Non-fungible tokens (NFTs) became mainstream this year. The furore around the top-performing NFTs has captured the public imagination. Many of these unique tokens are already collector’s items. The NFT marketplace took off with the introduction of 10,000 software-generated “CryptoPunks” which netted the creators of the punk-style characters over $1 billion.
Since then NFT collectables have exploded. But these unique tokens are not limited to digital art, games, memes, and virtual fashion. Brands are coming up with other innovative ways to create new revenue streams using NFTs. It makes sense. NFTs are expected to become a trillion-dollar money-making powerhouse. What’s more, unique tokens make digital transaction, easier, faster and safer for consumers.
What are NFTs?
NFTs, or non-fungible tokens, are unique digital assets that cannot be replicated, replaced or tampered with in any way. They are stored on the blockchain which records the entire history of an asset including ownership history, price and anything else you want to include in an NFT smart contract. The basic premise of the blockchain is to store data in a secure environment which maintains 100% privacy – but at the same time, eliminates fraudulent activity. All the details of a transaction are verified by computers and not accessible to human eyes.
This means that businesses have the opportunity to create products and experiences for their customers in digital environments. NFTs essentially serve as proof of purchase and detail the terms of the contract. Furthermore, access to services is automatic via an NFT purchase. Consumers do not have to go through a payment gateway every time they purchase digital assets because their payment details are tied to a digital wallet and can be held on their smartphone.
In the main, we also get to bypass email accounts – which as you’re probably aware can be problematic. With NFTs, there is no requirement for spam filters because proof of their authenticity is validated by an incorruptible digital ledger on the blockchain.
The Benefits of NFTs for Business
The boom in NFTs over the last year has been nothing short of breathtaking. As a matter of fact, the explosion escalated so quickly that people are already talking about the bubble bursting. Whilst you may not make billions like the early adopters in the digital art field, the long-term future of NFTs looks secure. To put it simply, the blockchain is the most effective way for exchanging digital assets – or even physical property through a digitalised contract.
NFT smart contracts also protect your intellectual property from copyright infringement. The tokens are given a unique identification code. When this is aligned with a smart contract that records the name of the creator and the existing owner, the asset cannot be fraudulently replicated. Brands are already finding innovative ways to use NFTs, either to bring in new revenue streams, promote brand awareness, reach new audiences, boost your image and foster customer loyalty.
One way of building brand trust and customer loyalty is via ‘Airdrops’. This involves creating an NFT smart contract and airdropping it into a customer’s digital wallet as a reward. For example, let’s say you organise a promotional event with a live ticketing system and you want to reward attendees with a 20% discount if they sign up for the service the event was promoting.
This would involve creating an NFT, adding the artwork and outlining the terms of the agreement in a basic smart contract. I appreciate that it all sounds pretty technical, but it’s not. A smart contract can be generated fairly easily on platforms such as Thirdweb or OpenZepellin. These platforms have precoded templates that enable them to work on the blockchain. All you have to do is edit the text as you would in a Word document and upload it to an NFT marketplace like OpenSea. Because NFTs are attached to digital wallets, discounts can be activated in-store directly from the customer’s smartphone.
The NBA and NBPA are launching a new non-fungible token (NFT) initiative, The Association NFT, where the collectible’s design will be dynamic and change over time. The appearance of the NFTs will evolve based on players’ on court performance. The more accomplished a player is throughout the season, the more their NFT will visually change.
There are some businesses that could also benefit from NFT royalties. These work in the same way as artists and musicians earn royalties. Whenever your NFT is resold, you can earn a portion of the sale. Let’s say you develop a model for rehabilitating patients that have lost a limb. You find a buyer in a local rehabilitation centre, but they see an opportunity to hold causes for private practitioners in the same field.
Ordinarily, they would use your model to share with other practitioners and you wouldn’t receive any compensation for reaching a wider audience even though it’s your intellectual property that is being taken advantage of. To avoid this, you can write royalties in an NFT smart contract which entitles you to a percentage of the resale of your intellectual property. This enables businesses to earn a passive income on older products.
Do you need to develop branded NFT’s that need to be animated to support your fan base? Why not drop us an email at firstname.lastname@example.org, or give us a call on +44 (0)207 148 0526. We would be happy to help. For further reading see our blogpost on Creating Animation For Multiple Use Cuts The Cost by clicking here.