Why is Elon Musk Pushing NFTs?
Elon Musk is known for many things, ranging from some of the world’s most exciting technology companies to some fairly unbridled behaviour on Twitter – and now, NFTs.
The bombastic tech entrepreneur has recently made fresh headlines with the promotion of NFTs, aka non-fungible tokens, leading to this new marketplace reaching exceptional heights.
If you happen to keep up to date with what’s happening in the world of cryptocurrency and blockchain technology, there’s a good chance that you’ve already read plenty of reasons why NFTs are so exciting.
In fact, you might have noticed how many big brands have come up with tailored marketing campaigns around NFTs to engage their target market and increase their sales figures.
However, if you’re a little confused about why this conversation has taken over the internet in the last couple of months, we’re going to give you a much-needed update.
Read on to learn about the concept of NFTs and find out why tech megastars like Elon Musk are getting involved.
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What Is a Non-Fungible Token
An NFT is a digital item that is certifiably unique to the person who bought it.
While the economic term of fungibility is where property can be replicated or interchanged, non-fungible tokens are digital items that are one-of-a-kind to the owner.
Over the years, the internet and the broader digital landscape has seen users become used to text, pictures, video and other forms of content being incredibly easy to share and reproduce.
However, NFTs are digital files that are technically owned by the buyer who is designated with a unique identifying code.
Naturally, this has led to the creation of a new kind of marketplace where special digital items are being purchased for huge amounts of money.
While NFTs exist on the blockchain, there is no way for them to be divided, exchanged or destroyed, unlike your average cryptocurrency.
With the NFT market experiencing a three-fold increase in 2020, now valued at more than $250 million, this furore is one that companies and investors need to be paying attention to.
How Does An NFT Work?
Like cryptocurrency, NFTs are stored on the blockchain. This means there is a publicly available ledger that records every single transaction for verification purposes.
Currently, most NFTs are found on the Ethereum blockchain, but it’s becoming increasingly common for other blockchains to store them as well.
When it comes to creating an NFT, they are ‘minted’ with tokens that are completely unchangeable, providing the buyer with total confidence that they own the digital item in question.
As you might have seen, there has been a massive surge in money being spent on NFTs. Some high-profile examples include a digital artwork by Beeple, selling for a record $69.3 million; the first tweet by Twitter CEO Jack Dorsey, which sold for $2.9 million; and the original versions of various memes, including Nyan Cat and Disaster Girl.
Digital items selling for millions of dollars isn’t especially useful to the everyday consumer, but NFTs could have a significant long-term impact on industries that deal with issues of trust and ownership, including real estate, car sales and commercial art.
However, brands looking to capitalise on this compelling movement have also found interesting ways to attract the attention of their target markets through digital marketing.
Can Brands Benefit from NFTs?
While NFTs might create a far more open and direct marketplace for consumers in the future, they have also proven to be incredibly useful for branding purposes.
With NFTs undoubtedly one of the hot topics for 2021, they offer a fantastic opportunity to engage your customers and create some exciting experiences that are bound to generate conversation.
For instance, the idea of collectables has been driving the NFT craze since the very beginning.
While visual artists, musicians and celebrities across the spectrum have benefited massively from offering unique items to their fans, brands that have a strong relationship with their customers can also devise an NFT that captures the attention of their target market.
The initial popularity behind NFTs is based on the fact that fans can own entirely unique artworks or merchandise from their favourite creator.
However, many brands have already figured out they can try the same thing…
For example, your company could partner with a popular artist to create an NFT item. This item could then be auctioned off to raise money for a worthy cause that resonates with your target market.
While the idea of NFTs has taken over the internet in recent months, they have also generated enough controversy that brands need to be careful about how they engage with the medium.
With some people uncomfortable with the mind-boggling amount of money spent on NFTs, you don’t want to be seen to be exploiting your customer base for your own single-minded profit. Fortunately, there are still plenty of outstanding opportunities to leverage in terms of brand awareness and reputation. But you want to be extra careful about how you market your campaign.
While you might generate cash in the short term, you don’t want to damage your reputation for the sake of an NFT in the long run.
What is the Future of NFTs?
With non-fungible tokens perfectly positioned at the meeting point of technology, investing and controversy, it’s no surprise that the likes of Elon Musk are getting involved with NFTs.
As the initial hype around this fascinating product gradually dies down, we can begin to make predictions about what the long-term impact of NFTs might be.
Although the success of NFTs has so far been driven by people looking to invest in digital art and collectables, the thing that really makes NFTs interesting is how they change the idea of ownership.
In the past, making high-value purchases has relied on professional brokers to mediate and confirm your purchase. However, the fact that NFTs are stored on the blockchain means that individuals can verify their own purchases, effectively cutting out a large part of the process to save time, money and effort.
As you might expect, there are many challenges to be solved around this incredibly new concept. But there is potential for a secure and frictionless way to purchase physical assets using the advantages offered by the digital world.
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