What is an NFT?
Recently added to Collins Dictionary, the term NFT is almost unavoidable across social media and the wider tech sphere. Thought of as a digital trading card, what is an NFT and how can your business use an NFT?
What Does NFT Stand For?
NFT stands for non-fungible token. Non-fungible essentially means that it is unique, while token refers to the unit of data that is represented. Based on the digital ledger that is blockchain, an NFT can be purchased and owned. As there is only one of each kind, some carry high price tags. An NFT can also be traded for something else. An NFT is different to cryptocurrency as each unit of cryptocurrency is the same as every other (Elon Musk's bitcoin is the same as Grimes's bitcoin, for instance). Each unit of data that becomes an NFT is unrepeatable - which explains why some are selling for such huge sums. Like fingerprints or snowflakes, they are one of a kind.
How Do I Own an NFT?
Essentially, when you purchase an NFT, you are purchasing the data that represents something as an NFT in a digital form of ownership of the data. For some it may be an image, video, or even some web code. Using the blockchain, this ownership is immutable and extremely secure. So, once purchased, it cannot be taken away.
NFTs are mainly used for the purchase and sale of digital art. One of the earliest forms of NFT was Cryptokitties. Cryptokitties are digital cat images - each one is unique - that can be bought and owned. They can be traded and bred with one another to create other unique digital cats. As NFTs gained popularity, this has evolved to allow people to collect fine art, other people's tweets, autographs, or any kind of imagery.
Can People Steal My NFTs?
Well, technically, there's nothing stopping someone saving or screenshotting the image of an NFT. But what can't be taken is the proof of ownership which has been recorded in the immutable digital ledger of Ethereum's blockchain. People can steal your NFT images but they can't replace you as the owner. The blockchain technology means that the ownership of an NFT can be tracked on the ledger, so even if it happens into the wrong hands, there is watertight evidence of who it belongs to.
How is an NFT Related to Ethereum?
An NFT uses the Ethereum blockchain. Ethereum is a cryptocurrency like Bitcoin, Dogecoin, or Ripple, but one that is cited as being more secure. The Ethereum blockchain is used to sign contracts and in supply chains - EY used Ethereum to help Bofrost Italia track their frozen food shipments. Ethereum benefits from having tamper-proof systems in place alongside its decentralised payment network.
Is the NFT Craze Over?
Each trend has a life cycle. NFTs were originally a niche form of collecting for those who understood cryptography and the use of the blockchain. Given their media popularity, they have already entered (and are arguably nearing the end of) the phase of mass consumption. Soon, NFTs could fade away just as quickly as they took over social media.
How Can My Business Use an NFT?
If NFTs were thought of as limited edition merchandise or trading cards, then businesses could benefit from them. Take a brand, for instance. Turning a motif from the brand into a series of NFTs could give customers and loyal fans something to buy, could show the brand was engaging with trends and embracing modernity, and given their popularity, could provide someone a great gift. William Shatner is selling NFTs, so there is no reason you shouldn't consider it.
Twitter's Jack Dorsey sold his first ever tweet as an NFT and brought in $2.9 million. The tweet? "Just setting up my twttr."
The new owner hopes that this will appreciate in value - just like fine art does.
Nike is looking at using NFTs in the same way that the Ethereum blockchain was used in the supply chain - to add a level of verification. A patent for CryptoKicks shows that they plan to connect digital NFTs to a physical product to give a level of authenticity. Think of the serial number on a note of money or hologram on a sports team's merchandise. In the future, NFTs could be connected to products as a mark of luxury or to give a sense of trust, especially in an industry where forgery is rife.
Could an NFT Be a Good PR Move?
If nothing else, getting involved with NFTs as a brand could net some press coverage, especially if the brand is one that would never normally go near such modern technology. Launching a limited run of NFTs to an audience who would likely understand how they work and why they are important could be a great move and a chance to dabble with something that represents the forefront of technology.
However, NFTs have their detractors, those who look to use them for nefarious deeds, and a reputation. Some brands can get away with it, while others may erode support from their core market. So, think carefully before embarking on an NFT campaign. There's no reason you can't have fun with the ideas of NFTs though, especially for a web-only campaign.