NFTs, Beyond PFPs
8/14/2022, 2:29:57 PM
When you understand the true value of NFTs, you then open Pandora’s box of this inevitable technology!
We hear a lot of people asking, why would a PFP, a pixilated image, or a token on the internet be worth that much? Why is it worth any money at all? So, to tackle this common doubt, let’s start by appreciating what NFTs are and the opportunities they enable.
NFTs are unique digital assets that represent ownership and give rights to their holders. The ownership of these NFTs is registered and tracked at any time on the blockchain, a decentralized and publicly visible ledger. The data an NFT contains can be tied to a piece of digital art, songs, videos, avatars, and much more. Besides, it can be linked to both digital and physical utilities. So, in short when first Bitcoin gave us a way to own digital money, today NFTs let us own unique digital assets that live on the blockchain.
Now it’s easy to see why the rise of NFTs has left many people skeptical and deeply resistant to what they consider just another temporary trend. Here are the two main reasons:
First is the fear of the unfamiliar. NFTs represent a very new category of digital assets that we don’t see that often which has suddenly taken the world by storm. But, just like the internet in the early 90s, people rejected it at first because it didn’t make sense to them until it became the only common sense. Likewise, many businesses started capitalizing on the big potential of NFTs, so eventually, the use of this technology will be massively adopted thus, resulting in major shifts across nearly every industry.
Second, is the challenge to differentiate between existing (or emerging) businesses making meaningful use of the NFT technology from those just riding the wave. Actually, in the past year, we’ve seen many investors allocate big amounts of money to NFT projects- mostly PFPs, work for 3 to 4 months, and BOOM! generate a load of money. Further, in several cases, these projects ended up as rug pulls. Consequently, this led many people to think that NFTs are either a scam or just another way to make quick money.
However, beyond this reasonable doubt, there’s a logic to how and when NFTs are a great tool that solves problems and enables opportunities for business owners; while creating value for their users. This is when you stop looking at NFTs as just a PFP bubble, but rather consider them as a technology that is here to stay.
Let’s pinpoint a few things that NFT projects creating value have in common: They leverage a community of users and communicate in full transparency with them. They show consistency in their work and provide confidence that they can continue fulfilling the project to maintain community engagement. Moreover, they’re able to pivot and adapt through a bear market by coming up with innovative solutions to keep creating value for their community.
Likewise, there’s a wide variety of benefits NFT holders can gain especially since there’s no one type fits all NFTs, yet they are segmented into different categories each with its utilities. For instance, NFTs can grant their owners access to exclusive merchandise, access to real-life or digital events, special discounts, free memberships, or even shares in a company. Moreover, NFTs can serve as digital passes to online spaces in the metaverse where you can engage with other holders. On top of that, a major characteristic of NFTs is tradability. The freedom for a holder to benefit from his/her NFT as long as it’s useful for him/her, then pass it on a secondary marketplace to someone else, makes this technology stand out with flexibility and usefulness.
Moreover, from an entrepreneurship perspective, NFTs are a great tool to create business opportunities, here’s an example: Have you ever had a dream business but didn’t have enough capital to bring it to life? Well, instead of begging the banks for a credit line and then paying unfair interest rates or going on the run for investors, NFTs allow you to crowdfund your investment and partner with a community of people that share your passion and believe in your vision. Therefore, instead of creating a company, you form a DAO, (decentralized organization) that guarantees the right to vote to your community, aka shareholders.
This new type of organization will transform the relationship between business owners and users, turning the latter into partners instead of only customers. In the future, every single brand will have to elevate and shift communication with its users from pure marketing and selling to more contribution and sharing mutual interests, therefore providing a better experience for users.
Another significant use of NFT technology is in the markets of luxury brands, art, and other valuable collectibles. Mostly addressing the problems arising from counterfeiting and fraud. In that case, NFTs assist brands and artists in achieving transparency and confirming authenticity for end users. Many other types of businesses are adopting NFTs like real estate, food & beverage, music production companies, and more, some have even started integrating the technology behind NFTs into their supply chain, showing that the sky is the limit when it comes to applying this technology into any business model.
So, at last, rationally doubting NFTs is to a certain extent beneficial, as it makes you do your thorough research, and ask the right questions before jumping into any kind of project, whether you’re on the investor or the user side. However, this should not limit you from embracing this inevitable technology, because the minute you unlock the opportunities NFTs enable, you will start building businesses and creating value around it.
Prepared by Dania Jradi