Crypto Punks. Bored Apes. Lazy Lions.
These aren’t garage bands from the ’90s Seattle grunge scene. These delightfully silly, two-word monikers are some of the most popular NFTs on the market right now.
NFTs (non-fungible tokens) from a very high level are digital assets that can be purchased, traded, re-sold, or displayed like one would with any physical world art piece.
The market for NFTs, specifically original, portrait-style digital art, is scorching hot right now. For instance, a collection of Bored Ape NFTs sold for $24.4 million in an online sale at Sotheby’s auction house in early September 2021.
As NFTs continue to grow in popularity, brands would be wise to look for ways or opportunities to utilize them. For subscription brands, there are several ways to incorporate NFTs and access memberships to provide your customers with exclusive perks and first dibs on new product drops.
So whether you’re running your own NFT marketplace or looking to jump into the wild web3 world of creating and selling non-fungible tokens, let’s break it all down.
Explain like I’m 5… What is a NFT? Is it a digital asset?
Skip this part if you’re well-versed on the ethereum blockchain and/or have a star-studded stable of digital horses for Zed Run.
So let’s break down non-fungible tokens, word by word.
If something is “fungible,”it can be replaced by another identical item of equal value—like a single bitcoin, ethereum, or even a physical world $20 bill. On the flip side, something “non-fungible” is original, unique, and can’t be replaced, like a holographic Charizard Pokemon trading card or a digital image of a cartoon ape looking somewhat apathetic (shouts to Yuga Labs’ Bored Ape Yacht Club).
The Mona Lisa? Non-fungible. A house designed by Frank Lloyd Wright? Non-fungible. The penny you found on your walk? Fungible.
Now, let’s complete the word trio by adding the word “token” onto the end of “non-fungible.”
Token, in this context, implies a digital certificate of ownership. To get more technical, this token is a verification of authenticity that exists on the blockchain (a shared public ledger of digital information that is unchangeable and tamperproof). The blockchain is decentralized, that is to say it is duplicated and distributed across an entire network of computer systems on the blockchain, as opposed to being stored in one place or controlled by one entity.
To sum it up: NFTs are digital assets which can be created, collected, traded, and sold.
They can be digital art, like “Everydays — The First 5000 Days” from artist Beeple, which sold for $69 million at Christie’s.
It could be an entire video like Charlie Bit Me, which sold for £500,000 that the boys will use to pay for university.
It could even be a social media post, like when Twitter CEO Jack Dorsey sold his first tweet for $2.9 million to a blockchain company CEO in Malaysia.
But… why would someone pay an exorbitant amount of money to own a NFT when you can do a Google image search for the exact same content?
Excellent question, astute reader. There’s a couple of reasons, first being that every NFT has a smart contract that verifies and declares ownership of the digital file.
In fact, ownership of all NFTs exist as a public record, meaning anyone can look up any non-fungible token and verify who owns it. Most NFTs are built on the ethereum blockchain (ETH being the shorthand for the aforementioned cryptocurrency), but let’s share the second reason people shell out big bucks for digital items.
If I print off a copy of the Mona Lisa, frame it (in a very nice one mind you) and hang it in my home, did I just hang up a priceless piece of art?
No, I printed a duplicate and stuck it on my wall. It doesn’t have the same value as the original, because it’s not the authentic, one-of-a-kind piece. But just who exactly sets the value of art? Well, the people who buy art do. What they’re willing to pay is the value.
So with the Mona Lisa being worth $860 million USD at last glance—why is this 30 inch by 21 inch painting of a woman with a wry smile worth so much? Because that’s the assigned value of the original piece of art.
So, if someone is willing to pay thousands of dollars for verifiable ownership of a Lazy Lion with a blue mane and pink fur… that’s what that digital asset is worth.
An item, art especially, can cost as much as someone is willing to pay for it. But overpaying for something is silly, isn’t it? Well, silliness is in the eye of the beholder.
Where I live, the real estate market is scorching hot right now. People are buying property for hundreds of thousands of dollars over asking price. The value of a non-fungible asset truly is what someone is willing to pay for it in that moment. Is it worth as much to the next person? That’s a different story. It could go up in value, as popularity increases and more people desire it. Or the market could tank and the value plummets.
But there’s no crystal ball to predict those outcomes (though there’s likely several crystal ball NFTs available for purchase).
Digital data and the creator economy
So we’re all brushed up on NFTs, but let’s take a moment to talk about the rise in the creator economy thanks to these sellable digital items. Now, content creators from anywhere in the world can sell their work across a global market. There’s no gatekeeper at the auction deciding what can or can’t be sold, and there’s no geographical limit on the reach content can have. NFTs are allowing artists to create and share their content to the entire connected world.
For buyers and collectors, there’s no concern about forged content with the unique identifier smart contracts that authenticate all NFTs.
For collectors, virtual worlds are being created through NFTs, giving rise to the term “metaverse.”
Consider Loot, the latest project from a Vine co-founder, that started as a text-based list of randomized adventurer gear. Now, Loot is giving rise to whole communities who are inventing lore and art for these fantasy-based non-fungible tokens.
There were 8,000 loot bags available upon inception with randomized adventurer gear inside. There were no stats associated with these items, and no pictures, because they were intentionally omitted for others to interpret. The last part of that sentence is key: The creators of Loot were empowering the buyers of their bags to develop on top of their NFT items.
People were designing and minting (the act of publishing a unique instance of your token on the blockchain) in all sorts of creative ways.
Communities are popping up alongside these Loot NFTs, with users bonding over shared items and dreaming up entire gaming worlds incorporating these items (think Dungeons and Dragons, but you bring your own NFT adventuring gear).
An NFT access pass
NFTs are available to all brands who are willing to put the infrastructure in place to offer them. How you use a membership subscription in combination with an NFT is entirely up to your brand’s creativity.
Perhaps you use NFTs like digital tickets as a way to gain entry to a gated collection of your products. Or maybe you use a subscription membership to access gated content, like early access to NFT drops, limited edition products, or exclusive offerings.
An example of a business already using an access membership in combination with NFTs is Official. The brand has already started its own branded NFT marketplace and token. Using this token, Official customers will have exclusive access to physical products the brand produces, which can only be purchased with their $OFCL brand token.
Here are some other ways you could use access memberships in combination with NFTs:
- NFT marketplaces could be gated with a monthly membership billed on subscription for users to gain entry
- NFT access passes could be used like digital tickets or proof of membership to unlock access to a library of gated content
- NFT digital art creators could provide early access content to their top tier membership of subscribers
- Apparel brands could provide a combination NFT offering alongside physical world product purchases to exclusive members of their access membership (imagine wearing your limited edition Nike Air Jordans in real life as well as on the feet of your custom video game avatar while playing a massive online multiplayer game)
A whale of an opportunity
It’s a lot to take in, and we’ll be the first to say this piece barely scratched the surface of the possibilities with NFTs. But the main takeaway is to understand that NFTs aren’t a passing fad—they’re steadily gaining in popularity and bursting with potential for creative minds.
That’s true whether you’re a big brand looking to innovate, a content creator looking for a way to grow your community, or a 12-year-old boy from London making £290,000 by selling pixelated whale NFTs.