NFTs seem to be everywhere. Whether it's the NFL, rapper Snoop Dogg, Burger King, Shakira, or even the "side eyed Chloe" meme, it seems you can't swing a dead CryptoKitty without hitting someone jumping on the NFT bandwagon. Here's the thing, NFTs aren't just for celebrities and billion dollar corporations, they are perfectly designed to benefit small businesses, as well.
Before going too far into how founders can use NFTs, let's take a minute to understand what they are first.
What is an NFT anyway?
A non-fungible token (NFT) is a digital asset that represents an array of virtual and physical things, which cannot be substituted or switched with a fake since they are created on a blockchain that can always be traced back to the original owner or creator. NFTs can be works of art, photos, music, videos, collectibles, memorabilia, contracts, coupons, certificates of authenticity, ID files, health records, and more.
NFTs were little more than novelties until they started to get traction in 2017 with the launch of CrypoKitties and CryptoPunks, which are different collections of digital trading cards. According to nonfugible.com, total NFT sales in 2018 topped $40 million. Annual adoption and sales continued to grow through the end of 2020, when NFTs exploded onto the mainstream, exceeding $338 million in yearly sales--due in large part to the launch of the NBA's Top Shot NFT website. Since 2020, some individual NFTs have sold for more than $50 million each. Once purchased, the digital assets are stored for safekeeping in digital wallets either online or offline.
NFT growth is continuing to skyrocket
According to the website's Non-Fungible Tokens Quarterly Report: Q2 2021 Second Quarter 2021 Report, that three-month window was a record breaker for the NFT industry. The nonfungible.com report shows that in Q1 2021, the total volume traded exceeded $500 million. During Q2, it soared an additional 40 percent to more than $700 million.
The second quarter also saw a new record in the number of active wallets (more than 175,000), which shows a strong growth rate of interest. Additionally, the number of buyers and sellers is still increasing. Specifically, the number of buyers (over 38 percent) is increasing faster than the number of sellers (over 25 percent), which means that NFTs have a greater rate of uptake than attrition.
Two of the biggest reasons for the growing adoption and increased sales of NFTs are that humans like to collect things and NFTs are programmed to be scarce. Basic economic theory states that scarcity of nearly anything in demand bids up its price.
Additional attributes of NFTs are:
Digital permanence: They last as long as the blockchain they're built on continues to exist.
Cannot be counterfeited: Anyone can confirm authenticity by checking the blockchain.
Provable ownership: Which can be transferred if the NFT is programmed for resale.
Boost your local business with NFTs
All of this suggests an opportunity for small businesses to take advantage of the current NFT mania. Here are five ways that you can use NFT technology to grow your business and retain customers.
Counterfeit-proof issuance of single-use promotional tools: coupons, promotional discounts, event tickets, BOGO deals, etc. Blockchain codes or QR codes serve as uncopyable, tamper-proof access/discount assets with a wide array of use cases.
Establishing a customer loyalty program: Consider a digital NFT loyalty card. Once customers sign up for it, they download it to their mobile device. Every time they visit your business, they scan the loyalty NFT code to accrue loyalty points. At certain thresholds, you can push rewards, discounts, or blockchain tokens to be used in store.
Cause-related marketing and charity support: NFTs were used to raise money to help empower Afghan women in the aftermath of the recent U.S. exodus. A similar program could be duplicated at the neighborhood, town, city, or state level to spur geographic-affinity marketing or support local charities.
Secure fundraising for expansion: If your business is considering opening another location or expanding your existing site, an NFT campaign could be a low-cost funding alternative to a traditional bank loan. Think of it as a scam-proof Kickstarter: Crowdfunding campaign where donors know and track that money, which is only issued if milestones are reached as determined by smart contracts established at the start of the campaign.
Sweepstakes or gamification types of promotions: These types of marketing campaigns can be expensive to run and usually only make sense for large enterprises, such as McDonald's franchises that participate in Monopoly game pieces or Publishers Clearing House, which still uses sweepstakes marketing. With a little creativity, NFTs bring the possibility of highly engaging gamification marketing to small businesses. For example, a Chamber of Commerce could launch a digital NFT scavenger hunt involving dozens of locally-owned businesses to drive customer traffic to each location. The potential is limited only by imagination.
Get your NFT on
If you're fairly Internet savvy, or have access to a college intern, you can get started learning how to DIY your NFTs using online resources such as free articles and videos. If you don't have the time, interest, or patience for all that, you can pick one of the ideas above (or use your own creativity) and hire a freelancer to complete the entire project. Some of the best freelance sites are Upwork, Freelancer, and Guru.
Regardless of how you get started, you might want to give NFTs a try. With little to lose, your small business's bottom line may see significant gains, as NFT popularity shows no signs of slowing down.
Tor Constantino has holdings in BTC, ETH, ADA and XRP.