5 ways you can boost your business with NFTs now…
… and 5 more things you could do in the near future.
NFTs, or non-fungible tokens, have been on everyone’s lips in 2021. Pixelated images were selling for thousands of dollars and sparked the imagination of the people. Even the big brands, including Nike, Coca Cola and Gucci, joined the NFT craze, creating their own digital assets.
The truth is, NFTs are not just digital images, but a powerful tool that could boost businesses of any size, and their true power lies in their properties. Let’s see how NFTs can help small and medium enterprises now and in the future, and why exploring these tokens is worth business owners’ time.
What are NFTs?
NFTs are tokens that help represent ownership of unique items. The most popular forms are the aforementioned digital pieces of art, but we can use them to tokenize anything from videos, music, collectibles, contracts, documents, IDs, certificates of authenticity, health records, votes, and physical items. There are few characteristics that make NFTs unique.
They are immutable
The ownership is passed to the person that owns the NFT and there can be only one owner at a time. This helps identify the current owner of the asset.
They can’t be counterfeited
Since all information is available on immutable ledger the ownership history is clear.
There are no middlemen involved
With blockchain there is no need to have an intermediary to move the assets so time and money can be saved.
They are easy to invest in
Tokenized assets provide greater liquidity and give the possibility of fractional ownership.
They give you direct royalties
Every time an NFT is resold the original owner of the token receives royalties from that token thanks to the smart contract that has been implemented.
NFTs beyond art
To start with, we have to point out that NFTs as they are seen by the general public only scratch the surface with their capabilities. We have to distinguish between NFTs being art sold and traded for profit and non-fungible tokens that serve other purposes. Let’s explore NFTs beyond the art world and how they can be utilized by small and medium enterprises.
Why should SMEs explore NFTs?
The cases presented below are still in their infancy and as a small business owner you may not gain much value from NFTs just yet. However, there are few reasons why you should include non-fungible tokens in your strategy.
- You will be an early adopter. The gains will not be immediate, but you will receive attention and you can position yourself as a progressive business operator.
- You will familiarize yourself with how NFTs work well ahead of the competition. It will allow you to find your space, learn the new technology and gain the upper hand.
How you can boost your business with NFTs now
1. Secure funds. If you are thinking of expanding your business but you lack funds, the easiest way to raise money would be to create a collection of NFTs related to your business and sell them to your customers. You could then funnel all the profits back to the business.
Imagine you run a homeware shop and you are trying to raise money to open another location. You could create a collection of NFTs and sell them for a small price to your customers. The money you earn could go straight back into your shop! To engage more people you could also turn those NFTs into discount or loyalty cards. More on this below.
2. Create loyalty cards. The difference between a traditional loyalty card and its NFT equivalent is that you can add unique features to the latter, such as specific discounts related to reaching a predefined threshold. The value for the customer is that the card becomes an asset. If they are not interested in your brand anymore or can’t use your services, they could sell it to someone else and make a profit on it.
Let’s say you run a coffee shop. One of your customers buys a coffee every day and they get their loyalty points. After buying 10 coffees, they get one extra. After buying 50 coffees, they get a 5% discount on every next purchase. When they reach 100 purchases they receive a free meal once a month… The more they use the loyalty card, the more benefits it holds and its value grows. Fast forward into the future, the customer needs to move to another city, so they don’t want to keep the loyalty card anymore. They find another regular customer of your coffee shop and sell the card to them with a profit! What’s more, all the benefits that the previous owner of the card had are passed on to the new card holder.
3. Explore the metaverse. Hailed as the new internet, metaverses are spaces that you could enter through VR (virtual reality) headsets or any AR (augmented reality) capable equipment. NFTs are a crucial part as they can be anything from virtual clothes for your avatar, real estate, or tickets for events within each metaverse. As a small business you could start promoting yourself in a place like Decentraland, create events related to your business and secure your presence there.
4. Sell tickets. According to CNBC, 12% of people buying tickets online fell victim to ticket frauds. Turning each ticket into an NFT would help verify their identity. Companies like Yellow Heart are already selling NFT tickets. It also prevents scalpers from buying out the tickets and reselling them for much higher prices. The tickets can also have unique features written into them, like discounts for drinks, or if you purchased a limited premium ticket, a visit backstage or a dinner with your favourite artist. After the event, the ticket becomes a collectible that the owner can resell to other fans.
5. Get involved with charities. You can learn more about NFTs and use them for good deeds. Charity organisations started to embrace non-fungible tokens to raise funds. One of such examples was BookBlocks.io, which minted 2,200 NFTs in order to support Afghan women education after the Taliban took over the country.
Community is the key with NFTs
One thing is worth remembering. Building an NFT ecosystem around a business needs to be community-first. It’s the audience around an enterprise or an idea that gives value to NFTs. So one of the challenges that business owners have to face is building a long-term narrative around the tokens. Such an ecosystem will also keep customers engaged with a brand and keep a low level of customer outflow.
Invest in NFTs now and reap the rewards shortly
Below, we’ll explore some further use cases for NFTs, which may currently be limited in their scope, but which certainly have a lot of growth potential in the future.
- Equity crowdfunding. Although it’s still in early stages you could start selling equities of your business as non-fungible tokens. Until now, you had to either find potential investors on your own or rely on platforms like Kickstarter. However, since the very beginning of their existence, users have been encountering multiple problems with the platforms. They have been plagued with scam projects, high fees, and unclear liquidity methods. Blockchain and NFTs solve all of these problems. By investing through NFT purchase you automatically become an investor, and the secondary market will make selling equities easier and faster.
- Tokenize physical items. Small producers will be able to issue an NFT along their physical product to offer provenance. Such a token could also have a digital representation that you could use as an object in existing and upcoming metaverses. If you are a local designer, imagine someone buying a shirt from you and having the exact same piece of clothing that they can sport on their avatar in Decentraland.
- Hospitality bookings. According to Zonal, 1 in 5 online bookings do not show up. That is a potential spot that could have been given to another person that would spend money in that restaurant and result in £16 billion losses in the UK alone. If seats were sold as NFTs, with reservation fee written into them, a restaurant could avoid losing money and receive at least a reimbursement for the missed booking. Such a mechanism could potentially make people more accountable and push them into showing up in the restaurant despite the urge to cancel.
- Patents. At the moment the patent industry is slow, expensive and unreliable. Minting an NFT would be cheaper, faster and will prove that an individual holds the rights to a specific patent, and since it’s on the blockchain, that information can be checked immediately.
- Authenticating products. According to 2019 numbers, trade in fake goods was over 3% of all trade in the world. By tokenizing each individual item producers can prevent counterfeiting and consumers can be sure they receive legitimate products. It is especially important when dealing with medicine or aesthetic medicine products
Other uses
It’s worth mentioning that there are plenty of companies and organisations that look into NFTs outside their commercial use.
Blood donations. Blood donation organizations suggest using NFTs for blood donations. A blood donor is marked with a specific token and the transportation to a blood bank can be traced on a blockchain. Next, thanks to health information exchanges and digital blood banks the need for specific types of blood can be easily tracked.
IDs. Organizations like DIF are experimenting with creation of a digital ID which essentially would be an NFT. Such an ID could be paired with education and health certificates, etc.
Counterfeit medical products can affect individuals’ health, producers, governments and whole economies. By tokenizing each individual medicine product individuals, drug stores and hospitals can quickly check their legitimacy.
Potential problems with NFT usage
NFTs present great opportunities but we need to be aware of existing bottlenecks that will take some time to solve.
It’s early. The technology is still in its infancy and the market is not mature enough yet. As analysts and industry experts predict, 98% of all NFTs projects will not survive. The main reason is the lack of long-term strategies around the tokens.
Crypto wallets are still a new thing and they are complex to use. Not everyone has a crypto wallet yet, or even understands the idea behind having one. In such cases many of the solutions listed above will not have enough reach to keep the projects alive.
There are not many professionals in the field. Blockchain and NFTs are still relatively new things and there are not enough engineers and marketing experts that could help SMEs yet. Creating collectibles is the easiest option at the moment, as any visual artist or a graphic designer could create a set of designs and mint them for you.
Uncertainty in regulations. Even though ownership is the biggest part of NFTs, on the legal side there is still no framework on how to work within blockchains.
Start your journey with NFTs now
Should you start your journey with NFTs as a small or medium business operator? The short answer is yes. Despite the early stages of the sphere and several bottlenecks you will encounter, this is the perfect time to start learning and positioning yourself in this new and exciting world. Just like with early years of social media, you may not see the results immediately but these early experiments will be your long time investments.
