It seems like every week there is a new trend in the marketing world. The latest trend? NFTs. But what are NFTs, and what do they have to do with marketing? We’ll answer all of your questions about non-fungible tokens, so you can look smart and in-the-know at your next marketing meeting. We’ll also discuss whether or not an NFT might be a good marketing tactic for your brand.
What are NFTs?
NFT stands for non-fungible token. We know, that doesn’t really clear it up very much. The technical definition is that it is a unique digital asset that can be bought with cryptocurrency on the Ethereum blockchain. It is basically an individual piece of crypto art.
However, we know that doesn’t clear things up much. It helps to think of an NFT is a kind of digital collector’s item. It can be anything digital: a drawing, music, etc. The most common non-fungible tokens, at least for now, are digital art.
If you own an NFT, you have the ownership of that digital work. However, that doesn’t mean it can’t be downloaded by someone else. Awkward, I know. But in this way, it is similar to art collecting. For example, someone owns the original Picasso, but anyone can own a print of that same piece of artwork and hang it in their home.
Non-fungible means that the token is unique and cannot be replaced with something else. For example, if someone borrowed your dog, they cannot just replace your beloved pet with another dog or animal instead. However, a dollar is fungible. Every dollar is easily interchangeable for another. Got it?
How Do NFTs Work?
At the highest level, NFTs are a part of the Ethereum blockchain. Ethereum is a cryptocurrency, similar to bitcoin, but it supports non-fungible tokens by storing their information. The NFT exists permanently on the blockchain.
The best way to think of them is to imagine it as collecting something, like fine art, except in this case, the collector’s items are anything digital. (But they can still be art.)
For digital artists, nonfungible tokens are an (extremely lucrative) way to monetize their work online. But as we’ll discuss later in this article, there is at least one downside to nonfungible tokens.
Examples of Non-Fungible Tokens
Here’s one example: the founder of Twitter, Jack Dorsey, sold the first-ever published tweet as an NFT for $2.9 billion. Yes, really. People are dishing out some serious dollars for certain NFTs. The tweet was purchased by Sina Estavi, who is the chief executive officer of the Malaysian blockchain service Bridge Oracle.
Some brands have already jumped on the NFT marketing train. The fast-food chain Pizza Hut Canada, on the other hand, announced it is releasing its “1 Byte Favourites,” which are digital images of pizza, as NFTs. The first “slice” was sold for a whopping $8,824.
Taco Bell and Charmin have also gotten in on the NFT marketing trend, with a $187,000 “Swivel Taco” and a $1,822.21 roll of TP, respectively.
While it may seem like a silly new trend, the market for NFTs is already being valued at $1 billion, according to Bloomberg.
NFTs and the Environment
Another thing you might not know about NFTs is that they are bad for the environment. How are digital art and the environment related, you might ask? Well, non-fungible tokens are at least partly responsible for the millions of tons of carbon dioxide emissions generated by the cryptocurrencies used to buy and sell them that cause global warming.
The “mining” portion of cryptocurrency is often overlooked. However, ethereum mining uses about 26.5 terawatt-hours of electricity a year. That is approximately the same amount of energy used annually by the entire country of Ireland.
Though in the future, mining energy could potentially come from renewable sources, there is no immediate plan to make that happen. In the meantime, non-fungible tokens are susceptible to the criticism that they are hurting our planet.
NFTs and Marketing
While non-fungible tokens might be the hottest topic in marketing right now, they aren’t necessarily realistic marketing tactics for most brands. It might be a fun way to get social media engagement and garner some shareable news headlines, and makes sense for brands who are tapped into the social media world and pop culture.
But just like any other trend, the hype surrounding non-fungible tokens might die down quickly. After all, not everyone can sell their tweet for millions of dollars like Jack Dorsey.
However, if you are looking to get in on the NFT fun, contact SEO Design Chicago today to brainstorm some ideas! (Or, if NFTs aren’t your thing, we can discuss some other digital marketing strategies to help grow your business instead.)
FAQs about NFTs:
- What does NFT stand for?
- Does my brand need an NFT strategy?
- What are some examples of NFTs?
- Are NFTs bad for the environment?
- What are the most common NFTs?