Though non-fungible tokens (NFTs) have been around for years, they’ve seen an enormous boost in awareness and popularity in 2021. This is due to a confluence of factors, including the normalization of cryptocurrency, advances in blockchain technology, and heightened consumer demand in the wake of the Wall Street Bets saga.
In spite of that growing popularity, NFTs are new to many. Below, we explore the concept of NFTs, identify who’s interested in them, and discuss some recent examples in the marketplace.
What are NFTs? To say that something is fungible is to say that it is interchangeable or replaceable. Therefore, something that is non-fungible is inherently unique. NFTs are one-of-a-kind tokens that represent a good—such as a piece of digital art. Through the minting process, that piece of digital art becomes part of the Ethereum blockchain, which is a public ledger that cannot be tampered with. This allows the NFT to be bought, sold, and digitally tracked into the future for proof of ownership.
What are some examples? You might have seen some examples of these digital collectibles in your daily dealings, too. For basketball fans, you may have heard of NBA Top Shot, which allows consumers to buy, sell, and collect officially licensed digital “moments” from their favorite players. Similar to the concept of physical trading cards, users can purchase digital packs that contain an assortment of moments or seek out a desired moment in the marketplace. As recently as April, a LeBron James tribute dunk to Kobe Bryant sold for $387,600.
Outside of the world of sports, art has proven to be a rich territory for NFTs. One of the original NFT projects dating back to 2017 is called CryptoPunks, which is a collection of 10,000 8-bit-style characters, each with their own unique features. Given the historical relevance of CryptoPunks, they’ve become some of the most expensive NFTs, with some selling for millions of dollars. You may have also heard about a digital artist named Beeple, who made waves in March when an NFT of his digital art sold for $69 million at Christie’s auction house.
How are brands getting involved? Where there is immense buzz, it’s safe to expect brands to get involved, and that’s been the case with NFTs. Back in March, Charmin auctioned off toilet paper-inspired NFTs. All proceeds were donated to Direct Relief, a nonprofit that provides emergency medical supplies and resources to communities in need.
Stella Artois followed suit in May when it auctioned four NFTs of artwork representing the brand and used proceeds to provide tips for bar staff in the United Kingdom. Since then, the brand has dabbled in NFTs outside of the charitable realm by partnering with the digital horse racing platform, Zed Run.
In the realm of beauty, E.l.f. Cosmetics joined the mix by converting some of its most popular products into NFTs. Only nine of them exist, and each was sold for the same price as the retail product itself. In response to growing concern about the environmental impact of NFTs—and cryptocurrency, in general—the brand tapped a partner to help reduce its environmental footprint and make the transactions carbon-negative.
What is the audience? In an April survey of U.S. adults conducted by Adweek and Harris Poll, 40% of respondents said they were familiar with NFTs, and 81% said they were aware of them. While only 12% of respondents said that they’ve invested in NFTs, that number was much higher among Millennials at 27%. In general, NFT owners fall into one of two baskets: investors and collectors. The former is more likely to see it as an opportunity for a quick buck, while the latter sees inherent and sentimental value in their purchase.