If you have been following the news on markets and technology, you have surely noticed the 2021 emergence of a new buzzword – NFT. However, do you know the full meaning behind it?
What Is an NFT?
To begin with, NFT is the acronym for a non-fungible token. Although nowadays NFTs are most commonly thought about in relation to the boom of cryptocurrency and the blockchain, the term dates back to 2014, way before crypto was a thing. On May 3rd of the same year, digital artist Kevin McCoy created the world’s first NFT called “Quantum.” It represents a mesmerizing octagon, where fluorescent shapes of various sorts pulse together to form a beautiful image. At present, the value of “Quantum” hits the $7 million mark.
While NFTs are oftentimes connected to digital artwork, it is important to know that they have many other valuable applications. In fact, non-fungible tokens offer abundant possibilities and can be used to state ownership on any unique asset. For instance, NFTs are currently being used for club memberships, event admission, software licensing, etc.
That said, sometimes the booming NFT market can be quite confusing. Therefore, in the blog post below, we will take a closer look at the NFTs that offer real intrinsic value to assist you in your future buyer and investment decisions.
NFTs Connected to Physical Products
The beauty of NFTs lies in the fact that they are unique, traceable, and verifiable. This makes them ideal for purchasing physical goods. Some market leaders, such as Nike, have been quick to adopt this advantage. The sports goods company has made a revolutionary move by filing a patent for “CryptoKicks.” The latter will allow Nike to attach a digital asset to each pair of the brand’s shoes. Thus, owners of Nike shoes will now be able to resell them by transferring both the physical product and the digital asset to the buyer. This ensures a tamper-proof way to exchange goods.
Another example is Hennessy’s recent NFT release to establish digital and physical ownership on the first and last bottles of the Hennessy 8 limited collection. Each NFT is worth $226,450 and includes a digital representation of the bottle as well as the physical set that includes several additional goodies like a commemorative sculpture, an engraved Baccarat-blown carafe, and a few other items.
Another way in which NFTs benefit the transfer of physical products is through authentication, as they allow the product’s origin to be traced. This is extremely helpful when you buy luxury items like diamonds, expensive watches, and so on. Also, let us not forget that NFTs work in favor of price transparency, ensuring you get fair value for your investment. This is especially beneficial in the case where you buy from intermediaries who are likely to charge high commissions.
The Use of NFTs in Art and Collectables
Many collectors worldwide have been shrewd enough to adopt NFTs from the very beginning and for a good reason. Non-fungible tokens that govern the digital representation of valuable physical assets are ideal for those who are into collecting art, antiques, artifacts, and other objects of high aesthetical worth. The reason is that they offer a lot of added value in terms of security and identification.
What is more, NFTs provide access to collectibles located all over the world, including items that might otherwise be difficult to find. Let us not forget that they also offer a practical solution to an often underrated but frequently encountered problem collectors face – the lack of storage space. Buying the 3D model of a collectible allows you to own the object without the need to worry about the physical space it occupies.
Last but not least, crypto assets offer added-value opportunities not only to collectors but to artists as well. NFTs give creators the chance to reach a global audience and increase their income. In the physical world, artists usually sell their work through intermediaries, such as auction houses, galleries, and the like, which charge commission fees. In contrast, offering artwork in digital assets allows creators to keep almost the entire amount for which it is sold. Moreover, NFTs provide the opportunity for earning a passive income each time a piece of art is sold, as artists can program royalties into the token.
NFTs for Memberships
NFTs hold the power to create an entirely new membership economy by redefining the relationship between organizations and customers in a way that turns the latter from clients into investors. This is possible thanks to the fact that they can be leased or potentially resold for a higher price.
This might seem like an intriguing enough opportunity by itself, yet there is certainly much more to Membership NFTs. They represent a wonderful opportunity to increase loyalty, drive community engagement, and shift the dynamics of the business-client interaction to a place where customers play a truly active part in it. Besides, NFTs are a great marketing tool to create vibrant, self-sustainable communities, where member commitment is the driving force to progress.
What are some examples of NFTs for clubs and memberships?
Quite a few businesses have already adopted the NFT model for building active, engaged communities of clients-turned-investors. Possibly one of the most popular examples is New York’s first NFT restaurant, the Flyfish Club. The place is scheduled to open doors in 2023, and buyers will use cryptocurrency to pay for a membership, which is an NFT itself. The latter can be used as a regular monthly membership or can be leased or sold, depending on individual preference.
Another exciting initiative comes from one of the USA’s most popular events. The Coachella Valley Music and Arts Festival has also recently launched an NFT marketplace. Buyers who purchase the so-called “Coachella Keys Collection,” a set of 10 NFTs, will receive a lifetime pass to the festival as well as multiple perks for the event’s coming 2022 edition.
Individual artists have also embraced membership NFTs. Famous DJ Steve Aoki recently announced an NFT project: the A0K1VERSE. It represents a dynamic metaverse to host various communities of NFT collectors. Members will have privileged access to exclusive concerts, other events, and merchandise.
DAO Governance to NFTs for Big Ownership Projects
Blockchain has facilitated the rise of many thrilling concepts, one of which is DAO, or Decentralized Autonomous Organization. DAOs are becoming increasingly popular because of their decentralized nature. Being blockchain entities, DAOs are in essence organizations run by non-hierarchical groups of people, who create and follow their own rules through blockchain-recorded transactions. The need for a central authority is fully removed because the blockchain records cannot be tampered with.
Thus, DAOs represent flexible, easily adaptable, and viable communities of people who can work together towards a common goal without the need for formalized leadership. These are very intriguing examples of organizations, where everyone is responsible for their own actions and requires no supervision.
DAO governance of NFTs has many benefits, but possibly one of the most important perks of such organizations is that they provide easier access to investing in blue-chip projects. For example, massive real estate ventures require significant capital, which few people can afford if they follow the traditional investment model. In contrast, DAOs allow groups of people that might possess limited budgets to own together a high-value NFT.
Some of the most visible DAOs at present include BitDAO, a group investing in various DeFi projects through a treasury of more than $2.5 billion, the members-only social club for crypto FriendsWithBenefitsDAO, legal engineers LexDao, and more.
Final Words
As you can see, NFTs have many forms of use and possess genuine disruptive power. Although they are still far from mainstream, non-fungible tokens are becoming increasingly popular among various groups including businesses, investors, collectors, and regular buyers. In case you are considering the purchase of NFTs, always research the available options and try to make informed choices.