NFTs: The Future of the Creator Economy
In case you haven’t heard, NFTs are a type of unilateral digital asset that uses blockchain technology to identify the owner of the asset as it is traded between buyers on the Internet. NFTs are most commonly known as pieces of digital artwork, such as the widely-known Bored Ape NFT. However, they can come in virtually any form, such as animated GIFs, music, video game items, digital trading cards, clips of memorable sports moments, memes, domain names, virtual fashion items, and various other miscellaneous digital items, according to an article by MakeUseOf.com.
In essence, an NFT of any type of media is like an original piece of art by your favorite painter, singer, or any other kind of artist, only in digital format, and it can only be purchased or sold over the internet. While other people around the world might have physical prints on display in their homes or digital images saved on their devices, you can bask in the satisfaction of knowing that you are the one and only true owner of your favorite digital pieces of media.
Of course, that’s just the tip of the iceberg. What are some other reasons to consider NFTs? Let’s take a closer look.
Mine, Mine, Mine
One of the biggest claims NFTs hold over other forms of art is that there can be little to no doubt over who the true owner of an NFT is at any point in time, while other forms of art and memorabilia ownership are often subject to questions about authenticity of a piece or item, as they can be difficult to verify. Essentially, NFTs use of blockchain technology ensures that proof of ownership will never be an issue by keeping track of who is purchasing and selling the item in question at any point in time since its creation.
The Red Chalk Group makes a fantastic case for using blockchain technology to track ownership of a digital piece of media. “Due to historical and legacy reasons, many industries still use paper to prove whether something is real or whether a particular person actually owns an asset. Paper can be altered. Paper can be lost. When purchasing a diamond ring at a jeweller, it is easy for the corresponding certificate to say one thing, but for the ring to be something entirely different. This is a problem that has been hard to solve until the blockchain came along.”
In other words: if you were to post an NFT on your various social media accounts to show it off, others could very easily save, screenshot, and download it, but they could never really prove that they own the piece or try to sell it, as they lack the evidence of ownership by way of the blockchain. The Red Chalk Group solidified this point as they explained, “a fundamental property of the blockchain is that, once something is on the blockchain, it cannot be altered or counterfeited. And a use case that has begun to pop up for the technology is as an ownership verification tool. Once an asset is listed on the blockchain, ownership is immutable unless the owner verifies a change.”
Without a shadow of a doubt, the people benefiting the most from the introduction of NFTs are the creators. Artists, coders, photographers, writers: Anyone capable of creating content that normally would not have a sustainable market can find a way to sell their works on the NFT market.
Essentially, NFTs put the power back in the hands of the creators when it comes to buying and selling, eliminating the need for middlemen to handle transactions and stifle profits that should belong to the creator. The ability to handle transactions regarding their works gives creators even more autonomy over their creations and gives them the ability to maximize the profits to be made from said works.
More than a Token
While NFTs are most commonly known for their artistic value, this isn’t the only thing that NFTs deliver. NFTs can also contain value in the form of various utilities, accesses, and other benefits.
Utility NFTs are typically classified into five categories: Community NFTs, Fantasy Sports NFTs, Gambling NFTs, In-Game NFTs, and Social NFTs. Essentially, utility NFTs are virtual items that can be traded amongst a specific community that values the NFTs for the benefits they deliver. For instance, if (or when) the Metaverse becomes accessible to general audiences, in-game virtual NFTs will have a much more widespread market, potentially increasing their value when general audiences find a use for such items.
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Connect and Explore
Another benefit that NFTs bring to the table is the potential to boost interactions between brands and their audiences, which can prove to be lucrative for brands willing to explore the NFT market.
A Harvard Business Review breaks down the benefits that brands who release NFTs could see:
“Looking ahead a few years, NFTs could be the central digital touchpoint between brands and their consumers — and one that is controlled by the brand itself.”
“While NFTs are mostly being used for unique digitalassets (a specific Bored Ape image or NBA video clip), the underlying technology could just as well identify a unique experience (the fact that you attended an event, for example) or a unique physical-world object. It’s a question of how companies use the digital identifier that forms the basis for each NFT’s assertion of uniqueness and authenticity.”
In other words, NFTs could present what is essentially a new interactive form of advertising for brands that drive sales not only for the NFTs themselves but for real-world products as well, if done in a unique and creative way that promotes a one-to-one relationship between brands and their audiences.
Through such collaborative efforts, co-creators of an NFT could potentially see equal profit from their works each time it changes owners through commissions, driving the demand for collaborations.
The New Frontier
The Metaverse is expected to launch a new phase of the virtual economy through a new virtual platform. Innovative creators are preparing themselves through NFTs. By preparing their brand for this new frontier, creators are giving themselves a head start on taking their brand to the Metaverse, as NFTs are expected to play a massive role in this economy. Users are essentially securing a piece of virtual real estate for their brand when the day finally comes. The same article from The Defiant explains it like this: “The Metaverse itself is akin to a blank canvas. To bring it to life, creators across different industries need to collaborate to create content and experiences. NFT-based collaborations will allow artists, brands, creators, and influencers to join forces and build the Metaverse and the future of the internet while reaping equal financial and social benefits for their efforts.”
In other words, creators are essentially creating the ‘building blocks’ that will make up the Metaverse economy before the platform on which the blocks can be used even exists. As the first brands with a stake in this new virtual economy, they can expect to see significant benefits for their brand.
Room for Growth
As one of the more recent and popular markets in online commerce, it stands to reason that the market for NFTs has seen a massive increase in transactions over the past year alone. In fact, the NFT market has seen a 328 percent increase in NFT sales from the first to third quarters of 2021 alone, according to projections from BrandEssenceResearch.com. The NFT market is expected to see even more growth in the coming years as Web3.0 continues to develop and roll out to the public.
One of the most important things for prospective buyers to know is that NFTs are not simply a current trend for your brand to tick boxes off of a checklist to stay relevant. They are digital assets that are expected to increase in value over time: an article that promises the future of the digital world and its economy. While NFTs are massively trendy and popular in the present, there isn’t an expiration date on the market, so creators and anyone else looking to tap into this new, lucrative market can rest easy knowing there is still time to do research and make a plan to carve out their place in the digital marketplace.
To learn more about NFTs and why they matter to creators and innovative thinkers, read more here!