If you run an online business and you haven’t yet come into contact with the NFT marketplace, you soon will. NFT or NFT coin is the latest digital innovation set to take the world by storm, and many believe it will redefine everything about the way we buy and trade online. However, even if we have heard the term thrown about in recent months, most of us are still very much in the dark about what an NFT actually is and how it works. In this blog, we provide a beginner’s guide to this exciting new market.
NFT stands for ‘non-fungible token’ and it is closely related to cryptocurrencies like Bitcoin. An NFT is a digital asset – like a piece of visual artwork, music, or video – that you can buy or sell using cryptocurrency. Just like real-world artworks, the price of an NFT can range anywhere from a single cent to millions of dollars. The most expensive one to date by the artist known as Beeple sold for a jaw-dropping $69.3 million USD.
Why Is an NFT Worth Anything?
But hang on, you might say; if an NFT is just a digital object, say a digital image of a painting, what’s to stop someone from creating a digital copy of that painting for free rather than buying it? The answer is that each NFT has its own, unique identifying code that is built into the file and recorded on a blockchain, essentially an online ledger that records transactions, and that code cannot be changed (‘non-fungible’ meaning it cannot be substituted or interchanged for something of similar appearance). Someone could create a digital copy of the NFT, but it would not have the identifying code that makes it ‘authentic’.
The value of a piece of art in the non-digital world is based on the same basic premise of authenticity. You could probably find a reproduction of a sketch by Picasso or Renoir for next to nothing, and even though it might be a highly accurate representation of the original, the mere fact of its being a reproduction means it is worth very little. Conversely, it is the authenticity of the original that means it is worth millions of dollars. When you buy or create an NFT, you have the code to prove that you are the sole owner of an original piece. The unique code of an NFT is a way of creating digital scarcity and driving up value.
What Kinds of NFTs Are There?
The most famous NFTs to date have tended to be visual artworks, but that’s not the only option. Both Pringles and Pizza Hut have brought out NFT ‘flavours’ of chips and pizza that have sold for thousands of dollars, and NFT sneakers and jewellery can go for tens of thousands. The possibilities are limitless.
What Does All This Mean for My Business?
If you’re a business owner in 2021, NFTs represent a new marketplace to start exploring. The market is still very new and there is plenty of disagreement about its longevity – some feel it will fizzle out in no time while many others are convinced it is the way of the future. If you ask us, the dialogue is sounding very similar to the way people were talking about Bitcoin ten years ago, and the naysayers from back then are keeping pretty quiet these days. What can’t be denied is that the profits to be made right now are very real, and as with any important innovation, those who strike first are likely to be rewarded with the lion’s share of those profits.
How FMD Can Help
The team FMD has been watching the NFT market closely for the last couple of years, and we could not be more excited to see it really coming into its own in 2021. As we’ve mentioned, the market is still very new and the rule book for how to market NFT products is still being written, but we can safely say our team is way ahead of most other digital agencies when it comes to developing winning NFT marketing strategies. To find out more about NFT marketing, get in touch with FMD today.