At this point, you’ve heard of Bitcoin and crypto currency, but what about non fungible tokens? What are they? Non Fungible Tokens, or NFTs, are digital assets similar to Bitcoin but unlike Bitcoin, unique in nature. (When you receive a Bitcoin, you don’t care if it’s Bitcoin 58 or Bitcoin 349820439, but with NFTs each token is different.) This makes it a perfect block chain use case for art, collectibles, and online gaming assets. It also makes it perfect for influencers.
NFTs are built on top of the Ethereum blockchain which allows collectors to verify their ownership. The space has exploded in the past few weeks. Nyan Cat, an animated GIF of a pop tart cat that leaves a rainbow trail in space, was sold on Foundation for 300 Ether (about 600,000 USD at the time). Beeple’s artwork entitled “Everydays: The First 5000 Days”, the first 5000 days of digital art in his career from May 2007 to January 2021, was being sold at Christie’s for more than $10m. (As of the time of this, the bid was 9.75m, but buyer’s premium would drive that over $11m).
While it may sound insane that someone paid that much money for an animated GIF, people in the art world do this all the time. A Keith Haring poster, for example, could be bought for a few hundred dollars while the original canvas might be worth millions. As Beeple explains it: a lot of people take a picture of the Mona Lisa, but only one Mona Lisa actually exists. NFT ownership is analogous to owning the original master copy. The owner will have his ownership documented on the blockchain, similar to owning the title, like in real estate.
Elisabeth Johs, co-founder of New York based art gallery Trotter and Sholer sums it up perfectly, “NFT’s are intriguing as they represent the direction our world is moving towards. Transparent digital assets demystify much of the opaqueness traditionally involved in art as a commodity. They also solve other challenges within the art world including incentives, royalties, and agency for artists.”
Online gaming assets and collectibles like Crypto Kitties utilize NFTs to allow users to take the assets out of the gaming environment and allow third party marketplaces to trade them. A number of collectible and gaming companies utilizing NFTs from Crypto Kitties to RareBits to GameDex (trading cards) have raised a substantial amount of venture capital. Crypto Kitties creators, Dapper Labs, built out NBA Top Shot which are video clips of NBA highlights. Collectors have spent close to a quarter billion dollars on these video clips, many of which can be viewed for free on YouTube.
On top of that the Ethereum “smart contract” also entitles the author of the asset (the artist) to royalties which can be as high as 10% on each additional sale of the asset. As long as you continue to have access to your Ethereum wallet, there is no storage cost, no maintenance fees, and no other upkeep as associated with other forms of art. However, some of the marketplaces do take a cut of the resale profits (in addition to the optional royalty to be paid to the artist). Nifty Gateway, for example, costs 5% in the secondary market, while Rarible takes 2.5%.
As an influencer how can you leverage the NFT phenomenon to expand your business? If you take a step back, you’ll see how you are really an artist. You create a lot of art (or content). Some content does really well, some goes viral, some content bombs or maybe just doesn’t resonate with your audience. Not all of us are top YouTube influencers. However, you aren’t sure what piece will be a hit and which will be a bomb. What if you could reduce that volatility in earnings by converting it into an NFT? An owner, or partial owner, of your content could see how well it does online and have the pride in picking the right horse. Perhaps the owner of it would get a percentage (from 1-100) of the profits from that single piece of content, the rights to turn it into a meme, or the rights to monetize the intellectual property mentioned in the post. Could you reposition NFT to be similar to an “investment” in you, the influencer? (Update: is this what the Jay-Z / Tidal and Square deal is about?) (Update 2: @Jack first tweet being sold and the bid has now reached $2.5m)
NFT artists can draw up Ethereum Smart Contracts to include a royalty payment to the author. (Fun fact: Every other art form offers royalties except for visual art and … being an influencer!) What if your travel itinerary, recipe, or sewing pattern could be sold with an NFT and each time the original buyer sold it, you would receive a royalty in perpetuity even though you only sold it once.
If you can see NFTs beyond the original application of art and collectibles but into the broader world of digital assets, you can see that there is a wide number of applications for influencers and beyond! In fact, NFTs can create an entire new world of copyrights and intellectual property royalties for the open information economy that influencers fuel. The possibilities are only limited by your imagination! While we don’t know what the future holds for NFT’s we do know that Ethereum tokens will probably have solidified their role in our crypto future.
Got new ideas for NFTs? Drop us a line!