What are NFT’s and how are they used?

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Technology has been advancing at a rapid pace over the last few years. One area in particular that has been enjoying rapid expansion is blockchain. 

This doesn’t solely mean cryptocurrencies like Ethereum and Bitcoin. Let’s take a look at non-fungible tokens (NFT’s). There has been huge hype around this relatively new technology and the amount of money being invested in it is eye watering!

In the last year we have seen old memes being sold for nearly $600,000. A piece of digital art in the form of a JPG file went for $69.3 million and was the first digital-only NFT auctioned by Christie’s.

What are NFT’s and how do they work?

You may be thinking, ‘that’s all well and good, but what are NFT’s?’

NFT’s have actually been around for a couple of years now, but have recently become the hot topic of digital technology and the blockchain. 

To get to grips with what they are we must first understand the word ‘fungible’. It isn’t a commonly used term but one you might be familiar with if you are into economics. If something is fungible, it can be exchanged for something of equal or similar value. For example, the Great British Pound can be traded for goods of an equal value or traded for other currencies. 

For something to be non-fungible, it can’t be exchanged for something of equal value. If we look at houses, although they can look identical they are in fact non-fungible because they are in different states of repair, have unique views of the surrounding area and experience different levels of noise and traffic. 

The ‘token’ part of NFT then, is a unit of data stored on a digital ledger, the blockchain. It is therefore a certified digital asset which makes it unique and not interchangeable.  

What sets NFT’s apart from cryptocurrencies, which are fungible, is that they have unique metadata and identification codes to distinguish one from another. Because of this, they cannot be traded at equivalency for another NFT, therefore creating a digital collectable. 

Most NFT’s are part of the Ethereum blockchain. Ethereum is a cryptocurrency but also supports NFT’s by storing extra information that makes them work differently to the ETH coin, Ethereum’s own currency. It is worth noting that other blockchains are capable of implementing their own version of NFT’s. 

Kings of Leon NFT album release

The band, Kings of Leon, released their most recent album, When You See Yourself, in the form of an NFT. They used three types of tokens together to release something that was the first of its kind. The first was a special album package, while the second offered live show perks. The final token features exclusive audio-visual art. 

The NFT album itself was sold for 2 weeks, after which no more tokens were created. With their numbers limited and with each album sold being uniquely identified in the blockchain, they became collectable tokens.  

Kings of Leon are the first band to release an NFT version of an album, something which would have put them in the hearts of their fans and build fan loyalty. 

Weird Whales NFT’s

A 12 year old boy from London made £290,000 during his summer holidays by selling his creation of ‘Weird Whales’, as non-fungible tokens.

Already advanced in coding, Benyamin Ahmed used his skills and knowledge of the blockchain to form a collection of 3,350 pixelated whales. His inspiration came from a meme, fused with one of the most notable and earliest NFT collections, CryptoPunks (featured image).

This story shows how it is possible for anyone to make money with NFT’s. All it takes is one idea to resonate with a group of people and for a collection to be perceived as unique and collectable.

Digital sneakers

A little-known Chinese virtual sneaker brand called RTFKT designed an NFT sneaker to celebrate the Chinese new year and put it up for auction. Incredibly, it sold for a crazy amount of $28,000. Remember, this sneaker can’t even be touched. It isn’t a physical object. 

For a company that is only a couple of months old, it’s an impressive feat. They disrupted the market and made a name for themselves and this was made possible by the buzz and excitement around NFT’s. 

There are ways to leverage NFT’s as a business. Create limited memorabilia around a certain holiday or company milestone. Almost anything can be made into an NFT so it’s a chance for marketers to get creative and work out how to grab attention and build a tribe of followers. 

Football trading cards

Trading cards have been around for decades. Many people would have fond memories of sifting through their Pokémon cards or dreaming of one day owning the card of their most favourite sports star. 

Now in 2021, the novelty is coming back. In particular, the demand for football trading cards is booming. Many companies are building their own platforms for football fans to buy, sell and even compete with their football cards. 

French startup, Sorare, has recently announced it has raised a significant amount of money in a funding round. $680 million to be precise. This values the company at $4.3 billion!

What makes Sorare unique is that it has partnered with 180 football organisations, including some of the biggest clubs in the world. These partnerships create a barrier to entry for other companies in the space. 

Future of NFT’s

What does the future look like for NFT’s? They are still relatively new and their practical use is limited, however people love them and are willing to spend vast amounts of money on them. Their perceived value is rocketing and this suggests there is longevity here. 

As the technology develops and more people jump on the bandwagon then the landscape could start to shift. Businesses will identify NFT’s as a more efficient way to operate. The blockchain can serve as a digital ledger that doesn’t necessarily need a centralised system to run. Business transactions will certainly be quicker too. NFT’s can also include smart contracts, coded elements that automate a self-enforcing set of rules that cannot be skipped or ignored. 

Conclusion

NFT technology is here to stay, how it will be used is the question.

Currently, NFT’s are a brilliant way of creating memorable experiences and to help businesses connect with their audience. From a marketing perspective, they can be used in countless different ways to promote a brand, a product, and tap into a new niche or audience. 

They are now a proven concept but are still polarising in the sense that they are being labelled as a fad. Social media was once viewed as a fad and many believed it would not last. Social media is now ingrained into our daily lives and used for so much more than just interacting with people over the internet.

The bottom line is, NFT technology is here to stay and will undoubtedly become a part of our digital lives. 

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