Non-fungible-token (NFT), a significant innovation of blockchain technology, is the newest trend in the marketplace. NFTs have expanded from authenticating digital art to creating new business models and engaging customers, demonstrating their immense potential to revolutionize almost every aspect of our lives. In addition to its value as a niche NFT marketing strategy, NFT technology can also change the way companies approach the digital transformation of their businesses. This article will explore how NFTs can accelerate digital transformation, knowing why you should begin to explore and plan to enter a new era of NFTs.
What is a non-fungible token (NFT)?
A non-fungible token (NFT) is a blockchain-based record of unique digital assets such as digital art, text, videos, photos, songs, or lines of code which exist exclusively on the internet. Proof of provenance is stored on a digital ledger, making NFT a unique digital asset that cannot be replicated.
How does NFT work?
NFTs allow exclusive ownership of digital art and provide ownership of digital assets as never before. Unlike physical art, NFTs are easy to store and secure because ownership is verified and guaranteed on the blockchain, making it accessible through a digital ledger. This technology enables people to verify ownership of digital assets without carrying any physical documents, thereby changing how we buy, sell, and handle artwork.
NFTs also offer a way for companies to benefit from a decentralized peer-to-peer (P2P) model, meaning two individuals interact directly with each other without intermediation by a third party. In 2021, over $23 Billion in trading was generated, indicating the opportunities behind this model.
The Game-changer: How to Use NFTs for Accelerating Digital Transformation and Advancing Business Models?
1. Build Decentralized Finance (DeFi) Services
Decentralized finance (DeFi) is an emerging financial technology based on secure distributed ledgers similar to those used by cryptocurrencies. In DeFi, assets are moved with a smart contract and are exchanged via a P2P network that does not rely on intermediaries such as banks.
In the future, NFTs will be an essential part of bridging the digital and physical worlds, and storing them in a crypto asset portfolio will ensure their secure ownership.
2. Create New B2C Digital Engagement models
Due to the limits placed on offline activities by the pandemic, NFT has provided a chance to digitally transform the way they engage customers. Developing new B2C digital engagement models using NFTs and Metaverses provides the biggest opportunity to develop new business models, e.g. legacy auction houses, Christie’s selling blockchain-based artworks, Sotheby’s accepting cryptocurrency for payment, and fashion houses issuing luxury AR wearables NFTs for owners to accessorize the metaverse.
3. Embrace Business Paradigm Shift
With the escalation in online demand, new business models have emerged, including Play-to-Earn (P2E), Experience-to-Earn (E2E), Build-to-Earn (B2E), and Rent-to-Earn (R2E). In Metaverse-powered games that use cross-platform NFTs, such as PUBG and Fortnite, the same armor and weapons can be tokenized by converting in-game purchases into transferable goods. Through interconnection, players can earn in-game or exchange money or other digital assets.
4. Offset the Environmental Impact
Energy consumption has been a significant concern for companies that have considered dipping their toes into the NFT world. To address this concern, program incentive mechanisms that encourage sustainability—such as recycling, green energy credits, or reducing product wastage—can be used in conjunction with ESG policies to promote brand image and optimize costs. For example, the Hong Kong agency and NFT service provider NOIZ offers a one-stop platform for NFTs, making it easier to track, trace, and experience them in the metaverse. In addition, crypto and even credit cards are accepted as payment methods, promoting safer, more accessible transactions through green blockchain technology while helping the environment.
Benefits of Using NFTs for Digital Transformation
1. Enforce Asset Exclusivity and Scarcity to Drive Brand and Product Value
NFTs can be used to improve the exchange of any asset in the digital world, including digitalizing assets, monetizing intellectual property, and creating authenticity for original assets and their creators. Unlike regular online content, NFTs are subject to the scarcity of digital data and therefore require a valuation. NFTs allow online assets to have verifiable scarcity and ownership that cannot be manipulated and bring the elements that endow physical art and assets with value into the digital realm, driving value enhancement for both digital and physical assets.
2. Monetize the Product and Bridge Between Online and Offline Engagement
NFT fever have spread rapidly across the globe. It is a lucrative opportunity that has already entered the mainstream of product development. Companies should see this as an opportunity to create revenue by promoting products and experiences between physical and virtual environments, hoping to be able to monetize and bridge between online and offline engagement.
For example, Burger King launched an NFT campaign called the “Keep It Real Meals” initiative. The campaign collaborated with the NFT marketplace Sweet and featured celebrities like Nelly, Anitta, and LILHUDDY. When guests scan an artist’s Real Meal box QR code, they are awarded one of three variations on one of three collectible NFT game pieces. Guests complete the artist’s set after collecting the same variation of each collectible NFT game piece.
3. Drive Dynamic Programmability to Create New Revenue Opportunities
Through programmability, NFTs allow fractional ownership and target unique business models, increasing investor access and changing how capital is created and allocated. Programmability also enables interactive brand experiences and the potential for new digital products to be built by integrating art, design, and digital business assets with social interaction capabilities and monetized experiences.
Risks Associated with Using NFTs for Digital Transformation
As the world moves towards decentralization and Web3, global brands are getting big on NFTs. Brands should consult digital marketing agencies and tailor NFT marketing strategies targeting mass customers effectively and keep crypto speculators at bay.
NFT Marketing Agency in Hong Kong
New Digital Noise is a leading, one-stop Metaverse and NFT marketing agency and digital marketing agency in Hong Kong. Providing expertise in NFT design and creation, plus Metaverse and NFT marketing strategy, immersive experiences, and Discord community building, we’ve got you covered! Contact us now to learn more!
Q1: What is the future of NFTs for brands?
Although NFT technology has been around since 2014, it is just beginning to be put to real-world tests. However, the NFT market remains very young, and questions about rights, ownership, intellectual property and insurance are to be further explored.
Q2: What is the relationship between cryptocurrency, NFTs, and blockchain?
NFTs are built on similar technology like Ethereum and Bitcoin, but they aren’t cryptocurrencies, and they exist as entries on a blockchain that verifies their unique identity and ownership. Although some have been developed for other blockchains, many NFTs are held in digital wallets on the Ethereum blockchain.