We hear daily about the rewards of creating an NFT, but rarely is the inverse considered: what are the costs for not participating in this new technology? By looking at it this way, no longer is it about how individuals are benefiting, but how businesses and brands are potentially missing out.
Many artists already think this way. Once it became clear that NFT art wasn’t just a momentary fad, it began to look increasingly more like an unmissable opportunity. Some artists are now successfully making a living by primarily putting their work on the blockchain.
As the NFT market matures, it stands to reason that some brands may come to a similar realisation. They’ll no longer see NFTs as a quirky fad or even a viable option, but something bordering on necessity.
But why wait for this watershed moment? If your brand is toying with the idea of launching an NFT, here are three reasons to push you over the edge.
1. NFTs create scarcity
As any economics undergraduate can tell you, the “dismal science” is the study of how choices are made under conditions of scarcity. Without scarcity, there would be no need to transact goods and services -- there would be no value. Why are diamonds vastly more expensive than water, which is crucial to human survival? Partly because diamonds are more scarce. Scarcity is a crucial component of value.
NFTs are game changers because they restore scarcity in the digital space. Take music as an example. Before the internet, music was more scarce. Sure, one could get a burned CD off a friend, but it wouldn’t be the same as owning the original. Not only would there be no album art or accompanying booklet, there would be no feeling that one owned the real thing (this is especially true if the album was a first release or limited edition). When peer-to-peer file sharing services came onto the scene, scarcity went out the window. Now everyone could download the same MP3, with nothing to distinguish one copy from another. In this egalitarian marketplace, it’s no wonder many weren’t willing to pay for their music.
Now, with NFT songs and albums, scarcity is making a comeback. As Linkin Park lead vocalist Mike Shenoda explains, “the NFT isn’t the song—it’s an NFT containing the song. You can even rip the audio and video, [but] if the song becomes more popular, then arguably the NFT becomes more valuable.”
More precisely, where there’s scarcity, there’s value at least for some. This is important for brands to recognize, because no matter what one’s feelings may be about NFTs, there’s no ignoring the booming market for them. For every sceptic who finds a pixelated avatar less than useless, there are others who covet it for its rarity, and at least one willing to spend good money (say, $7.5 million) to get it. In other words, NFTs are value-creating machines, and for that reason alone launching one wouldn’t be such a bad idea.
2. NFTs are in high demand
You know something has entered the mainstream when it’s been made into an SNL skit. The explosion of interest in NFTs is truly remarkable, not just because a formerly obscure academic term like “non-fungible” reached peak keyword search volume practically overnight, but because many are speculating that this is only the beginning.
According to a joint report (gated) between NonFungible.com and BNP L’Atelier, the recent surge in popularity for NFTs is no fluke. “What we are witnessing is not just hype,” the report’s authors write, “but rather the boom of an entire industry which is reaching a new level of maturity.”
While it’s not easy to calculate the growth of a technology or asset class in its infancy, the report gives a “conservative” estimate that NFTs grew by 299% in 2020. According to Invezz, an investing news site, a sharp growth trajectory is forecast to continue through 2021, with the market cap increasing from $338 million to $470 million.
This extraordinary success is off the back of just three niche segments: gaming, art, and collectibles. While these are some of the more obvious use cases for NFTs, they’re not the only ones. Some applications, such as NFTs for real estate, could see a boom of their own, driving the market up even further. Your brand can therefore get creative about what type of NFT it launches. For example, if you offer some sort of accreditation, you could consider putting it on the blockchain.
What’s a good time to launch an NFT? There’s no right answer. Better yet, there’s no wrong answer. The cryptocurrency market needn’t be a strong indicator, since the outlook is potentially win-win for NFTs. When prices are up, newcomers are introduced to the blockchain, exposing them to the NFT marketplace. When prices are down, savvy investors see NFTs as a hedge. According to the NonFungible.com report, “when the value of a cryptocurrency is relatively low, buyers and collectors take the opportunity to fill their portfolios with new assets….Crypto Winter phases appear to be formidable opportunities for collectors and NFT buyers to expand their portfolio.”
So while only time can tell what’s truly in store for NFTs -- their various applications, and where their impact will be most meaningful -- in terms of sheer demand and popularity, all paths are pointing to growth. If your brand is thinking about launching an NFT, getting started now could set you up for success.
3. NFTs can be great PR
P. T. Barnum, founder of Barnum & Bailey Circus, famously remarked that without publicity, a terrible thing happens: nothing.
Forget about the monetary value of NFTs -- something about them attracts attention. “[They’re] an imaginative way of marketing,” said winery owner Flavien Darius to wine magazine Club Oenologique. Darius is selling wine NFTs not out of any conviction about their use value, but simply as a way to reach new customers. In effect, he’s hitching his brand on the back of their growing popularity.
This certainly works. Pizza Hut Canada recently sold a ”non-fungible pizza (NFP)” for $8,824. Charmin is selling NFTP (non-fungible toilet paper). Pringles released 50 cans of CryptoCrisp, its only non-fungible (and inedible) chip. Some might call these stunts, but the fact that they’re successful -- garnering press and, indirectly, revenue -- says something about NFTs’ allure. Completely independent of their real-world value, they’re undoubtedly attention grabbers.
Less facetiously, launching an NFT can signal that a brand is keeping pace with the times. This not only lends a certain level of credibility to one’s customer base, it also opens it up to new cohorts. According to a survey of 569 U.S. adults, 18- to 29-year-olds are most likely to claim familiarity with NFTs. Launching one can therefore either boost a brand’s legitimacy with its younger audience or attract this formerly untapped demographic. Either way is a win, especially considering how much younger generations engage with social media — good PR snowballs with every like, comment, and share.
If nothing else, NFTs can serve to bolster existing marketing efforts. According to Steve Barrett of PR Week, “the creative options for including NFTs in marketing and branding are huge.” “I can see NFTs being integrated into sales promotions and competitions, or collectible exclusives,” he writes. “I can see brands setting up on SuperWorld or integrating communities within virtual environments….The possibilities are endless.”
MoonPay and the future of NFTs
MoonPay will soon support the purchase of NFTs on ERC 721 and ERC 1155 priced in USD and ETH. Our exclusive on-and-off-ramp solution blend together the fiat and crypto aspects of a transaction to offer a first-of-its-kind NFT offering that’s safe and secure. Look out for an announcement soon!