Our world is going increasingly digital; from shopping and payments to booking appointments, meeting people, consulting a doctor and studying in a school or college, we are using the internet and digital tools. With the arrival of cryptocurrencies and blockchain technologies, we can secure transactions better and protect our financial assets. Now comes, another new format in the form of NFTs (Non-Fungible Tokens) to protect our non-financial assets.
What are NFTs?
Non-fungible tokens are unique digital identities connected with an asset and are issued to people or organisations to mark their ownership over the asset. An NFT owned by a person on an organisation is unlike a currency note or crypto because the NFT is unique and owned; the rights can be transferred to someone else at the will of its owner. This is like someone’s home, mobile phone, jewellery, book, collection of music, email account and social media profile. Some of these assets can be transferred or sold in exchange for money or a consideration only at the behest of its rightful owner. Legal systems of the State ensure that the transfer of these rights is governed fairly and uniformly.
NFTs have been in use for a few years now; however, they have not been quite common in our discussions until recently when the Founder of Twitter, Jack Dorsey monetised his first tweet (“just setting up my twttr”) by auctioning its NFT for USD 2.9 Million and at an auction at the Christie’s, an American digital artist, graphic designer and animator auctioned a piece of his digital art by its NFT for USD 69 Million.
Who is using them?
The point is, NFTs are new and there are enough fans in the world who want to be first-movers and pioneers in their circle. Hence, there is a demand for NFTs now; companies like Microsoft, Coca-Cola, and Nike are among these pioneers to have introduced NFTs.
Imagine a situation where Nike develops a limited-edition logo that entitles its owners certain privileges such as meeting some of its brand ambassadors as an exclusive event and life-long passes to premium booths in the sporting events it sponsors around the world. This super-exclusive club can be digital, by an auction among a curated list of participants and the winners of the auction are issued personalised NFTs. The value of the membership status of this unique club can keep appreciating and the fan club gets stronger over time. Nike will get the impact of the positive influence that the Fanclub members create on its brand, amplify the impact over time and can draw many other secondary benefits from these NFT-based memberships which can be transferred from the first owner to the next owner and so on.
How different it is from the traditional methods of marketing?
Firstly, NFTs are personalised and cannot be copied or faked unless there is a new technology that can break into the blockchain level of security. For example, a rare painting of Van Gogh can be copied or printed; however, the situation can change if there is an NFT of the painting and the museum sells just a few of these tokens. These NFTs will represent the original painting, an extremely precious asset and create significant revenues for the museum. As a part of the NFT, they can offer some special privileges for the owner to the museum, events celebrating Van Gogh’s greatness and public acknowledgement of ownership if the owner permits. This can make the owner of the NFT truly special.
For this situation, we cannot create a marketing program using the traditional methods to generate a similar impact. Hence, the NFT market is fast-growing. People are increasingly interested in buying NFTs for digital artwork, music, photos, multimedia, rare moments in history, video games and so on. Going forward, companies can issue NFTs to their customers and fans who contribute to co-creating products and influencing communities; engage with the society at large to raise money for charities and influence policies. It is a new line of thinking!