFTs?
We have already seen that most current examples of NFTs are digital art. For example, our feature image above – Everydays : The First 5,000 Days by Beeple. It sold for an eye-watering $69 million at Christie’s in 2021 and brought the world of NFTs firmly into public consciousness.
Another collection of NFTs to gain wider attention has been the CryptoPunks series. These were some of the first NFTs to be created; in 2017 by Matt Hall and John Watkinson. They were originally offered for free, but their value started rising rapidly in January 2021, with some now selling for over $11 million. CryptoPunks have become for many the defining face of NFTs.
One of the current best selling NFTs is the Bored Ape Yacht Club (BAYC) series. This is a collection of 10,000 NFTs which also serve as membership cards for the online Bored Ape Yacht Club. BAYC has various benefits, including socialising with other Bored Ape owners via both the BAYC Discord server and real life events.
However, although most NFTs are digital art, in theory anything digital could be sold as an NFT. For example William Shatner has sold Shatner-themed trading cards, one of which featured an X-ray of his teeth.
So what are the benefits of NFTs?
For artists, designers, creators and inventors NFTs are a new way to sell work. As well as the original selling price, the blockchain tracking mechanisms related to the NFT (see below) will ensure that its creator will receive a percentage every time the NFT changes hands, giving it long term ongoing income potential.
Buyers can benefit in various ways. For the everyday buyer, it provides the opportunity to support an artist and also then be able to use the purchased NFT in whatever way they choose. For the more serious investor, there may be large profits to be made if they buy and sell an NFT at a good time for the market.
There are several thriving marketplaces to buy and sell NFTs – including OpenSea, Nifty Gateway and Rarible – and more are being added regularly.
How are NFTs linked to cryptocurrency?
Through marketplaces such as those just mentioned, anyone can buy and sell an NFT. And in theory they can do this in whatever currency they want. However, most NFTs are part of the Ethereum blockchain and can only be purchased using Ethereum’s cryptocurrency ether. Other blockchains currently supporting NFTs are Solana, Binance, and Fantom.
The blockchain technology also stores data about the NFT. Every NFT is unique so its ownership is able to be identified and tracked. And every transaction related to the NFT, including all sales and transfers is recorded and stored within the blockchain.
How can NFTs be used in digital marketing?
Whilst it may seem to be relatively early days in terms of jumping on the NFT bandwagon for digital marketing purposes, it’s always good to be ahead of the game rather than lagging behind.
There are at least three potential ways of using NFTs for digital marketing that you may want to consider:
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Launch your own NFT collectables
Several brands have already started launching their own series of NFT collectables. Campbell’s Soup – whose distinctive red and white cans had already been used by Andy Warhol in art and pop culture – celebrated a new label design in July 2021 by launching a collection of 100 NFT art pieces by Sophie Chang entitled AmeriCANa.
Meanwhile, not to be outdone, on International Friendship Day at the end of that month, Coca-Cola launched a collection of four multi-sensory NFTs housed inside a Friendship Box. These were put up for auction through OpenSea, with the proceeds going to longtime Coca-Cola partner Special Olympics International.
On a smaller scale, when starting off with NFTs, most selling platforms enable you either to create the NFT within them, or upload a pre-created NFT to the platform. We will look at these processes in more detail in a future article.
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Partner with existing NFT collections
An alternative to launching your own NFTs is to find a way of partnering with existing NFT collections.
A major example of this is the acquisition by Nike, in December 2021, of RTFKT Studios, a creator of virtual sneakers for the Metaverse. Nike describes RTFKT as delivering next generation collectibles that merge culture and gaming. Its stated plan is to “invest in the RTFKT brand, serve and grow their innovative and creative community and extend Nike’s digital footprint and capabilities.”
Prior to the acquisition of RTFKT, Nike had already patented a method called Cryptokicks to link the ownership of its exclusive shoes to NFTs. On purchase, the shoes would be linked to a unique owner, and the data recorded and stored via blockchain technology. This would also give the owner additional control of their footwear, with the option to design and create custom shoes.
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Create a brand NFT community
Communities that link people together are increasingly popular, and the world of NFTs is no different. We have already mentioned the Bored Ape Yacht Club, but there are many other NFT communities in existence.
A notable example is based around an NFT collection called Pudgy Penguins, which can now sell for up to around half a million dollars. In the Pudgy Penguin community, penguins are known as “pengus” and the owners are “huddlers.”
The potential to create a new community for your brand, with its own culture and jargon, opens endless new marketing possibilities.
In this article we have clarified the basics of NFTs and explored how they could potentially be used in your digital marketing strategy. Check back soon with us at Xcite Digital for more helpful tips about how to keep your digital marketing ahead of the game.