Think there is an NFT Bubble? Maybe. Well, probably. But NFT’s aren’t going away, and Sellers need to start paying attention. Read to see how NFT’s will start to impact your Brand.
“NFT’s represent a revolution in what is now possible in commerce.”
The New Landscape.
Question: What do Cryptopunks, Logan Paul, and Taco Bell have in common? Answer: Your E-Commerce.
Experts couldn’t be more divided regarding the NFT Craze. (If you don’t really know what an NFT is, we’ll define it below. For now, just know that it is something digital, and it is big business.) Some very big names are doubling down on NFT’s, and they range from Marc Cuban to Logan Paul. Antagonists, like Coinbase Founder Fred Erhsam, are warning that 90% of NFT’s will crash. Still others, like Gary Vaynerchuck believe that an NFT Winter, will be followed shortly thereafter by another boom.
But what almost all big investors agree on, is that NFT’s – at least in some form - really aren’t going away. Even if the NFT’s related to rainbow unicorns and pixelated ‘Cryptopunks’ disappear in a Dot-com style bubble burst, the concept of NFT’s is revolutionary, as is the Blockchain that has made them possible. Make no mistake, at least the concept, will have massive implications for your brand in the future.
To understand how NFT’s will impact your brand, we’ll need to define what they are, and how the Blockchain that they are built on works:
What is the Blockchain?
Since the Blockchain is the technological mother that gave birth to the NFT craze, we’ll start here. In short, the Blockchain is a form of widely distributed digital database. The data that is stored in this database, for the most part, is cryptocurrency transactions. The Blockchain is a sort of digital ledger, and every single cryptocurrency transaction is recorded on that ledger. There are two characteristics that make this “ledger” special:
1) All transactions are transparent to everyone.
2) It is virtually impossible to cheat the system.…at least for now.
So then what are NFT’s?
NFT’s, or Non Fungible Tokens, are digital tokens that prove ownership. That’s it. NFT’s can be tied to a physical asset, or they can be tied to something completely intangible in nature.
NFT Examples.
Physical NFT’s. An example of a physical NFT (or PNFT) might be a real piece of artwork. An associated NFT can be resold without the piece of artwork moving locations, or it can be redeemed for the actual piece of art.
Intangible NFT’s. Most NFT’s at this point are intangible. They might consist of an in-game item that no other gamer can own or replicate, or it can be a piece of digital content like Jack Dorsey’s first Tweet. What they have in common is that they are always completely unique. By definition, there is only one of every NFT, thus the term “Non-Fungible”.
What makes NFT’s Unique from Other Assets.
If you wanted to start anticipating the end of the movie, this is where you might start. Regardless of what the specific NFT is, it is entirely unique from other types of Assets. Remember that “Ledger” called the Blockchain? Well, every NFT is established on that ledger, traded on that ledger, and verifiable by all other ledger users. So there is a type of commerce that now exists only on the Blockchain. As a result of that “verifiability”, that NFT cannot be counterfeited, stolen, copied, or physically destroyed.
Why Blockchain and NFT’s are here to stay.
We still aren’t quite ready to make the argument that you should be buying those weird, pixilated images you’re seeing all over the news trading for millions of dollars. But the concept of creating value on the Blockchain, value that cannot really be destroyed, is not going away. Consider how…
…computers revolutionized our ability to process information.
…the Internet connected individuals into a single society.
…and the Cloud ended the limitations we had in finding, using, and keeping data.
Yet none of those innovations look the way they did in their earliest respective form. They all represented a revolution in data, although they all also went through their own incredible evolutions in their earliest years.
Similarly, NFT’s represent an early frontier of sorts. Bubble or not, there is a reason for the craze in NFT’s. NFT’s represent a revolution in what is now possible in commerce, and by extension, what is now possible in e-commerce. After all, NFT’s are a form of, well, electronic commerce. So while we don’t yet know exactly how this will evolve, the technological possibilities made real by Blockchain - for good or bad - are spreading to the broader World of business.
Here’s how you can expect Blockchain and the NFT frenzy to impact your brand.
Brand Tokens. Innovative brands are already creating ‘Brand Tokens’, which confer a pre-established value to customers. This of this as a sort of imminently trackable, traceable and conferrable loyalty program. That value offered through the Brand Token is bolstered by the Blockchain’s permanence, transparency, and transferability. These Brand Tokens can be distributed as loyalty rewards, rebates, giveaways, or just generally to establish brand enthusiasm.
Raising Capital. From Cryptopunks to Jack Dorsey’s first Tweet, NFT’s can be tied to anything that has an Extrinsic value, such as a First Release, Limited Edition product, or Brand Asset. In other words, it is possible to create monetary value from virtually nothing, and it is already happening today. If you haven’t been paying attention, Taco Bell, Coca Cola, Nike, and Starbucks are already selling NFT’s related to gifs, photographs, and virtual VIP groups, which leads us to…
Special Access and VIP Groups. NFT’s have the unique inherent ability to convey status to a brand’s most valued customers. Transactions can be permanently tracked with no effort by the customer or brand owner, and pre-established rewards or status levels can be set to activate automatically once the customer reaches an established threshold.
Social Tokens. It is important to remember that NFT’s, like almost any other investment, carry with them the value conferred upon them by investor sentiment. This is Extrinsic value. As a result, the what drives that sentiment is virtually limitless. That’s why Grammy winning artist RAC has established a limited 10,000,000 shares that will be disseminated among his fans for their various forms of support. Fans can then reach various levels of status that will earn them special regards, such as access to events, autographed merchandise, public recognition, social media mentions, etc. The possibilities for this type of application are endless.
Integrated Data. While more related to Blockchain and less sexy than actual NFT’s, the data integration made possible by the Blockchain virtually guarantees it a place in the future of commerce. Consider the time and expense posed to a business of recording, sorting, and integrating all of the data associated with Supply Chain, purchases, sales, expenses, bookkeeping, HR, payroll, etc. It amounts to endless spreadsheets for startups, and costly and maintenance intensive ERP’s for larger organizations. Both modes of data recording and integration are made obsolete by the permanence, reliability, and cyber-security associated with the Blockchain.
So it is worth mentioning that for all of the talk about how big brands aren’t nimble enough to keep up with smaller innovative brands, it is those same big brands that are positioning for first- and early-mover advantage in the world of NFT’s and Blockchain. Those smaller brands that have enjoyed the flexibility associated with small-team operations and agile supply chains in recent years, seem to be taking a back seat to the emerging world of NFT’s and Blockchain. But in a World that is growing more and more digital at an exponential pace, these technologies are worth some serious discussion inside of our leadership and planning teams.
Message us at growth@elitecommercegroup.com, or DM us on Instagram or Facebook, to find out what we’re doing to investigate real NFT opportunities for our brand partners.