Non-Fungible Tokens: What are NFTs?
By 2021, Non-Fungible Tokens (NFTs) have become hyped outside the crypto world. NFTs are digital certificates of ownership based on blockchain technology. What makes them, among other things, forgery-proof and unique is that they are predestined to be used in digital collectables. In 2021 alone, NFTs worth around $16 million were sold on Opensea, the largest NFT platform. NFTs can still transform the customer experience and customer engagement in 2022, making them important in marketing and communications.
How do they work, and why are they so hyped?
NFT stands for Non-Fungible Token; they are essentially digital property certificates for items such as art, music or videos. Like cryptocurrencies, they are also traded on the blockchain, making them unique and tamper-proof, as every purchase and sale is stored within the blockchain. With an NFT, creators transform virtual goods into unique and tamper-proof collectables via the blockchain - including a digital certificate of authenticity. This gives the works a value that arbitrarily duplicated content cannot have.
More and more companies and artists are using NFTs as a way to reward their customers and fans for their loyalty, which is why NFTs are also becoming increasingly important for marketing and communications in customer experience and retention. In terms of marketing, a move in the crypto direction has several advantages:
1) As first-movers in the NFT space, companies land in the headlines almost daily. Which, of course, brings a far resounding PR impact for the company.
2) The sale of NFTs also creates a virtual community where companies can communicate with their customers. Tokens can also be established as a loyalty program and customers can be contacted about their ownership. Nike, for example, offers NFTs "Nike CryptoKicks", which is predominantly aimed at the collector community of limited edition sneakers. Each sneaker is also given a digital identity in the form of an NFT. On the one hand, the authenticity of the sneakers is verified and a community is created which generates customer loyalty for Nike.
3) In addition, the revenue that NFTs generate cannot be ignored. For example, the NGO WWF Germany has launched an NFT collection with virtuals of endangered species in the respective numbers in which the animals are still present. For this, the WWF collaborated with international artists who created visuals for ten animal species. Since November, the WWF has been auctioning these in its own online store, using Ethereum's environmentally friendly side chain: Polygon. So far, WWF has collected around 200,000€ which in turn will be used for the protection of the animal species.
NFTs conquer the world
US rappers like Snoop Dogg or German rapper Kool Savas have already sold some NFT works. Probably the most expensive work sold by far is a collage by digital artist Beeple, which sold for an incredible $69 million. Even Adidas now offers its customers its limited edition NFT for sale.
More and more companies are drawn to the Metaverse. It creates a whole new way for companies to connect to customers while rewarding fans and also reward them for their loyalty.
Predictions are that by 2022, more and more companies will be expanding their own Metaverse activities, so marketing and communications need to incorporate this new trend of customer experience and loyalty.
For blockchain and crypto communications, PIABO is the place to go. Current customers of the blockchain cosmos include DFINITY, the xx network or financial service providers such as etoro or Vivid. If you have any questions, please feel free to contact our Practice Director Paul Gärtner.