If you still don’t quite understand NFTs, you aren’t alone. (Neither did I until I was contacted by SaatchiArt) But if their recent popularity is any indication, I believe you won’t stop hearing about them any time soon. As they’ve exploded in popularity, NFTs have entered the public conversation and positioned concepts like digital ownership and scarcity as veritable philosophical questions.
Buying an NFT provides usage rights and ownership over specific digital assets. While NFTs can be copied and downloaded, an NFT provides true ownership of the work (although the artist still retains the copyright and reproduction rights as in the physical art world). In the context of the LeBron James NFT, the general public can still go to YouTube and watch a clip of the play. But there’s only one true owner of the play. And for many consumers, that’s exactly the point.
NFTs are what happens when digital artists, blockchain, and crypto fans collide. It’s the start of a new revolution in art and content ownership that has seen the NBA, Taco Bell, and McDonald’s jump on the bandwagon. With Ethereum-backed digital art that provides true ownership and tradeability to consumers, NFTs might be an exciting new world for enthusiast brands.
Digital marketing guru Neil Patel breaks it down this way: “While they’ve been around for a couple of years, NFTs have recently become a hot topic (and even hotter investment). What are they, and how do they work? To understand non-fungible tokens (NFTs), we must first define the word ‘fungible’. If something is fungible, it can be exchanged for something of equal or similar value. A typical example would be fiat currency (and even cryptocurrency). It’s fungible because you can trade it for goods of an equal value. You can also trade it for another currency if need be. On the other hand, something that’s non-fungible is unique and therefore can’t be exchanged at equivalency. For example, a diamond is non-fungible as no two diamonds in the world are alike, and thus each has its unique value. You can’t trade one for another at equivalency. A non-fungible token is a cryptographic asset created using blockchain technology. What sets NFTs apart from cryptocurrencies (which are fungible tokens as they are identical to each other) is that they have unique identification codes and metadata to distinguish one NFT from another. Because each NFT is unique, it cannot be traded or exchanged at equivalency with another NFT. The result is that each NFT is a digital collectible, a one-of-a-kind asset that can’t be replicated. That’s where the craze for NFTs started. In 2017, CryptoKitties, a blend between Tamagotchi and trading cards, exploded onto the scene. Each kitten is unique and can be raised, reproduced, be traded—some for as much as $140,000. NFT mania was born, and today, the interest in NFTs is only increasing.” Thanks wearescs.com for helping explain that!
So as a unique piece of art on the Ethereum blockchain, with a code only one person can own in a digital wallet, NFTs have created an entirely new ecosystem for digital art. And the implications for brands are enormous. Now for the first time, IP owners have a way to encode individual digital assets, make them available for sale, and trade them on an open market. Like art, scarcity and uniqueness drive value, making NFTs a home run for entertainment and enthusiast IP brands. It’s the reason why artists, entertainment studios, music artists, athletes, and meme owners are flocking to NFTs and creating new value in their IP by releasing NFTs to exchanges for sale. Iconic photos. Memes. Collectible cards. Animated 3D digital art. Album art. Any unique creative visual that has a fan base can make for unique and interesting NFTs.
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