A non-fungible token is a unique and non-interchangeable unit of data stored on a digital ledger or blockchain. NFTs can be associated with easily reproducible, digital items such as images and videos – but can also be linked to physical goods. NFTs use blockchain technology to give the item public proof of ownership.
The item itself is not the NFT. The NFT is a token on the blockchain that works like a one-of-a-kind certificate of authenticity.
What is the blockchain and why does it matter to me?
The blockchain is a public record or ledger that is copied across many computers across the globe. This decentralization feature makes the blockchain incredibly secure because there is no single point of failure.
You may have heard of some of these blockchains –Ethereum, Solana, and even Bitcoin will soon support NFTs.
This is important for owners of any unique item because we now have a neutral, public, and tamper-proof system for confirming rightful ownership and origin.
But there’s so much more.
Let’s take a quick trip back to the early ’90s. Think about what the internet was like at that point and try to imagine something like Amazon or modern social media. That’s where we are with this technological revolution, also known as Web3. The possibilities are endless, and adoption is happening fast. There will be an incredible amount of innovation being built on this technology, but there are already some amazing uses that brands need to take advantage of now.
The provenance of an item is no longer disputable. Real-world objects linked to NFTs offer a way to track the lifecycle and journey of the item and verify its authenticity. Louis Vuitton is experimenting with NFTs to solve this problem, along with other brands within the LVMH conglomerate and diamond specialist De Beers.
Experiences and Rewards
Special offers can be “airdropped” into NFTs at will. Brands can invite certain clients to events through their NFTs or offer perks. This gives another layer of value to the NFT and the item that the NFT represents.
People are living more and more in very specific online communities. Issuing NFTs are a way to grow and nurture a brand’s community. NFTs make fans culturally and economically invested in a brand. Your success is aligned with their success.
What does this look like in the real world?
A guitar brand can create an NFT that is associated with each guitar. The guitar maker “airdrops” special offers to the NFT over time. When that guitar is sold on the secondhand market, the buyer can see that the seller is the rightful owner and that the guitar is authentic. When the seller transfers the NFT to the buyer, a small fee can be processed automatically and sent back to the manufacturer.
All interfacing with the NFT is done through the guitar company’s website. NFT owners would create a login to access and trade their NFTs on the website, but the website would be interfacing with the blockchain in the background. This gives all the security of the blockchain but makes the user experience simple.
Why should brands care now?
We are currently at one of those very rare moments in time when a big change happens all at once. We believe that, just like the early days of the internet, there is a once-in-a-lifetime opportunity for early adopters to take advantage now.
Our mission at Sasco Digital Assets is to deliver the technical expertise and hands-on development to partner with our clients, invest in their success, and make sure that they are winners in Web3.
Why are NFTs better than rewards programs?
Blockchains are built for permanence. An NFT represents ownership that cannot be externally altered in any way. As a consumer, I want to know that, like the product I buy from you, the NFT is owned by me. Furthermore, we are just seeing the tip of the iceberg now. New technologies are being developed every day that are creating new uses for NFTs.
What the heck does fungible mean?
Fungible items are mutually interchangeable – like dollar bills. NFTs are non-fungible. This means that an NFT is completely unique.
How can this be scalable?
For NFT projects that need to reach people on every level of tech literacy, we recommend building a portal on your website. Our developers will work with your team to create this integration. The user experience will be the same as creating any login profile, but the backend will be interfacing with the blockchain.
What is the easiest way for a brand to try this?
Do a limited run on a specific product. We can put together a low friction trial that gets your NFTs out there, creates buzz, and does not require much development. The NFTs can be sold on your website or auctioned on some of the popular sites like OpenSea.
What are the risks?
Being an early adopter of any technology always comes with some risk – but it also comes with amazing rewards. Brands that try to capitalize on the NFT buzz without delivering real value to their customers will be called out for it. Brands that have strong communities of customers, and who put those communities first – will be extremely successful.
Are there security risks?
Definitely, but these are risks that can be mitigated with the right partner. The blockchain is completely secure, but like we see every day, companies are vulnerable to malware and other attacks. Security is a pillar for our client’s success, and our leadership and development team put it at the highest level of importance.