NFTs have experienced an explosion of popularity for various reasons. Most obviously, NFTs draw the eye due to their eye-catching price tags.
NFTs (digitized versions of any static image or video clip) can be sold for exorbitant sums; Twitter CEO Jack Dorsey sold his first tweet as an NFT for $3 Million!
Blockchain Technology
NFTs use blockchain technology to create, trade and manage unique digital assets that cannot be altered or deleted – helping protect digital assets against fraud or theft.
NFTs’ main ethical advantage lies in allowing artists and content creators to regain full ownership over their work, free from control by record labels, publishers, or similar entities that previously dictated who made money off what. Artists or content creators can even program royalties into their NFTs to ensure they receive payment every time it is purchased or sold.
However, NFTs pose certain ethical considerations. One major drawback of these financial instruments is their fluctuating and highly illiquid prices; buyers may pay more in gas fees to complete a transaction than its value is worth. Furthermore, sellers of NFTs may engage in wash trading to artificially increase demand for their assets.
Authenticity
NFTs can be an excellent way to show ownership of digital art and memorabilia, but their true value lies in authenticating other types of digital assets such as software, venues, travel packages and certain documentation types.
NFT ownership can also help form communities. CryptoPunks’ collection of 10,000 pixelated characters has proven immensely popular as an NFT project, creating an active community around it among holders. NFTs can also be used to monetize virtual sports team assets so fans feel closer to their favorite teams or players.
As marketers explore more applications of NFTs, marketers must pay close attention to how this technology is being implemented and whether it is adding or exacerbating existing issues. For instance, using an NFT to buy original artwork might create confusion over its true worth when held by museums; therefore it is imperative that NFT platforms, issuers and intellectual property rights holders find solutions which ensure authentic assets.
Monetization
NFTs hold incredible potential for monetization. Artists and other creators may use NFTs as an additional method to monetize their digital creations through royalties and resale rights, among other income streams.
NFTs can also be a powerful way of creating buzz around an asset or project. For instance, an artist releasing new album music could create NFTs of their album cover to sell to fans and generate excitement around its release as well as build an engaged fan base invested in its success.
Non-Financial Transactions (NFTs) can be created using various technologies and platforms; however, legal professionals should always be consulted prior to creating your NFT to ensure it does not infringe upon any copyright or trademark laws when creating it. Furthermore, when selling it it would be wise to utilize a well-known marketplace so buyers identities can be authenticated as well as prevent any potential fraudulent buyers using stolen credit cards as payment.
Community Building
NFTs have quickly gained acceptance as an innovative community-building technology. Artists such as Beeple, Grimes and Kings of Leon have taken note, taking advantage of its community aspect to sell digital works for real cash or rewards in return.
Yet there remain significant hurdles in making NFTs mainstream, especially given that bear markets have caused $12 billion worth of utility NFTs to vanish from market value. Therefore, building a supportive community around them is of great importance.
Top communities feature an engaged user base who actively interact with them via social media or Discord to share updates, ask questions and offer feedback. Furthermore, these communities usually provide clear roadmaps and goals regularly communicated to their audience. Some of the most successful communities limit availability; giving members a sense of exclusivity and ownership that drives demand; such as Legendary Racers who offer exclusive perks like accessing NFT galleries or VIP events at Formula 1.