An NFT is a Non-fungible Token.
How’s that for an explanation that doesn’t explain anything?
What is a non-fungible token? According to Investopedia: “Non-fungible tokens (NFTs) are cryptographic assets on a blockchain with unique identification codes and metadata that distinguish them from each other. Unlike cryptocurrencies, they cannot be traded or exchanged at equivalency. This differs from fungible tokens like cryptocurrencies, which are identical to each other and, therefore, can serve as a medium for commercial transactions.”
Put in simpler terms, an NFT is a digital asset that is permanently stored on a blockchain and that has unique characteristics that make it special.
NFTs are digital products that customers can buy. And while copies can be made, like you can do with any artwork, the original is the one with the value. Think of a Renoir painting. Only the one painted by Renoir has massive value while the copies are inexpensive replicas. It is the same for digital assets.
Because I had a lot of confusion on how to use NFTs, I reached out to my colleague, Dennis Lewis, author of “Behold the Cryptopreneurs: How to thrive as a cryptopreneur in the new blockchain economy without feeling like a used car salesman“. Here is what he said:
There are many different ways to use NFTs.
One way is to consider an NFT as a unique property deed for something. In this case, whoever owns the NFT owns the actual asset.
Another way is to create a series of NFTs that behave like a limited collection. This would be similar to an artist selling a collection of numbered copies of a piece of art.
Finally, another model is to use NFTs to designate fractional ownership. For example, the owner of the Mona Lisa could create a series of 1000 NFTs each of which corresponds to 1/1000th ownership of the Mona Lisa.
The important idea is to understand that the NFT is basically an immutable certificate of ownership of something.
I’ve listed below some examples of NFTs that are out there.
“The Merge officially became the most expensive NFT ever sold on December 2, 2021, when it was sold for $91.8 million. A total of almost 30,000 people pitched in together to buy this NFT”, according to Indian Express. Considering this is a digital piece and not something you hang on a wall that is an incredible price.
According to their website. “They are a creator led organization. RTFKT uses the latest in game engines, NFT, blockchain authentication and augmented reality, combined with manufacturing expertise to create one of a kind sneakers and digital artifacts.” They were recently sold to Nike inc. One of the ways Nike might use NFTs is by selling a digital sneaker along with the actual physical pair of sneakers. Considering that some of Nike’s sneakers are collectors items and, Nike doesn’t benefit from these resales, they can now benefit by taking a percentage of the resale price. They also continue to create buzz for Nike by being on the forefront of edgy creativity and innovation.
Beeple is the name that the artist Mike Winkelmann goes by. On March 11, 2021, Christies auction house sold an NFT for Winkelmann for for over $69 million dollars. The work is called Everydays, the first 5,000 days. This artist made a different digital picture every single day for almost 14 years. Then he combined it in a collage of the pictures. Thus the Everydays picture.
What the auction’s winner gets is a digital file of the image with the rights to sell it. Winkelmann’s goal is to work with the buyer to come up with ways to display the piece physically. It probably will need to be some type of television screen.
Let’s get down to the nitty gritty. How does all this help us grow and market our fashion brands?
Think of the gaming industry where gamers can buy costumes and swords and other paraphernalia to use on their Avatars. It’s not so farfetched to think consumers might buy apparel or shoes to dress their digital personalities. One idea that I love is buying a digital wardrobe to use on Zoom calls.
How many times do I wish I didn’t have to get dressed up just to have a call?
Another way is to use NFTs to create connections with our consumers by offering NFTs with each purchase. These NFTs could serve as proof-of-purchase and could also be kept as collectibles. After all, wouldn’t you love to have a digital souvenir for that awesome dress you wore to your sister’s wedding?
Imagine also being able to showcase NFTs of the luxury items you’ve purchased? Do you have enough days to wear all those Chanel handbags? What about your collection of Manolos? If each purchase were to come with an accompanying NFT, you could easily have a page on your website or social profile that would display your amazing collection!
Whatever you think, the future of NFTs is bright.
This is a technology that is still in its earliest stage, like the Internet 20 years ago. This means that sharp entrepreneurs are already trying to come up with innovative new ways of leveraging this amazing tech in their businesses. At the very least, consider it another tool in your marketing toolbox.