NFT’s are a topic on the tip of every marketeer’s tongue, but the question is, what is the value of an NFT when buying or selling?
A non-fungible token is a bitcoin-like digital token that acts like a certificate of ownership that live on a blockchain. They appear as an image, artwork or any other JPEG file but have been bought for as much as £100 million, one example being the Bored Ape Yacht Club NFT owned by celebs including Eminem and Justin Bieber.
So why are people investing so much money in NFT’s and what are the benefits of owning one?
Essentially, the value of an NFT is within the ‘utilities’ it unlocks for the owner – think about it like a membership to a club, everyone that owns one will have unique benefits and the value of those can increase in value over time. For example, Nike may offer first access to new drops and tickets to one off basketball games to their NFT owners. This is where things can get interesting..
The possibilities are vast and brands can apply the utility principle in a number of ways. Some of the most important things to consider when buying or selling an NFT include:
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Increasing the benefits as time goes on to create incremental value of the NFT
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Ensuring your NFT is limited and exclusive to create demand
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Offering the buyer more value than the initial cost of purchase
NFT’s can also be a great long-term investment. The original creator / seller can build a percentage ownership of every transaction into a ‘smart contract’ which will earn them around 10% of the sale price every time it changes hand. If these increase in value and trade frequently it can have huge revenue potential for the original creator.
To summarise, the value of an NFT to a buyer can be vastly differant dependant on the brand and advantages it unlocks, but essentially it will act as a key to a door with exclusive benefits for the owner. As for the NFT creator, it can be an effective way to build a community of customers that are highly engaged with your product or service – great for customer reward schemes and retention.
It’s still very much a constantly changing and evolving world, so our advice would be not to follow the crowd and rush into your first NFT project. Only create an NFT if you have a genuine function for it, a loyal enough customer base and you understand the challenges surrounding the project or have the help of an agency who knows their stuff!
Brandforme