Marketing in the Metaverse

Are

NFTs a fad … or the future?

BY MAGGIE GLISAN

When you hear “NFT,” what comes to mind? Is it digital art sold for millions at a Christie’s auction? Maybe it’s something about brands like Nike, Adidas and Budweiser releasing digital collectibles for major dollars. Or perhaps it conjures up other techy buzzwords like cryptocurrency, blockchains and the metaverse — all of which are hard to get a handle on.

Consumer interest in non-fungible tokens (NFTs) remains relatively low. According to a survey by Maru Group, nearly one-third of US adults have not heard of them, and the aftermath of the 2021 NFT boom may have left those who are familiar with them feeling less enthusiastic. But now, as this technology enters a new stabilizing phase, brands are shifting their focus to explore how NFTs could offer greater utility for consumers and serve as a game-changing marketing tool for building community, brand awareness and loyalty. And that starts with the emergence of Web3.

In the early days of the World Wide Web, content was delivered in one direction. Information was uploaded and then accessed by users — not unlike an online encyclopedia. Then came Web2, which allowed users to create their own websites and connect to others via social media apps like Twitter, Facebook, Instagram and TikTok. The latest iteration, coined Web3, ushers in a new era of worldwide connectivity based on a decentralized online ecosystem that utilizes blockchain technology.

“Web3 describes the future of how we will connect, communicate and collaborate online,” said Ben McDougal, a tech founder, author and entrepreneur. Put simply, “If Web1 is read-only, and Web2 is read and write, Web3 is all three — read, write and own.”

Because Web3 is still very much in its infancy, it’s easy to be put off by some of the jargon — and much of the language is still being shaped by innovators and early adopters. However, there are a few must-know terms and concepts that make exploring the world of Web3 far less overwhelming.

First is the idea of decentralization, a key component to the next generation of the web.

“[Decentralization is] sufficiently transitioning from single authorities to proportionately deliver verifiable ownership, access, control, transparency, communication and governance to many stakeholders,” McDougal said.

This means that in the future, the internet will be controlled less by big tech, and more by individual users.

Web3 runs on the blockchain, a digital decentralized ledger that records information in a way that makes altering or cheating the system nearly impossible. Since the data cannot be changed and is completely transparent, it enables cryptocurrency, a digital decentralized currency that works around the traditional financial system using the blockchain’s cryptography. Bitcoin and Ethereum are two of the most well-known cryptocurrencies. Either can be purchased from a cryptocurrency exchange such as Coinbase, then transferred into a digital wallet — the tool for accessing Web3.

That brings us to NFTs. It’s important to first distinguish between what’s fungible and what’s non-fungible. Fungible items can be replicated and are not unique (e.g., a $1 bill has the exact same value as any other $1 bill). Non-fungible items, on the other hand, are unique and irreplicable (e.g., a signed rookie baseball card).

Therefore, NFTs are original digital assets that can be verified on the blockchain, and because they are uniquely coded, they serve as a digital record of ownership. NFTs can represent almost anything and can be used for collectability, event or community access, and crowdfunding, among other things. Users can receive, buy and sell NFTs on marketplaces such as OpenSea (the largest NFT marketplace), with new utilities and applications constantly emerging.

McDougal said now is a good time to help shift perception about what NFTs are and what they can do.

“I think because of the way they hit the mainstream through digital art, it created a false assumption that that’s all they are,” he said. “Focusing solely on what an NFT looks like is a quick way to get misguided.”