NFTs- what do we need to know?
This is what marketers need to understand IMO- don’t be scared, I’ll explain everything hopefully in a coherent way and as I understand it from my research so far!
An NFT is unique, it could be an image, tweet, piece of music, trading card, domain name, photograph, video, piece of a virtual world or a gif etc – it’s a piece of digital property and its authenticity, provenance and ownership can all be verified using blockchain technology.
For those unfamiliar, a blockchain is a decentralised immutable ledger of transactions. So it follows, as NFTs can only be bought on the blockchain. The ethereum blockchain is the most commonly used blockchain for buying and selling NFTs. As public ledgers, ethereum and bitcoin blockchains require transactions to be visible by default. The ethereum network offers partial anonymity – e.g. transactions are linked to addresses that correspond to public keys derived by user-held private keys, not by user name and password. However, there are also permissioned blockchains where transactions are anonymous to the general public, and, there are technologies being developed and tested for ethereum 2 and 3 that add an enclave of privacy to public ethereum; these are called zk-SNARKs. The simple version here is that a zk-SNARk is a cryptographic evidence and verification system that allows users to maintain private transactions while validating the transactions according to the networks consensus algorithm. When this goes live enterprises will be able to transact on the same network as their competitors in complete privacy, whilst still benefiting from the security of the public ethereum blockchain. (Keep reading, it gets simpler again from here…)
The most valuable NFTs are well documented but worth a google for the uninitiated; Beeple (known as one of the greatest digital artists) made a collage of 5000 pieces of his own artwork and it’s worth a staggering $69.3m. The ‘Clock’ that is counting down the days WikiLeaks founder Julian Assange has been imprisoned is currently valued at $52.7m.
I’ve also just seen that a Hot Dog stand- yes a hot dog stand- by Polka City Asset (who are an investment platform that allows you to invest in virtual assets in a virtual city) will pay out POLC tokens every week to their NFT holder like a salary when people in the meta verse actually go and buy hot dogs from your stand (is your mind boggled yet?!)!
Crypto art also plays a huge role in NFTs, namely the biggest artists being Pak, Beeple, Xcopy, Fewocious and Hackatao and they say the rise in the phenomenon which as actually been around for decades was due to the pandemic and growth of bitcoin.
So why does this matter for marketers? For experiential marketing; tickets could be NFTs if added on as assets onto a blockchain or in terms of content there’s branded artwork, branded virtual assets, owning gifs or videos of stunts used in ad campaigns… All the outputs could become tokenised and listed onto a blockchain as digital assets to buy.
The list is endless but it’s certainly a marvel and something that has a lot of risk attached to it and effectively any NFT token could be worthless the next day…!
To further make your mind boggle; NFTs can be extended into the real world physical assets that enables trading the possession of cars, real estate, carbon credits, etc on digital market places so anything and everything you can think of can and may be tokenised and bought.
Thoughts?! Are you ‘in’ for NFTs or does the mind still boggle?