What in the World is a Non-Fungible Token & How to Use NFTs in Your Business
Key Takeaways:
– NFT stands for Non-Fungible Token.
– Non-Fungible Tokens are a modern digital equivalent to collectibles.
– Representing one-of-a-kind work or a certificate of original ownership, every NFT has a unique value.
– Some NFTs are selling for millions of dollars in auctions.
– Your small business may be able to capitalize on the NFT craze, depending on your industry and offerings.
Ah, yes. Another nifty abbreviation for a nebulous digital idea. We needed more of those! Let’s define Non-Fungible Tokens, known as NFTs, and unpack what they really mean for the retail world, including for small business ecommerce brands like yours.
What is an NFT?
NFTs are Non-Fungible Tokens. And I bet we can guess your next question: What are Non-Fungible Tokens? Well, the deep-dive answer is full of more terms that make very little sense to people outside the nitty gritty digital world of cryptography and blockchains, so we’ll give it to you straight:
Non-Fungible Tokens are unique, individually identifiable digital items with distinct respective values.
If you’re old school, think of it as your baseball card collection gone digital. You can’t directly exchange one NFT for another – that would make them fungible – because each one has a unique value based on its rarity, desirability, and other factors.
Fungible assets, on the other hand, can be exchanged one for one, and you end up with the same value. Dollar for dollar, bitcoin for bitcoin, they are interchangeable and fungible because they have the same value.
If we pull back the crypto curtain, you can see examples of non-fungible assets in your everyday life. Fine art, for example, can be copied, but an original van Gogh is one-of-a-kind and thus fetches a higher payout than a reproduction. So, it makes sense that a truly, verifiably unique asset would be seen as valuable due to its scarcity. But how does that work for digital assets?
“Where Bitcoin was hailed as the digital answer to currency, NFTs are now being touted as the digital answer to collectables, but plenty of sceptics fear they’re a bubble waiting to burst.”
BBC News
“Don’t buy it because it’s an NFT,” said Evan Cohen, co-founder of Vincent in a report by CNBC. “Buy it because you like the art or buy it because you think the collectible is cool or the community is cool. You want to participate for the asset, not the underlying technology that powers this.”
Are Non-Fungible Tokens Worth Anything?
We could have a longwinded philosophical discussion about what gives an asset any tangible value, but the truth comes down to this: Non-Fungible Tokens have value because people are willing to put their money where their mouth is to assert that they are valuable.
Though digital files can be duplicated infinitely, a digital certificate of origination and ownership can be created to back the one true original. For some, this is a privilege worth paying for. Digital artwork has been auctioned by Christie’s for $69 million, for instance, even though there is no physical painting or portrait for the purchaser to touch and feel in real life.
As long as people are willing to pay the big bucks for an asset, there is value in creating and selling it. The question that remains is in the longevity of an NFT’s value. Remember when Beanie Babies were touted as a long-term investment you’d be foolish to pass up? While, yes, some rare bears are worth thousands even today, that value doesn’t come from the materials used to craft the plushies; it comes from rarity and desirability in certain circles. Accordingly, you risk purchasing a high-dollar asset that other investors and collectors could lose interest in over time.
How Do NFTs Impact My Small Business?
At this point, you may be thinking “okay cool, but what does this have to do with me and my business?” There may be an opportunity for you in Non-Fungible Tokens. Depending on your industry, ecommerce capability, and audience, you may find that digital versions of the products you create are a hot commodity for collectors.
Whether you’re a nonprofit that offers up an NFT to encourage donations, or you’re an independent creator selling bespoke content with a certification of ownership, your next top product could be of the non-fungible variety.
And the possibilities are broader than you may initially think, especially with virtual clothing and the advent of the Metaverse becoming inescapable realities of the modern digital world.
How Do I Get Involved with Non-Fungible Tokens?
We would love to work with you to figure out what your options are when it comes to creating NFTs for your business. Whether it’s exploring Non-Fungible Tokens, applying augmented reality to your retail store for virtual try-ons, or using AI to anticipate your customer’s needs, we want to help you get ahead with the technology of tomorrow.
Talk to a mentor today to see what advancements await you!
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