Recently the first digital-only artwork sold at Christie’s auction house for $69M (£50m) – but the winning bidder won’t receive a sculpture, painting or anything physical at all. This friends, is an NFT.
What is an NFT?
NFTs – or non-fungible tokens – are collectable digital assets. Much like paintings are seen as a physical investment, NFTs are the internet equivalent.
“With money, you can swap a £10 note for two £5 notes and it will have the same value. However, if something is non-fungible, this is impossible – it means it has unique properties so it cannot be interchanged with something else.” BBC
How do NFTs work?
NFTs can be purchased through cryptocurrency marketplaces like OpenSea, which artists use to ‘mint’ their work (aka, create and embed unique code into a blockchain that cannot be copied). Once minted, these works are then published into tokens, and from there, cab be purchased. Unlike buying a physical painting, when you buy an NFT, you obtain the rights (or code) to a digital asset – not the actual asset.
Importantly, there’s a record of ownership. And because these tokens exist on a decentralised database (like the Ethereum blockchain, meaning there’s no governing system and everything is “community-run”), that record is public. Which minimises the potential for fraud or theft.
“With money, you can swap a £10 note for two £5 notes and it will have the same value. However, if something is non-fungible, this is impossible – it means it has unique properties so it cannot be interchanged with something else”
How NFTs Can Unlock Potential For Brands
NFTs have unlocked an ownership economy that provides brands with huge opportunity. Here’s how:
+ Community: Brands like Starbucks and Glossier crowdsource feedback by leaning on their online communities to develop new products and experiences. However, they’ve never had the ability to compensate that community more than gifting them credit or a discount code. Brands “could democratise publicly funded projects easier with NFTs, by owning a portion of the final output,” and “providing tangible benefits to consumers,” says Ohara.
+ Exclusivity: Scarcity and exclusivity, are the building blocks of hype. Sneakers cost as much as they do because they’re produced in small batches – making them more exclusive. But NFTs, with their never-ending potential and built-in digital certificates of authenticity, will bring a whole new level of hype.
+ Less Man Power: Artists aren’t only able to reach a large, diverse, international community of buyers: they’re able to sell their work with far more ease and control. The same benefits can be applied to brands. There are already amazing examples of how NFT digital couture is helping brands and influencers move away from fast fashion. Watch this space.
Do Influencers Have A Part To Play in NFTs?
Early adopter influencers are already viewed as trusted NFT experts, giving partnerships more credibility and driving hype. Here’s how brands could work with influencers to turbo-charge NFT activity…
+ Authentic Collaboration: Like with a brand-product collaboration, there’s massive scope to utilise influencers to create exclusive NFTs alongside your brand. Might we see Michael Jordan create a unique NFT with Nike?
+ Ownership: One way to think of NFTs is like having an ownership log. Influencers that have (or have had) ownership of a particular NFT, automatically drives hype for it. This would be the equivalent of auctioning off a celebrity’s wardrobe for charity, an interesting spin on (re)gifting!
+ Awareness: As a brand bringing out a new NFT, why not get influencers to post on Instagram, wearing/using said NFT? This will work particularly well for fashion, but there’s no reason it couldn’t translate into other verticals.
Let’s get to work…
Whether or not they’re here to stay, there is real money to be made. There’s also real hype to double down on; you’re tapping into an entirely new trend that can help you snag that PR hook and get you front and centre in terms of conversation. We’re all nerds here, so there’s branded NFT ideas already in the bank of Connects. Drop us a line at email@example.com if you’re ready for a foray into cryptocurrency!