More and more brands are announcing programs using crypto tools. The NFT format has become the most trendy and popular. Celebrities, fashion houses and even real estate developers in the Arab Emirates have joined it. In the material we will tell you how non-interchangeable tokens work and what is the uniqueness of the technology. Readers will learn how traditional companies, not connected with the world of digital currencies, can apply NFT for business development.
What is NFT
In order to understand what the peculiarity of non-fungible tokens is, we need to give an example. However, this will require a distant analogy. In the real world, every money bill has a number. It is required for currency accounting and authentication. That is, because of the presence of a mark of uniqueness, buyers “on the word” believe the Central Bank that the means of payment is real.
In the blockchain space, coins and tokens are impersonal, transactions specify the type of asset, its quantity, and the wallet addresses of the sender and recipient. Payment cryptocurrencies do not have numbers. Authenticity is verified at any moment, because the entire history of transactions is open. Accounting for each item in such a system is not necessary. Nor is the intermediary for organizing it important. For the concept of money, such a system is more perfect.
The popularity of blockchain has been growing for 15 years because of its applicability not only in the segment of virtual payment assets. Current technology converts any photo, sound or document into a digital format and stores it online.
Blockchain technology guarantees the authenticity of any information within the crypto network. However, an accounting function is needed in the documents. It is also important to record both the authenticity and copyright of the product created. For this purpose, assets with unique hash signatures were developed – NFT (Non-Fungible Token).
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NFTs are assets with the advantages of open data storage. At the same time, they have a unique number, as in the bill example. The possibilities for the evolution of copyright and workflow are obvious. However, we need to understand how such tokens are applied in market practice and then in real-world practice for businesses.
Types of NFT tokens
By March 2023, there are millions of unique lots in the digital asset market. However, they can be grouped into 5 main categories.
| Group | Description |
|---|---|
| Lots from celebrities and recognizable brands, collaborations with developers of popular NFT series, digitized items with collectible value. For example, a virtual model of a retro racing car and a Rolling Stone magazine cover were sold as tokens. | |
| These are characters or ammunition for blockchain services. The popularity of certain projects made these elements of game-reality valuable for traders. They began to be bought as long-term investments. | |
| An untrained viewer is difficult to assess the advantages of lots in this segment. However, auction houses offer NFT-exhibits for millions of dollars. The value is influenced by the personality of the author, the background of the work’s creation, the contribution to contemporary art and the uniqueness of the work. | |
| Buying an NFT pass allows you to attend one or a series of events (e.g., a concert or conference), replaces a subscription to a membership in a gated community or club | |
| These tokens combine short-term trends with semantic weight for a narrow group of like-minded people. These include memes, the work of emerging artists and content makers. |
How businesses can utilize NFT
An important technological feature of such a blockchain solution is the deduction of royalty fees. The token creator specifies in the NFT code an automatic fee transfer (e.g., in the amount of 10%). Each transfer between the next owners will earn the author or company a royalty fee. The price of rare lots increases due to speculation in the market.
A fixed part of the income from the transaction will always go to the creator’s wallet. This feature is actively used by creators of content or digital artworks.
Another important feature is authenticity (ownership) and proof of authenticity. For example, real estate in Dubai (UAE) can be bought using cryptocurrency. If the NFT certificate is integrated at this stage, the owner will be able to resell the dwelling profitably during construction. The developer will receive royalties from the transaction.
By 2023, NFTs are not only effective for direct income. The tool also helps in promotion and marketing.
Engagement
You can give users NFTs for completing tasks – for example, buying services or products. The collection of digital achievements is then exchanged for an additional reward. A hierarchy is built up depending on business goals.
Community building
As an NFT, you can be admitted to a closed club with benefits for purchases, additional services and news of the sphere. This is how celebrity fan communities are created, as well as subscriptions to use premium services (such as personal airplane rentals).
Loyalty programs
Referral programs, reward systems and special prices can also be linked to the distribution or sale of NFT-tokens. This is what Starbucks Odyssey promotional campaigns have done.
Access to promotions
Clothing brands Adidas and premium goods retailer LVHM use NFTs as an add-on to products. Holders of the unique token get early redemption rights for limited edition products that are up for sale. The private access can be resold before release, and sometimes the price of NFTs increases several times at the time of the collection’s launch.
Entering a new market of users
The emergence of NFT marketplaces will help attract interest in the company among users of the crypto space. Therefore, brands collaborate with established digital artists or developers of popular collections. For example, Rolling Stone magazine c 2020 has created 3 joint NFT-issues with the team Bored Ape Yacht Club. Both participants present a partner for their respective audiences.
A close community has already developed on the major NFT trading platforms. However, success among service users will require significant conceptualization of the launch and the creation of an NFT with stand-alone value.
How to integrate the technology into business processes
The most challenging part of applying NFT is the unpreparedness of users for the day-to-day use of crypto-tokens. Therefore, you need to:
- Teach the audience how to use the technology. The company needs to explain to its customers how to buy and store blockchain assets.
- Create a custom wallet. You can integrate a ready-made solution into your app. This is what Starbucks has done. Alternatively, use third-party services for integrating NFT-mechanics, such as Telegram or Discord.
- Create separate marketing campaigns for NFT. You need to keep the strategy evolving on a regular basis, and scale as the audience is prepared.
Conclusion
The unique token sector has broad and interesting applications. Current marketing models are conveniently overlaid with implementation through NFTs. The trend is still shrouded in speculation and misunderstanding. The easier a company communicates the benefits of the tool, the faster customers will utilize it.
It’s also worth paying attention to the power of technology. Interest in non-interchangeable tokens has changed over the past year. Participants in the crypto space have become more aware of the importance of real asset value. The challenge for businesses is to create it and get an unconventional monetization method among the first in their segment.
Frequently Asked Questions
📌 Which wallets are used to store NFT tokens?
The choice of wallet is related to the type of blockchain on which the asset is minted. For Ethereum-based lots, MetaMask is considered the most popular, for BNB Chain – Binance NFT Wallet.
⚡ Which companies have launched their own blockchain collections?
Among well-known organizations, Coca-Cola, McDonald’s, Disney, Liverpool Football Club have created their own collections. Snoop Dogg and Donald Trump also have them.
🔔 How do I choose a blockchain to create a unique token?
You’ll need to consider the popularity and security of the network, as well as transaction fees. For example, placing an NFT asset on the Ethereum network costs about $100, with about $20 extra for each exchange transaction. In the Tezos network, the fees are 10 times lower.
✨ Which NFT marketplaces are considered the largest?
Rarible and OpenSea are considered the most popular over-the-counter marketplace platforms. Major crypto trading services have also implemented their own unique token stores. Among them are Binance, Bybit, and OKX.
📢 What is the Metacommunity?
It is a virtual ecosystem built on blockchain. Includes both cryptocurrency applications and entertainment sector. Widely utilizes NFT technology for purchasing digital products and services in its architecture.
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Author: Saifedean Ammous, an expert in cryptocurrency economics.
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