Finding the Fun in Non-Functional Ecommerce

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Non-fungible tokens, or NFTs, are still a relatively new movement in digital consumerism. However, their impact has already created a long-lasting effect that will transform the e-commerce market in the coming years.

NFTs are individually verified, verifiable and non-exchangeable items. Complete with unique identifier and metadata, they are truly unique objects with only one official owner at a time.

According to Vinod Varma, founder and CEO of creator.co

The NFT market has experienced 10-fold growth in the past two years and market observers expect the momentum to continue.

New revenue stream

With the adoption of NFTs, both brands and influencers can now create unique content that can monetize and empower followers to own a unique collectible.

“NFTs can promote brand equity, create publicity for a product launch or brand event, or be used as a form of customer appreciation and serve as a unique, customized gift or coupon,” Varma told The E-Commerce Times.

As this trend continues, brands will begin to see an entirely new form of revenue emergence from NFTs as goods can now be sold in an all-digital format rather than a physical product.

“Brands and influencers who work together to create innovative content will be able to reap numerous benefits and only strengthen the relationship with each other and their audiences,” he added.

Other than cryptocurrency

NFTs and cryptocurrencies are both based on blockchain which uses similar innovations and standards. Both draw from a similar target market. But they are not the same.

Think of NFTs as a subsidiary of crypto, meaning they can be traded and sold, but with a cryptographic form of money. In their most basic context, NFTs are a unit of data stored on the blockchain in the form of a digital ledger that can be sold and traded, explains Varma.

The main distinction between the two is indicated in the name. Cryptocurrency is a currency, which means that, like other currencies, it is fungible and has only monetary value, he clarified.

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Essentially, this means that with crypto it doesn’t matter which tokens an owner has. It will eventually have the same value as the next, and so on. The value of an NFT stems from its uniqueness and the fact that it cannot equally be replaced by anything else.

Non-fungible tokens are not a type of currency that serves as an equal exchange between all holders. Instead, each NFT is unique to each person who owns it.

What is the difference?

That difference may be missing a distinction for some people. Consider this comparison, Varma suggested. Cryptocurrency, like bitcoin, is fungible. An individual can exchange one bitcoin for another and will still have the same currency.

However, NFTs are a unique transaction that is non-functioning. So if you traded one NFT for another, it would be completely different.

Still can’t find that difference to make a distinction? Perhaps an overview of how NFTs actually work in trades will clear the fog.

How NFTs work

At a very high level, most NFTs exist on the Ethereum blockchain. Other blockchains can also implement Ethereum’s versions of NFTs, but for the most part, Ethereum is where most of them live, according to Varma.

Ethereum is a cryptocurrency but supports NFTs by storing additional data that allows them to operate differently from an ETH coin, he noted. NFTs are individually verified, verifiable and non-exchangeable digital items.

Complete with unique identifier and metadata, they are truly unique objects with only one official owner at a time. This buys, sells and trades them during gameplay, Varma added.

Do you understand the difference now? Let’s dig deeper.

Driving Factors

Brands and influencers are willing to invest in NFTs, even at this early stage, as they help improve user experience, increase brand awareness and increase brand engagement opportunities. Why the adoption has gone so fast has a few reasons to answer.

Brands can use NFTs in mobile ad campaigns, which can be strategically distributed across different digital outlets and generate multiple monetizations, Varma noted.

Its ultimate utility is to give both brands and influencers the ability to create unique content that can be monetized. This, in turn, allows followers to own a unique collectible.

“The NFT market is not just an option for people who understand the internet. NFTs are key to creating a broadly accessible and transformative marketplace for all individual creators. While accessibility is high, awareness and relevance of NFTs is still relatively low for everyday consumers,” Varma said.

One way to ensure widespread adoption is to allow the NFT market to be saturated with content that provides relative value to the market itself.

Following the pandemic and with digital transformation, individuals are now ready to participate in the types of technology that enable instant, easily accessible, peer-to-peer sharing, he said.

So that’s the point of NFTs.

Point taken, but why do we need them?

That answer, Varma suggested, ultimately depends on whether you’re a maker or a consumer.

Follow along to better understand Varma’s reasoning on this point.

For creators, NFTs serve as an option to sell unique work to a market that has never existed before. It also ensures greater exposure and visibility of the associated product than ever before.

“NFTs also have a feature that creators can enable, where they get a percentage every time the NFT is sold or traded, so that if the creator’s design becomes popular, they will reap the benefits as well,” explains Varma.

Consumers want NFTs for a variety of reasons. First and most obvious, by purchasing art, you can financially support artists and create your own designs that you like, while retaining fundamental and unique usage rights.

Plus, you get the fantastic bragging rights of owning your unique NFT. Suppose, however, that consumers want to take the investment route.

“In that case, NFTs can also work like any other art tool. The consumer buys the piece in hopes that its value will continue to rise, and one day it can be traded or sold for a profit,” he said.

wait, there’s more

NFTs are beginning to usher in a new form of social trading that empowers creators, consumers and brands, Varma added. It allows small businesses to use public blockchains to produce digital goods.

This capability can be delivered directly to a crypto wallet. An NFT is a unique digital object that serves as an authentic way for customers to profit from the retail platform.

Here’s how NFTs strengthen brand and influencer relationships, according to Varma, it comes down to opportunity.

“The possibility of what an NFT can be is always growing and has already enabled many creators to develop their own innovative ideas. This creates an opportunity for brands and influencers to collaborate like never before,” he said.

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From videos to virtual homes, music, artwork, online races and digital collectibles, NFTs continue to grow in originality and type. In addition, the number of marketplaces selling NFTs is only increasing, meaning this is all just the beginning, he predicted.

“The most important thing for brands and influencers is that NFTs are not just a recent trend or the latest fad. They are impressive digital entities that only exist in the digital ecosystem, but deliver value in the real world.”

As our culture becomes more and more digital-centric, NFTs will increase as organizations and people use them as investment opportunities for the new virtual environment. While most people still prefer physical assets, NFTs are the way of the future, he added.

Whether it’s a virtual collectible, a music selection, or a digital artwork, NFTs enable brands and influencers alike to collaborate in a unique way to leverage both digital content and intellectual property.