Decrypting NFTs
WHAT EXACTLY IS AN NFT?
The hype surrounding Non-Fungible Tokens (NFTs) continues to grow week-over-week. From artwork to music or even real estate, the purchasing of these digital assets has created a trend that cannot be ignored. However, many people are still asking “What even is an NFT?”
An NFT is a one-of-a-kind digital asset which represents real-world objects that can be bought and sold. They can be purchased online with cryptocurrency and are generally utilizing the same fundamental software as cryptos. While most digital files can be endlessly copied and have an infinite supply, NFTs have unique codes which allow them to be identified or “tokenized” which creates a certificate of ownership in the digital space. These unique identifiers are stored on ledgers known as blockchains and cannot be forged as the ledger is supported by thousands of computers throughout the world.
IS THERE REALLY A MARKETPLACE FOR THIS?
The answer is, emphatically, yes! People are paying thousands of dollars and in some instances, millions, for NFTs. These purchases allow them to own the “original item” (it is important to note that the artist/producer of the work can retain copyright ownership in most instances). It is like having an autographed piece of memorabilia, a one-of-a-kind trading card, or in the world of NFTs, one of the most viral videos in internet history — “Charlie Bit My Finger”.
*News Source: https://www.nbcnews.com/pop-culture/viral/charlie-bit-my-finger-youtube-video-sells-nft-760-999-n1268322
CAN I JUST SEARCH AND COPY THE ASSET?
In a similar manner to a collector that owns a rare painting by Picasso, Rembrandt or Basquiat, an NFT allows a buyer to showcase the authenticity of ownership. People can buy copies of prints from the previously mentioned artists, however there is only one person who owns the original asset and the value of that is whatever they’re willing to pay for it.
HOW DOES THIS APPLY TO MARKETERS/BRANDS?
If you are creating content, NFTs are a unique opportunity to monetize that work in a way for which there might not otherwise be much of a market. Creators can go directly to their audience and sell their content which can increase profit. As previously mentioned, NFTs have a feature that allows the creator of the asset to continue owning the copyright, so if the asset is sold or changes owners, they will collect proceeds from the exchange.
Taco Bell, a brand that is always willing to test out new ways of engaging their audience, was at it again recently getting on the NFT bandwagon. The QSR chain created five different taco-themed NFTs, which sold out in minutes. All of the proceeds from the sale went to their charity, the Taco Bell Foundation. The execution and organic interactions were covered across all media channels increasing their brand’s awareness.
There are countless other big-name creators, brands and investors testing the waters of the NFT trend … Mark Cuban is exploring the options of turning the tickets to Dallas Mavericks games into NFTs. Musical Artist Post Malone is exploring the NFT space by allowing collectors the opportunity to go backstage, fly or even play virtual beer pong with him. Nike has gone as far as to patent blockchain-compatible sneakers they are calling “CryptoKicks.”
WHERE CAN I BUY NFTS?
To get involved in purchasing NFTs you will need a digital wallet and cryptocurrency. A digital wallet is where you can store your crypto, in addition to any NFTs you acquire. You can purchase crypto using a credit card from many different sources such as Robinhood, PayPal and Coinbase to name a few. Ethereum, which is the second-biggest cryptocurrency behind Bitcoin, is also a blockchain network which runs smart contracts. The majority of NFTs are a part of the Ethereum blockchain and therefore bought with the currency native to the network –- Ether (ETH). However, you should check which currency the NFT seller is accepting prior to purchasing as there are thousands available.
Some of the most popular NFT Marketplaces are — OpenSea, Rarible and Foundation while even iconic auction houses like Christie’s are getting involved in the trend.
WHEN DOES THE BUBBLE BURST?
With more individuals and brands getting into the frenzy by the day, the NFT market continues to get saturated. Without being “first to market,” we probably will not continue to see such exorbitant selling prices nor demand moving forward. However, like most things built with a digital foundation, the opportunity to evolve and adopt this emerging technology will continue to improve.
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