NFT FAQ: Answers to common questions we’re asked
By Drew Rasansky, Matt Hingle, Leon Jon
Given the growing interest in the metaverse, web3, and nfts from customers and the enthusiasm and expertise held by the team at Radicle (like Drew Rasansky, Matt Hingle, and Leon Jon), we’ve established a practice focused on helping customers better understand, navigate, and engage with markets like NFTs, digital avatars, digital and virtual experiences, esports, and more.
In the coming month, we will be launching a series of 101s that will introduce everything from how to set up a wallet to how to mint an NFT.
Perhaps a good way to distinguish 101 from the FAQ is the following: FAQ = What vs 101 = How.
Ahead of that, and on an ongoing basis, we’ll be publishing answers to questions we’ve received from customers.
If you have a question about NFTs web3, etc, email us: drew@radicleinsights.com
— -
How can I quickly get smarter on NFTs and what they unlock for brands?
Below are a few links that we think might be helpful as primers. These articles and Twitter threads were created to explain the basics of NFTs, as well as frame their importance in a broader context.
Notable articles
- A beginner’s guide to NFTs — what they are, why they’re interesting, applications
- The Non-Fungible Token Bible: Everything you need to know about NFTs
- Twitter thread: Demystifying NFTs — ‘monetized memes’, NFTs tokenize all the things, authenticate the world
- How NFTs Create Value
Notable podcasts
How can I minimize Brand Backlash?
There’s no shortage of examples in which brands have entered the NFT space and received negative feedback from consumers. From what we’ve heard from experts, there are a few best practices / considerations for brands looking to enter the space while managing the concerns of consumers:
Authenticity
The NFT community is highly skeptical towards brands looking to enter the space. If a brand doesn’t take the time to build a community or add value to the NFT community and opts instead to drop an NFT project out of nowhere, this will be perceived as a cash grab or generally extractive.
The three pillars of authenticity are:
- Build a community from the ground up like Anheuser Busch. ABI became “a student of web3” by engaging with the NFT community on Twitter, buying NFTs and supporting popular projects, and adding value to the space.
- Partner with existing communities to provide symbiotic value to your own community and partner communities. Adidas partnering with Bored Ape Yacht Club, Pixel Vault and gmoney is a great example of this.
- Intentionality: Use your platform to bring awareness to philanthropic causes rather than using NFTs to extract value immediately. Think long term, not short. L’Oreal is a great example here, bringing awareness to female NFT artists and using a portion of proceeds for their charitable organization.
Know your target audience
It is imperative that brands understand who they are targeting with their NFT project
If you’re targeting a crypto-native consumer, you may prioritize building on a decentralized blockchain like Ethereum because your target audience will care more about truly owning their NFT. Additionally, this type of consumer will be more advanced and require less of a “Web 2.0” style customer experience.
If you’re targeting the average consumer, you will need to abstract away as much of the blockchain aspects as possible. This means allowing users to purchase NFTs with fiat currency, making the wallet experience as easy to navigate as possible (perhaps even offering custodial services), and prioritizing blockchains that are user friendly (i.e. low transaction fees, fast transactions, easy to use, etc.)
Do NFTs align with my Sustainability goals?
Blockchain has been the subject of constant (and warranted) scrutiny regarding its impact on the environment. These criticisms are directed at Proof-of-Work blockchains, like Ethereum and Bitcoin, which require massive amounts of computational resources to operate, which of course requires massive amounts of energy. In order to combat these concerns, you can explore the following options:
Proof of Stake blockchains: You can build an NFT project on a proof of stake blockchain. Compared to proof of work blockchains, proof of stake blockchains use a negligible amount of energy per transaction. For example, a recent study conducted on the blockchain Flow found that a transaction consumes less energy than a Google search or Instagram post. Relatedly, the Solana blockchain reported in November 2021 that a single transaction requires roughly 1.8x the energy of a Google search. Others, such as Polygon offering the ability to leverage the scalability of proof of stake blockchains while still being able to integrate with Ethereum. Finally, Ethereum, the most popular blockchain for NFTs, is currently in the process of switching from a proof of work to a proof of stake model, a move that will slash its energy consumption substantially.
Regardless of which blockchain you might choose to launch an NFT project on, it’s imperative that you convey the considerations you made and show your consumer base that you’ve done your homework on blockchain selection (such as sustainability, network of users and developers, blockchain security, centralization)
Offsets and/or philanthropic efforts: Another way to curb sustainability concerns is by devoting a portion of your projects proceeds to environmentally focused philanthropic efforts or carbon offsets. Further, if you want to bolster your authenticity within Web3, you can partner with a Web3 native sustainability initiative, such as KlimaDAO, or a crypto-native nonprofit to align your NFT project with your organization’s broader sustainability focus. A great example of this is Polygon, who partnered with KlimaDAO to offset roughly 90,000 tons of CO2 emissions in a broader initiative to become carbon negative this year.
—
For more insights from Radicle: here.
