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What Is an NFT And Why Should Businesses Care?

Non-fungible Tokens are All the Rage These Days

By Rahul JhaveriPublished 2 years ago 5 min read
Forward-thinking businesses are banking on NFTs

First things first. Unless you haven’t heard the rave about NFTs, you must be wondering what the acronym means. Well, it stands for non-fungible tokens. On the other hand, you may know what it means but you don’t understand exactly how it works. In this post, you’ll know more about NFTs which are currently drawing the attention of various businesses.

A few years back, the NFT space barged into the limelight as popular artists started tokenizing their works and receiving huge returns. In a viral incident, American digital artist, graphic designer, and animator Mike Winkelmann, sold one of his works for more than $69 million!

But today, the reach of NFTs has extended beyond the art world as some notable businesses have gradually ventured into the lucrative industry. Studies have shown that this is bound to happen as NFT’s disruptive innovations are virtually inevitable.

So, What Exactly Is NFT?

A non-fungible token is basically a unique digital asset that is secured and tracked on a blockchain. Everything can be included in NFTs, from digital goods such as digital real estate to tangible assets such as physical land.

Since NFTs are used to create digital files (e.g., MP4, gifs, jpgs, 3D animation, VR artwork, etc) ownable, they open endless possibilities to new avenues for brand expression and points of interaction with customers. They are even emerging as fully functional mobile apps, embedded safely within cryptocurrency wallets.

There are numerous new experimental discoveries in the NFT world and it’s imperative for you to know more about them so your business will benefit and grow over time.

Figuring whether NFTs are right for your brand will take a lot of research, but in general, the major upside of NFTs is access to an existing global network of customers which is likely to continue to grow, especially as new applications are unraveled and virtual experiences become more common.

Here’s Why Your Business Should Venture into the NFT Space

If you are contemplating whether it would be worth it for your business to give NFTs a try, these are the reasons why you must consider getting into it early:

NFTs Foster Brand Awareness

Draw Attention to Your Brand

While the hype behind non-fungible tokens started four years ago, projects that create NFTs are still garnering clickbait headlines in various media channels and also among the target audience. Small to large businesses delve into NFTs for marketing purposes or to increase the value of the products and services they offer. Either way, you’ll be able to achieve brand promotion and boost your chances of attracting new clients.

One of the key tenets of NFTs is the concept of communal ownership. In most cases, when you buy NFT, you also buy the IP of that particular token. This means that while having the NFT does not give you the right to use the name of the brand that created it, you do gain the right to use the NFT’s digital artwork for your own business’ marketing, thereby spreading awareness of your own brand as well as the NFT project.

Established brands like Nike and promising brands like Bored Breakfast Club are leveraging NFTs to promote brand awareness. Bored Breakfast Club is in fact a novel NFT project that transcends merely shipping premium coffee. They are also delivering an exclusive digital experience to their members through the use of 5,000 unique breakfast scenes existing as NFTs on the Ethereum blockchain. This helps increase brand awareness through the sharing of their NFTs by their customers on social media.

A New Way of Customer Interaction

Integrating NFTs to your brand gives existing and prospective clients a new - and perhaps a better - experience. This will help in boosting engagement rate among customers while also converting more leads.

A good example of this is when Emirates Airline announced that it plans to launch its NFTs to increase revenue, enhance brand experience and operational efficiencies. Emirates is one of the first Airline companies to embrace NFTs and following its announcement, it drew a lot of attention. When its NFTs were launched, their functionality focused on making flight booking a lot easier for the passengers.

NFTs are also improving how businesses reward their clients. AMC Theatres in the United States recently airdropped roughly 86,000 NFTs to its loyal customers. The NFTs gave the holders free access to a Spider Man movie as well as discounts on some films in the future.

NFTs will also be of great help to businesses when it comes to their supply chain. Consumers will be able to confirm the authenticity of products through their attached NFTs. The technology embedded into the tokens shows the whole supply chain journey, including the name of the manufacturer, storage location, and the viability of the product. Lastly, the location of a product can be traced, from when it was produced all the way to the final consumer.

NFTs Use Blockchain Technology

Security of Data and Transactions

Much like blockchain, NFTs have the ability to securely store data and records while ensuring privacy. You can take full advantage of the the uniqueness of every token to guarantee record accuracy and data immutability.

For businesses, NFTs provide a network where virtual assets can be stored and coupled between those in the network and those using them. This way, NFTs offer users heightened security by eliminating any third party, thereby keeping all vital data secure.

A New Way to Generate Revenue

As businesses continue to search for new income streams, NFT seems to be a lucrative option. It’s even more interesting because businesses don’t need to shell out a significant amount, yet they can make big returns.

A prime example is the journalism industry where the sources of revenue are limited to ads and sponsorships. Fortunately, NFT is opening up new and far better income streams through tokenisation of columns and reports.

Times Magazine recently sold four digital magazine covers for 276 Ethereum in an auction. That’s a whopping $855,000! Even French Daily closed an NFT sale amounting to more than $3000 late last year.

Further, the conventional museum system is likewise tapping into the NFT space. The British Museum is reportedly set to launch a NFT collection worth a staggering $41 million. With these recent developments, other bold and dynamic businesses are looking to delve into the NFT market as a means of increasing their revenues.

NFTs Enable Transactions that Drive the Metaverse

Scalability for the Metaverse

The Metaverse is an immersive hypothetical iteration of the Internet that is achieved through the combination of different artificial realities, with blockchain technology as its basic infrastructure.

Studies have shown that the Metaverse has the potential to become a $1 trillion business opportunity. This means businesses can scale to the Metaverse, but how will NFTs help your business do this?

Bear in mind that every file or item in the Metaverse exists as a non-fungible token. Therefore, mainstream businesses are creating NFT versions of their products and services so they can be Metaverse-relevant.

Fashion brands are currently leading the way, with Louis Vuitton and Dolce&Gabbana launching their Fashion NFT collections. If you want your business to benefit from the Metaverse economy, then you must get started with NFTs as soon as possible.

Final Thoughts…

For all the hype surrounding NFTs, the general public still doesn’t fully understand what they are and how they work. However, non-fungible tokens are set to become crucial aspects of various industries.

Brands already using NFTs benefit from better transparency, traceability, accountability, and reliability. Soon more and more businesses will be using NFTs as a way to boost efficiency of their operations. Everyone in the business community stands to benefit from the increasing adoption of NFTs. When brands leverage NFTs, it creates an incorruptible circle that benefits the businesses and their respective clients, employees, and suppliers.

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About the Creator

Rahul Jhaveri

Rahul has been working in Australia's IT industry for more than 10 years. He is the director of JhavTech Studios, a Melbourne-based tech hub which offers top-notch and personalized services in the area of Web and Mobile Development.

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    Rahul JhaveriWritten by Rahul Jhaveri

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