Lots of people are wondering what a NFT is. Well, it is a non-fungible token. That sounds as clear as mud, right? Is it a sponge made of fudge?
I know that sounds silly, but it's what I think about when I hear the term “non-fungible token”. Of course, NFTs have nothing to do with candy or cleaning implements. They are a new way for creators and brands to monetize their digital assets.
How they work
Let's dive into the murky NFT waters to find out. Basically, non-fungible tokens are unique identifiers attached to a digital piece of content. They provide verified proof of ownership for, say, a video, a GIF, an image, or a tweet. They are bought and sold online, usually with cryptocurrency and often encoded with the same underlying software as many cryptos. But unlike crypto, NFTs have a digital signature that makes it impossible for them to be exchanged for or equal to one another (thus, non-fungible).
The term non-fungible itself means unchangeable. So no matter how many times an item is sold, it retains the original ID. So “fungible” means you cannot take one and replace it with another—that would be two different items. For example, if I gave you $5 and you paid me back with that same $5 bill, we would be even—it's fungible. But if I gave you $5 and you gave me back a British Pound, we are not even because they do not have similar value.
The process begins when a content creator creates or mints a token associated with a product and then sells the token online.So those 3 steps to creating a NFT are:
- Actually creating it
- The minting (transforming the file to a 1-of-1 NFT of it)
- Selling it
Purchasing NFTs is like bidding on any type of online auction. TechRepublic states:
Think of owning an NFT like owning an original van Gogh: Sure, you have the artwork the man himself painted, but there are countless prints of it in other people’s homes. The big difference is that it’s basically impossible to claim ownership of a virtual item that can be copied without error unlimited times, while a physically original van Gogh painting is (with the exception of a skilled forgery) unmistakably the original painting. When you think of it like that, it’s almost as if an NFT is only worth the bragging rights that come with it.
The difference between an NFT and many other assets you may have is that you can't really touch it. You can still experience it, show it off, and prove to people it's yours though. There has been loads of publicity around NFTs:
- Digital artist Beeple received over $69 million for a digital collage sold by Christie's (the auction house).
- Jack Dorsey, CEO of Twitter, sold his first tweet for $2.9 million and donated the money to charity.
- The NBA marketed a combo: virtual and real basketball set.
- Even Charmin released a non-fungible toilet paper.
Personally, the real thing is my preference. But how might NFTs impact your marketing and ads? Consider that they use the technology that can make personalized content, gifts, vouchers, and such to your customers. Additionally, you would not need to use cookies to track your content engagement to measure what is successful.You can use NFTs to give customers another connection to your brand. For example, you could make a unique digital copy of a popular product or take an eye-catching brand icon or event poster and turn it into a digital one of a kind. Just about any digital memento can be offered as a NFT. The key is to demonstrate its cache and value to your customers so they're willing to make an investment. Just remember, NFTs are minted on a blockchain like cryptocurrency, which means their environmental footprint is large and that may turn some customers off.
Will NFTs continue their rise, or are they just a passing digital fancy? One thing is for certain: there is no end to what you might discover on the NFT market. One token came with a secondary prize: a real house the buyer could live in. The viral YouTube video, Charlie Bit My Finger, brought in over $750,000. Even a meta New York Times column on NFT sold for $560,000.
Hmm, perhaps I should offer the next edition of my newsletter as an NFT. On second thought, maybe not.
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