By now, many of us will be accustomed to Non-Fungible Tokens; how they function, what they can look like and where to get your ‘hands’ on them. Few people however, are yet to realise just how significant their value can be and what benefits NFTs could have on their business, their art, their audience or their fanbase. As people discover the benefits and applications for NFTs, the global desire for NFTs is only increasing. According to data from blockchain developer Enjin, the total traded volume for NFTs in December 2020 was around $12m USD. By March 2021, that figure skyrocketed to over $500m USD.
During their brief history and the meteoric uptick in sales, many inspiring success stories have emerged, particularly from the earliest adopters. The digital artists who jumped on the band wagon early have seen sizeable profits from their NFT sales, all the way up into the millions in some rare cases, but the longevity of that particular trend or style of NFT is still speculative. The future success of NFTs will not be dependent on how good the artwork is or how funny the minted meme may be. The real value of NFTs and in my opinion, the biggest determining factor in their success, will be on the real world, redeemable utility buried within their code.
Let me borrow an analogy from head of Vayner Media, social media philanthropist and entrepreneur Gary Vaynerchuck, or Gary V as is his household name. Gary V has been a vocal advocate for the humble NFT and after investing heavily in several interesting projects, released his own line of NFTs to the public in May 2021, titled ‘VeeFriends’. The ‘VeeFriends’, hand drawn illustrations from Gary V himself, also acted as a ticket to a yearly conference, hosted by the entrepreneur. Real world value and real world utility: that is what makes these particular NFTs valuable.
Picture this, Dominos release a line of NFTs. Some are purely digital art for collectors: slices of pizza, a pizza box rotating slowly — you get the idea. These exist to line the digital wallets of collectors; they’re cute and they may even sell for a bit of money provided they’re rare enough, but they don’t really have any real world value; no utility. There is one Dominos NFT however, maybe a ‘golden slice’, that gives the owner free pizza for as long as they hold it. Then let’s say that person gets bored of all that dough and cheese and decides to part with it, auctioning it off on a secondary marketplace to the highest bidder. How much do you think something like that is going to go for? One hundred dollars? Five hundred? Thousands maybe? A wise investment for anyone eating pizza often enough. I’m sure many of us would laugh in disbelief when we read that headline but Dominos? They’ll be laughing all the way to the bank. Buried within the code of this ‘golden slice’ NFT, this glorious ticket to pizza heaven, is a contract stating that for each and every resale, Dominos take eight percent in perpetuity. Or any percent they like for that matter, that’s entirely up to them!
In the not too distant future, big brands across the world will adopt and create NFTs of their own, just like the example paraphrased from Vaynerchuck. Starbucks will be giving away free coffees, Walmart will give ten precent off to its ‘NFT Members’, Uber will have their golden ticket, ‘free ride NFT’, while Netflix shares early access screenings to a lucky few with the “N-NFT”. These will trade hands dozens, maybe hundreds of times throughout their lifetime, pulling in massive profits to the businesses the birthed them.
Sound far fetched? It shouldn’t. It’s happening right now.
Nike are already preparing to use NFTs to authenticate their shoes, stamping out counterfeits and increasing the value of the original product simultaneously. In the music industry, Kings of Leon already released a line of NFTs to support the release of their album ‘When You See Yourself’. Within them were real world, redeemable prizes for anyone lucky enough to get their hands on them. For the most common: pieces of music and the cover art to the album, but the rarest? Front row tickets for life to anyone holding that NFT. That is value! Just like the fictitious pizza example, Kings of Leon receive a very real percentage of each resale, in perpetuity. Who is parting with front row Kings of Leon tickets for life? I have no idea, but if they should do so, everybody wins.
RAREZ, a creative agency based in Australia, is helping other artists to achieve this kind of fan centred, digital content for themselves. Having already worked with some of the biggest names in the industry, RAREZ is positioning themselves as a big player in the NFT industry; crafting bespoke digital collectibles with real world, redeemable utility coded inside. Soon the company will open its doors to artists of all sizes, guiding users through their own NFT creation process.
For those looking to create and sell NFTs on their own, without the help of an agency like RAREZ, there are also a number of viable options. Marketplaces like OpenSea, Mintable and WAX are already teeming with frenzied creators, buying and selling digital merchandise all over the world. Just how many of them contain value? That’s another question entirely. For small, independent artists, either musical or visual, injecting real world utility into their NFT can be absolutely game changing. The more creative and inherently valuable, the more profits they stand to make.
Business owners, musicians, film makers, entrepreneurs, game designers, should all be scratching their heads, trying to come up with value for their audience. NFTs can be as flashy as they like but their longevity will hinge on the value within.