Non-fungible tokens (NFTs) are rapidly taking over the digital marketplace as artists, musicians, and other creators strive to authenticate their virtual works.
Media outlets and digital entrepreneurs like Gary Vaynerchuk rave about NFTs becoming the “next big thing” in terms of tracking ownership of digital assets.
In this blog, Signature W Studio explores what exactly NFTs are and how marketing agencies can use them to better track virtual assets on the blockchain.
What Is an NFT & How Do They Work?
Economically speaking, a fungible asset is a unit that can be interchanged, such as money. For instance, if you have a $20 bill, you could exchange it for two $10 bills and be no poorer for the transaction. By contrast, a non-fungible asset is one that is so unique that it can’t be exchanged for something else.
Such examples might include Andy Warhol’s Campbell’s Soup Cans or Vincent Van Gogh’s Starry Night: These artworks might be duplicated or sold as prints, but there is only one original.
In this way, an NFT is thought of as the “original” version of a digital asset. Possession of an NFT acts as a certificate of ownership, which is logged on the blockchain.
The blockchain ledger is impossible to forge because it is maintained by thousands of computers worldwide. NFTs can even contain smart contracts that allow artists to receive royalties for future sales of the token.
Why Are NFTs So Popular?
Headlines touting first-ever Tweets being “tokenized” and sold for $2.5 million have many scratching their heads over this sudden surge in popularity. But NFTs have offered a unique opportunity for artists to prove true digital ownership of their work.
Aside from an online domain, it’s increasingly difficult to prove ownership of online assets, such as images, music, and videos. Because NFTs need to be created, minted, and added to the blockchain in the same way that powers cryptocurrency, there is a more legitimized sense of authenticity over digital materials that did not previously exist.
The NFT also embeds the creator of said digital assets into the blockchain ledger permanently, so there can never be any question about who was the original artist.
How Can Digital Marketing Agencies Use NFTs?
It’s still too early to determine how the NFT marketplace will impact marketing agencies — or any business for that matter. However, early adopters and innovators are determined to make it work and make it profitable.
With that said, here are a few ways that marketing agencies can remain ahead of the curve and begin using NFTs to better serve their clients:
The best way to describe an NFT is as a digital file that represents ownership of a real-life object or asset. As such, it makes sense that one of the best ways for a digital agency to utilize an NFT is through agency agreements or contracts.
Using an NFT as the contract marker creates a digital asset that ties the contract to the creator. Not only does this make digital contracts more official, but it shows that the agency is at the forefront of cutting-edge technology.
Retainer Tokens or Licenses
For agencies that work on retainer models, NFT can act as a license to do business with you. Much like an NFL stadium and seating licenses function. A client can purchase the right to work with you in the form of an NFT.
The client still needs to pay for monthly services, but they will forever own that right and can even sell that license in the form of a referral. Even better, the sale of that retainer license can net you a royalty.
The bigger your brand, the more that retainer NFT is worth.
Proof of Deliverables
Of course, an NFT can also be used by agencies to represent a created video, set of files, or even a website that has been delivered to the client. This is a great way to officially mark a project as delivered and complete, especially as it will be permanently noted in the blockchain.
Selling Digital Assets
One of the greatest advantages to using NFTs is their ability to be sold and transferred as digital art. Some artists even use blockchain and smart contracts to create the artwork itself, allowing NFTs to act as an artistic medium.
Buying and selling NFTs through the blockchain allows digital assets to be traded more efficiently while decreasing the likelihood of fraud.
Where Can We Take NFTs?
While much is undecided about where NFTs will ultimately take us, one thing is clear: This new and exciting technology has taken the world by storm.
The decision to be an early adopter and remain at the forefront of blockchain technology is up to you as a business owner.
As Vaynerchuk puts it:
Just like a lot of small businesses went out and built apps on phones a decade ago, I do believe that NFTs will be a part of the marketing strategy for businesses going forward.
Signature W Studio is currently exploring every option to use NFTs in their business. Agencies that will remain relevant will do the same. Those agencies that identify ways to innovate in the NFT marketplace will continue to be considered thought leaders.