Everything to Know About NFTs, in a Monk’s Opinion
Everything to Know About NFTs, in a Monk’s Opinion
Technology moves fast, and often the most cutting-edge developments can feel challenging to wrap one’s head around. That’s why we’ve launched a new live webinar series, IMO (short for “In a Monk’s Opinion”) where subject matter experts and client partners explore the hottest trends in digital marketing through an accessible discussion. In addition to covering the latest trends in virtualization, panelists also explore the tactics you can use today to make the most of them.
Hosted by Director of Content Marketing Adam Remson, the first episode of the monthly series is a special “Ask Me Anything” edition focused on NFTs featuring Jam3 Strategy Director Rachel Noonan, Lead Creative Strategist Michael Litman and Strategy Director, FLUX Dan Lewis.
As one of the biggest trends in marketing last year, NFTs have gotten a lot of attention from marketing teams and have become an accessible entry into the metaverse. But the tech behind them can add a bit of an esoteric mystique. An NFT is a token showing ownership of a digital asset. Because they can be proven unique, they can be assigned value (and accrue more before being traded or sold). This has led to incredible interest in the space, including from people willing to pay top dollar to dress their avatars in designer sneakers, purchase unique digital artworks or even land in the metaverse. Watch the episode of IMO to see how NFTs are being used in a marketing context already:
Throughout the live webinar, our audience flooded our inbox with questions about the technology and how to use it effectively—more than we could cover in a single webinar. Here, we’re surfacing up marketers’ most urgent questions about NFTs, ranging from their fundamentals, safety and security concerns, costs involved and use cases.
What does it mean to own an NFT?
If you are considering creating your own NFTs, first think of them as a “certificate of ownership” and not as a copyright. It is like verifying a painting you own as an original piece. You own it and can now price it to sell based on its value in the art market. This however does not prevent people from printing out images of your artwork from the internet, framing it and hanging it on their walls.
Rebecca Minkoff’s NFT collection, unveiled at New York Fashion Week, comprises a mixture of unique items and limited editions, released on OpenSea and The Dematerialised.
How do NFTs have value?
The value in physical objects is clear: they’re tangible and unique goods that tend to grow in value as they become scarce over time. Digital assets meanwhile run the risk of being duplicated. Still, NFTs are widely understood to have tangible value; because each digital asset is unique or limited in quantity, NFTs have the potential to benefit from the same sense of scarcity that applies to physical goods. In minting your own NFT, you are in control of how many are produced (ie, the scarcity of the asset) or a specific window of time in which they are available to buyers.
Are there any moves being made to increase the accessibility of NFTs?
NFTs are a nascent technology. That, paired with “gas” fees (essentially a transaction fee that changes throughout the day based on network traffic) can make minting NFTs an expensive and confusing affair. But many are already making the creation or purchase of NFTs simpler for the average user. Platforms have already emerged allowing the purchase of NFTs via credit card, for instance, cutting out the need to purchase cryptocurrency altogether. But for now, the sense of exclusivity may work for some—the fashion and luxury industries, priding themselves for being at the cusp of artistry and craft, have adopted the technology well.
Should I be concerned about security?
Blockchains are decentralized, relying on a network of servers that confirm and validate transactions along a digital ledger. This means the record of ownership of an NFT or cryptocurrency isn’t contained on a single server, making them tamper-proof and more secure by design. Therefore, even if the server where the NFT is hosted is taken down, the NFT is not lost due to the decentralized nature of the mechanism that verifies the authenticity of NFTs. Still, NFTs are not 100% safe. They can be stolen from their owners’ crypto wallets through phishing schemes, and marketplaces that mint or exchange them can be hacked. NFT thefts occur when an owner is tricked into opening up their digital wallets and transferring the ownership of their NFT property.
How much does it cost to create NFTs?
When it comes to the cost of minting one, look at a minimum of $70, with costs fluctuating based on gas fees (which can drive costs to over $100) and the volatility of the cryptocurrency used to pay. There is also a commision fee levied by the host server of the initial sale of the NFT that a seller bears, which ranges between 3% and 15%.
How can marketers utilize NFTs?
NFTs may not be right for every single brand or every single industry. A brand needs to understand what it wants to achieve with an NFT activation, and an NFT should be part of a longer-term roadmap where it can provide unique benefits and virtualized experiences for people that wouldn’t be experienced anywhere else.
One of the best examples in use case for NFTs can be seen in events and entertainment. For example, NFT concert tickets can open up a world of opportunities and ways for artists to connect with their audience. The NFT not only acts like a music pass but is also a collectible and a tradable asset. It can be a tactical enablement tool for marketers in which users can unlock exclusive experiences like early-access to sale tickets of the next concert, special meetups with the artists, and cross-promotions with other brands. Concert tickets are the one of the most obvious places right now, especially when there’s fandom or a community that hinges on it. Used this way, artists and creators benefit because they can bypass intermediaries to connect directly with their audience.
An unreleased scene gifted as an NFT was given to the quickest code-cracker as part of our immersive web experience for Netflix's Army of the Dead film.
How might NFT ownership translate to physical goods and experiences?
Sometimes an NFT isn’t tied just to the ownership of a digital good but confirms the ownership of a physical good as well. This type of hybrid NFT arises when NFTs expand their scope and utility by bringing the real world on-chain. The Real-World Asset NFT (rNFT) is a way of tokenizing physical property or goods so they can be traded, collateralized, governed and owned using smart contracts on blockchains. Tokenizing products can generate new revenue streams for fashion brands by increasing the penetration of physical products and adding new services such as early access to limited collections, special events, experiences or even unique virtual products and activations. An interesting recent example of virtualization leveraging NFTs is Dolce & Gabbana’s Collezione Genesi, a nine-piece virtual fashion collection released as NFTs. Five of them offered their owner the opportunity to redeem the corresponding physical pieces. This type of utility is exciting in the world of luxury and art, but it’s safe to assume use cases will start to proliferate across many different categories.
