You may have seen the news earlier this year that digital artist Beeple sold a collage of images for a whopping $69.3 million – but this was no ordinary sale. Beeple’s artwork was sold as an NFT, a non-fungible token that means ownership exists entirely in the digital realm.
It’s not just the art world that has embraced this new take on cryptocurrency. Kings of Leon released an NFT album and NBA fans are trading videos like they once did trading cards.
We are used to things rapidly changing in tech, but as an eCommerce business it can be difficult to judge where to invest your time and money. Are NFTs worth considering as part of your eCommerce strategy? We take a deeper look at how they work and whether the introduction of digital products should be on the radar of online retailers.
What Are NFTs and How Do They Work?
If you’re not entirely clued up on cryptocurrencies, this is going to sound like utter nonsense, but bear with us on this one.
A blockchain is essentially a shared ledger of who owns what when it comes to cryptocurrencies. NFTs are part of the Ethereum blockchain but they work differently from the likes of bitcoin or an ETH coin.
As a non-fungible token, an NFT cannot be interchanged with something else. For example, money is a fungible asset. You can swap two £5 notes for a £10 note and vice versa. An NFT is something that can’t be copied – ownership of the original file. Though this doesn’t necessarily mean you own the copyright, and as with anything online the file can be shared and reproduced millions of times over, but you do claim the right to ownership. To put this in context of physically owning something, we can all buy a print of the Mona Lisa but there will only be one original painting.
Where Are NFTs Sold?
There are several marketplaces which allow people to buy and sell NFTs. KnownOrigin, Rarible and OpenSea are just a few examples. There is some controversy surrounding the sale of NFTs, however. Anyone can upload a file (not just the copyright owner) and sell it as an NFT, obviously causing some issues surrounding licensing there. We’d imagine there are likely to be some rule changes around this in the future.
It’s also worth noting that NFTs cannot be traded once purchased, but they can be resold and bought with other currencies.
Are NFTs the Future of eCommerce?
It’s highly unlikely NFTs will take over how we buy and sell online. There are some things that just won’t work as a digital file. Don’t dismiss them yet, though.
When we take a look at how far technology has advanced over the last few decades, there are many physical products that have become obsolete due to more convenient digital offerings. The music and film industries are a prime example of this. Cassettes and vinyl have become collectors items as we made the move to CDs and now being able to stream all of our favourites online. Generation Z won’t even understand the concept of having to go to your local Blockbuster to rent the latest film releases. The likes of Spotify, Netflix and Amazon Prime have made content easily accessible, without having to own a physical item.
Artists on Etsy sell their designs for people to print at home. Mobile gamers can make in-app purchases in an instant. Even events such as concerts and theatre performances have shifted online due to the coronavirus pandemic. It’s clear that digital products certainly have a place in eCommerce but whether that’s as NFTs remains to be seen.
Should You Invest in an NFT Strategy?
Unless you have the time and budget to experiment with an NFT strategy, it might be something you put on the back burner for now.
That’s not to say you shouldn’t seriously consider how you could potentially monetise your digital content. There is definitely a customer base for it, and it’s always a good thing to stay on top of consumer trends and advancements in commerce.
Looking to update your eCommerce strategy but unsure where to start? Our digital experts can talk you through the next steps towards growing your business. Give us a call on 0121 369 5874 or email firstname.lastname@example.org.