An Introduction To NFTs For Business
From pop culture to art and digital media, there has been a lot of buzz about nonfungible tokens. If you’ve been paying attention to the media over the past six months or so, you’ve probably at least heard of NFTs. But, the key question that every business owner asks is, “How can this help my organization?”
Sell Digital Media
First, what is an NFT? Well, it is a link to a digital asset that is verified on the blockchain. Basically, it includes a built-in certificate of authenticity for any digital file. Files minted on the blockchain are linked back to the owner and to every subsequent transaction creates a chain of custody that is public. So, imagine not just owning a Michael Jordan card, but having its authenticity verified and everyone can see that you got it from Mike Trout
NFT platforms allow for creators to sell directly to the consumer with little of the traditional friction and fees that are associated with traditional mediums. Some NFT platforms take a fee associated with the costs and others allow minting and buying for free.
Most digital products, within size limits, can be minted onto a blockchain using a minting service or even by writing your own smart contract and sold as an NFT. This includes music, books, art, software and photography. With the NFTs and cryptocurrency operating online, it allows artists to build their own community or participate in an existing one. It opens doors for collaboration and connecting with fellow artists.
NFTs can only allow the buyer to purchase a product but also can also include special access to things and experiences. Some NFTs come with unlockable content – this can be a downloadable file or can be a physical product. Digital unlockables can also include access to an online community, like Discord, or can grant the buyer to commission an artist after purchasing a single piece or collecting a number of pieces.
Physical unlockables operate in a similar manner. This can include a physical item, such as a sculpture or a pair of shoes, or it could be an event, like a concert or a conference. Since NFTs operate on a blockchain and can’t be double-spent, you can ensure their authenticity. Some physical unlockables include an experience with a celebrity either in person or digitally.
The blockchain is immutable – it can’t be altered or deleted and every hash has a unique value. That means that every NFT on the blockchain has a certificate of authenticity attached to it. This prevents not only selling the same item twice but also verifies to the buyer that they are getting an authentic product because they can see the transaction history for each item.
That transaction history allows for everyone to see the chain of custody of an NFT – so you can see when an NFT was minted and when it was bought and transferred and to and from whom. This allows for a chain of custody for an item and also allows anyone to see how many of an item has been minted. This means if you want to by an edition of five, you can verify that there are that many and who owns the other four. Also, if the price has changed or been resold, that information is also recorded on the blockchain.
Many NFT platforms allow creators to set the royalty for every time an item is resold. Some platforms also allow for more than one creator to split the proceeds and royalties from a sale. This unlocks so many possibilities for creators to collaborate and publish without fear of having their work stolen.
NFTs also allow for creators to sell an intellectual property and the copyright of their work, if it is written in the description of the NFT. So this can allow buyers to take creative control of the piece and not only sell the item on the secondary market but create a business on derivatives of the piece or merchandise. This, oftentimes, will increase the value of a piece and build upon a community of buyers.
NFTs are here to stay folks. In a few years, most transactions that you make will be an NFT; from your car insurance to your marriage certificate. Even social media will be replaced by NFTs. Today, people are buying and selling NFTs like trading cards but in the future, it will be as seamless as searching for and buying an item on the internet.
NFTs present a cost-effective way for creators and organizations to sell digital products and the market is only expanding and Sparkable is here to help businesses enter or expand their NFT market.