Understanding NFTs for Your Business

Have you heard talk about NFTs and are wondering what they are? What about the blockchain or cryptocurrency?

Keeping up with the latest developments in technology can be daunting when you’re trying to run and grow your business. Being aware of what’s new and that could impact your company - or your social media marketing efforts - is smart business.

Before exploring the latest "cool trend," remember your business goals and objectives and the audience you are trying to reach. Not all high-tech platforms and tools - like augmented reality, virtual reality, and virtual worlds - are suitable for all businesses or all customers.

What Are NFTs?

NFT stands for Non-Fungible Token. "Fungible" is defined as something that can be replaced or is interchangeable. "Non-fungible" means that something is unique and can’t be replaced by something else, no matter how similar. A token is defined as "a visible or tangible representation of a fact, quality, feeling, etc." Therefore, an NFT is a visible or tangible representation of something - in this case a digital representation of something - that is unique and cannot be replaced.

Here’s the tricky part about NFTs: they are digital, and any digital file can usually be copied or replicated in some way, whether by downloading it, duplicating it, scanning it, or taking a digital photo of it. What prevents an NFT - a digital file - from being copied?

NFTs, the Blockchain, and Cryptocurrency

NFTs are "minted" or placed on the blockchain. "Minting NFTs" is a method of publishing a digital token so it can be purchased, gifted, or otherwise obtained by others. The blockchain is a complex system that tracks and securely stores digital data in a distributed, decentralized manner. Translation: No single company in the world controls this digital data.

Think of how the Internet works and how the idea of the Internet was complicated and foreign to most people when it first became accessible to the public. The Internet consists of many computers or servers around the world that let people’s digital data bounce around from system to system to get to its destination or to provide access to a destination, like a website.

The blockchain works as a complex system of computer networks that store data, including digital currency known as cryptocurrency. Cryptocurrency - like Bitcoin, Ethereum, Dogecoin, and Tezos - is a digital currency that is verified and tracked via the blockchain. That means that the digital records for cryptocurrency are not maintained by any centralized authority, such as a bank.

How Can Your Business Use Cryptocurrency and NFTs?

To determine if you should incorporate NFTs into your marketing and social media marketing tactics, ask yourself these questions:

• Does your audience appreciate and respond to cutting-edge technology?
• Does your audience already know about - or are curious about - NFTs?
• Are there products or services that you or your company provide to customers where providing an exclusive token might be useful?
• Do you or your company regularly produce unique digital files including photography, graphics, animation, video, or audio?

If you answered yes to the above, you may be ready to try minting NFTs. To do so, you still need to go through a number of steps to set your company up to be able to mint and perform transactions using NFTs and cryptocurrency. Without going into too much detail here, these might be the next technical steps you’d take:

1. Determine which cryptocurrency you’d like to work with predominantly.
2. Set up an account with a cryptocurrency exchange platform, like Coinbase, and link it to your regular bank account.
3. Set up a cryptocurrency wallet to manage your transactions in your cryptocurrency of choice, like Temple Wallet to manage Tezos.
4. Set up an account on a platform where you can mint NFTs and make them available on the blockchain, like Open Sea for Ethereum or Objkt for Tezos. These platforms are typically specific to a single cryptocurrency.
5. Create your digital tokens and mint them through the minting platform of your choice where you can then put them up for sale. You can also make NFTs available for free.

Once your NFTs are on the blockchain, they can be bought, sold, exchanged, and otherwise transacted. No matter where they go on the blockchain, and no matter who owns it, you will always be listed as the originator and could even receive royalties in perpetuity each time your NFT is resold. How does that happen?

Any NFT on the blockchain is forever trackable and traceable back to its origin and its original creator. If you are creating digital art or non-digital art that you digitize, minting those files as NFTs offers you the ability to track where it goes once someone purchases or obtains it from you, even if they gift or resell it or it continues to be resold for years to come.

How Can a Business Use NFTs?

Many companies are already exploring NFTs in a variety of ways. Here are some examples that might spark some ideas for your own business:

• The NFL used NFTs as a way to commemorate the 2022 Super Bowl. They gave every fan who attended the game a customized NFT Super Bowl "ticket" that listed their section, row, and seat. Think of these NFTs as highly collectible digital items that could increase in value over the years - like collectible cards.
• The music concert festival, Coachella, set up an NFT marketplace, partnering with a cryptocurrency exchange called FTX. Attendees could purchase NFTs that gave them exclusive access to galleries of festival photos, access to a VIP area, and lifetime passes to the festival.
• Kia, the car manufacturer, turned an image of a robotic dog that appears in one of their commercials - Robo Dog - into an NFT, selling it on the blockchain to raise money for The Petfinder Foundation. They sell it on their website as a collectible.
• Bud Light featured an element of a popular NFT art series called "Noun" in its Bud Light Next commercial. The element is a pair of 8-bit art glasses that appear on Noun NFTs.

Here’s a breakdown of some of the most basic ways NFTs can be integrated into your digital and social media marketing:

1. Promote and Sell Art. If you already create digital art including photography, graphics, music, animation, and video, mint it and make it available on the blockchain for a new revenue stream and another way to market your art.
2. Digitize Existing Art. Consider digitizing what you create or offer offline and then making those digital files into NFTs. This could be anything from digital versions of flower arrangements if you’re a trendy florist or digital versions of fashion designs.
3. Hold an NFT Art Contest. If you already run contests as promotions for your company, holding an NFT art contest might make sense. You could collaborate with a cryptocurrency exchange or NFT community known as a DAO which stands for a Decentralized Autonomous Organization. Through this collaboration, you would be able to expand your brand’s reach while also benefiting the DAO to help them attract more users or members.
4. Create an Exclusive Collectible with Perks. Mint NFTs and give them away for a limited time to create an exclusive "calling card" for your customers. Attach perks and benefits to anyone holding one of your NFTs such as providing them VIP access to special events or discounts when purchasing your products or services.
5. Add NFT Images to Products or Packaging. Feature NFT art on products you produce or work it into your marketing visuals. Note that if you are looking to display images of existing NFTs created by someone else, you should follow standard copyright laws and never use someone else’s creation without express permission, and if requested, compensation.

When you incorporate NFTs into your marketing mix, use social media to announce and promote your NFT initiatives. Link to your NFT gallery or to your website where you can explain the promotion and how customers can engage with you and obtain your NFTs. Adding an NFT visual element to a social media marketing or advertising campaign could appeal to, and attract, a tech-savvy customer.

As with any new technology, don’t spend a lot of time and resources on trying the "next big thing" until you’ve done careful research and considered the pros and cons of adopting something cutting-edge and speculative. But if you’re ready to experiment and be creative, NFTs might be worth exploring.