So what is an NFT? While it is an encrypted set of data that generates a private cryptographic key that is not mutually interchangeable, we think it’s easier to look at it like this: a piece of data which verifies something as authentic – a photo, video or other digital file or piece of content. NFTs are created for image files in various formats including jpeg or gif, etc., but they are also attached to Tweets (Jack Dorsey sold his first Tweet as an NFT), music files, or video files. The NFT is not the content itself, but rather a way to verify content as genuine and create a record of ownership. Offline, this could be analogous to a certificate of authenticity for an autographed Babe Ruth baseball, a letter of provenance for an Andy Warhol lithograph, or a serial number to a Louis Vuitton handbag.
NFTs tend to be built on Ethereum, with smart contracts, and are standardized. If you’re selling an NFT, you can prove you’re the creator, determine the amount of digital files to be sold or distributed, get paid for the sale, or sell it on any platform. If you own an NFT, you can prove ownership, avoid it being manipulated by anyone, sell it, or hold it in your digital wallet. Once a transaction occurs, it is distributed through the blockchain network. Others with access to the network can see who owns the NFT asset, but are unable to access the asset itself without the unique code (the private cryoptographic key) that the owner has.
A. The Brand’s Use Case For NFTs
Brands, celebrities, and artists are actively participating in the NFT market with some hoping it can be a brand building move, provide an outlet for doing good and even drive profits. Some of the key areas that we are already seeing brands use or contemplate using NFTs include:
Brand or Celeb-Themed Artwork, Memorabilia or Other Assets. One way to create buzz for a brand (and raise money) is to create or sell unique brand-themed assets. Taco Bell created five different taco-themed animated NFTs and released five editions of each in early March. The NFTs sold out in minutes selling for as much as 1.5 wrapped either (WETH) or approximately $2,600 USD (at the time of sale). Procter and Gamble introduced a non-fungible toilet paper – NFTP! Luxury watch brand Jacob & Co. is auctioning off a one-of-a-kind NFT watch, with the highest bidder receiving a certificate of ownership, a case with a hard drive containing the NFT and a digital rendering of a Jacob & Co. watch. Designer Andres Reisinger sold ten pieces of NFT furniture which can be used in any 3D space or virtual world. Finally, the NBA partnered with Dapper Labs to develop a platform to sell NFT memorabilia. A LeBron James highlight recently sold for $200,000 USD!
Charitable Giving. Brands are already using the NFT market to promote good causes. The profits for the Taco Bell NFTs mentioned above will be donated to the Taco Bell Foundation. The P&G toilet paper NFT proceeds went to the charity Direct Relief. Patrick Mahome’s Museum of Mahomes is auctioning off six pieces of one-of a–kind NFT artwork (some with physical memorabilia as well) with proceeds going to the Boys and Girls Club.
Brand Collaborations. Limited edition brand collaborations are nothing new to the marketing world, but NFTs open an entirely new world of possibilities. The artist known as Fewocious partnered with the sneaker brand RTFKT Studios to create virtual editions of Fewocious x RTFKT shoes which sold for $3.1 million in total. Each purchase also came with a physical pair of shoes.
Promotions. The possibility for NFTs and promotional games are endless. For instance, a brand could embed an NFT in every product it sells with some of them being a surprise and delight NFT, such as entry into a virtual concert or fashion show. Brands are also exploring awarding NFTs as prizes in sweepstakes or other prize promotions. Professional sports teams are looking at developing NFTs for their season ticket holders.
Virtual Experiences. The opportunity to use NFTs for virtual experiences is also endless. Post Malone partnered with a social money platform to sell NFTs to play beer pong with him in Malone’s Celebrity World Pong League. Microsoft launched a game celebrating women in science which rewards players with NFTs which unlock secret games in Minecraft. Artists are releasing NFT clips of music and events. Finally, a Canadian individual spent 288 Ether (over $450,000 USD as of this week’s prices) on a virtual real estate property dubbed the “Mars House.”