Chances are slim that you have been able to get away this long without hearing the acronym “NFT” being thrown around within the past year. Honestly, they feel impossible to escape as they seem to be lurking in every corner. While there has been endless debates, discussions and opinions shared across the internet lately regarding the role of NFT’s in the modern online landscape - it’s important we first take a step back to define what an NFT is and more importantly why it exists.
The What
NFT stands for Non Fungible Token. Simply put, this means each token is one of a kind and can not be duplicated or replicated. Ok, Great…but what IS it? NFT’s are digital assets that most commonly represent various types of media such as videos, artwork, music and more. They are bought, sold, traded and stored on blockchain thus ensuring both the certification and ownership of any particular NFT is directly, securely and publicly recorded at all times. Most commonly, NFT’s are purchased using cryptocurrency such as Ethereum. So, if you want to have skin in this game you would need to first set up a crypto wallet utilizing a service such as
MetaMask or
Coinbase…this isn’t a “how to” though!
The Why
In 2012 Meni Rosenfeld (President of the Isreali Bitcoin Association) authored a paper titled “
Overview of Colored Coins”. In it he detailed the concept of utilizing a bitcoin's capability of housing an additional layer of data via a metadata container of sorts for purposes beyond the digital purchasing power of the bitcoin itself. Since bitcoins live on the blockchain where all transactions are transparent, the associated layer of data on a given bitcoin could act as a ledger and be used to represent anything from ownership of a physical or digital asset, shares of stock or even a contract that guarantees particular rights to the holder. It was this initial thinking and intention that laid solid groundwork for what we now know as NFT’s. While Colored Coins and bitcoin in general at that time lacked sophistication, especially when compared to the modernized NFT, it’s that same general desire for storing additional data which spurred the evolution of a separate component known as a “Smart Contract”. For marketers, the smart contract is where the true power of NFT’s can be unlocked.
The Minting Process and Smart Contracts
In order for an NFT to officially become an NFT, it must go through what is known as the minting process. This is simply the process by which a digital item is officially placed on blockchain and made available for purchase via cryptocurrency. Parallel to the minting process, an NFT seller would need to generate a Smart Contract as a general form of agreement between themselves and a potential buyer of the NFT. Directly from
Investopedia, “A smart contract is a self-executing contract with the terms of the agreement between buyer and seller being directly written into lines of code.” While this sounds daunting, the reality is most NFT marketplaces such as
OpenSea have the capability of generating a smart contract for the seller during and as a byproduct of the minting process.
Whereas Colored Coins relied solely on storing small amounts of metadata directly on a bitcoin, NFT’s are accompanied by Smart Contracts that are, in part, derived from the metadata assigned to the NFT itself.
Sprinkle NFT’s Into The Marketing Mix
If you’re a marketer interested in adding NFT’s to your marketing mix, the key is to look beyond simply distributing pretty images. While naysayers will continue to pound their fists on the table yelling “I can just screenshot that!”, what they are really announcing is the fact they are unaware of the true utility an NFT can possess via the smart contract. For example, purchasing a
Bored Ape Yacht Club NFT also guarantees you full commercial rights to the artwork (which can then be used to
open a restaurant!), in addition to access to an exclusive Discord Server. College athletes are flocking to mint NFT’s in droves while guaranteeing a variety of “real life” items and experiences as added value to purchasers including everything from signed sneakers and in-person meet & greets, to first dibs on future NFT drops and commemorative physical swag. In 2021, Taco Bell sold a collection of 25 NFT’s where each included a $500 electronic gift card. While 100’s of other use cases can be cited, the takeaway here is the fact there is an unlimited amount of both creativity and utility that can be built into the underlying Smart Contract of an NFT.
While at the time of writing this, there is certainly no way of escaping the “band wagon” vibe of playing in the NFT game, that doesn’t mean you can’t play it smart and intentionally. Think about what your customers, fans, clients and potentials would appreciate. Is it access? Is it your time and attention? Is it an item in the physical world? Is it a service in the digital world? Is it a discount? Is it a future guarantee? Build that offering or opportunity into the sale or giveaway of your drop via the Smart Contract to harness the true value, power and utility of NFT’s and the blockchain at large.