Many companies and major brands, such as Nike, NBA, Pepsi, and even Taco Bell, are already on the cusp of non-fungible tokens (NFTs). But are these just for the show, or are these NFTs creating value? Just as digital services have become an integral part of all businesses inside and outside the technology sector, tokens, especially NFTs, are likely to be equally important in the emerging Web3 economy for at least two reasons.
First, in my view, NFTs tokenize ideas at the atomic level, creating competition and exclusivity around goods and services. If the goods or services do not conflict, that is, if one person’s consumption is not traded off with another person’s consumption, or if they cannot be excluded, then the law is to use a pricing mechanism to gate access to the goods or services. A market cannot be formed if it costs outside. NFTs, on the other hand, create competitiveness and exclusivity by leveraging smart contracts on the blockchain that deliver NFTs to people’s digital wallets at the time of purchase.
Second, I think organizations can use NFTs to efficiently attract and engage different levels of customers in their own unique ways. Traditional marketing requires you to sell a product or service at a discounted price, perhaps for a limited period of time, but with NFT, brands can target specific customers and reward those who want to get involved. I can do it. For example, a fashion brand may have decided that an NFT holder would drop a discount code or special offer that is not available elsewhere. Doing this on a large scale usually costs an exorbitant amount of money, but NFTs provide a way.
Related: Why are major global brands experimenting with NFTs in the Metaverse?
Building a community
However, so far, most NFT applications are included in larger brands. At least it seems to be based on media coverage. But in any case, even small organizations and independent business owners will benefit from NFTs in the coming years if they invest their time and energy to understand how they work. .. In fact, think about the types of businesses that are most likely to benefit from NFTs. It’s just a small organization that doesn’t have that much marketing budget to run large campaigns and discounts that benefit from cost savings. What NFTs offer to target consumers and invite them to the community.
Forget the thousands or hundreds of thousands of dollars spent buying mailing lists, creating sales funnels, and conducting research and market research. Understanding the competition and knowing the consumers is always important, but reaching people on the blockchain based on opt-in and the ability to transparently track what people are actually buying and involved. Given that, the situation is fundamentally different.
That doesn’t mean marketing isn’t important. Marketing and visibility are important as long as consumers need to learn about the products and services offered. But the mechanism behind it is changing. A large budget alone is not as effective as a small organization or an independent business owner with a clear community of loyal customers. NFTs are just new technological mechanisms for communicating rival and exclusive products and services to valuable people. NFTs are not an alternative to creating valuable products and services in the first place.
Related: Web3 relies on and lacks participatory economics — participation
For example, citing Gary Vaynerchuk and 3LAU, we’ll take a look at the positive effects of airdrops and governance tokens previously covered in Cointelegraph Magazine. When used intentionally and carefully, AirDrop is a great way to reward early users and build a close community. Then, as the momentum gains, the community grows and enters a new phase.
Strengthening B2B services
It’s easy to see how NFTs can improve the consumer experience, from fashion to content creation, but what about businesses that sell services to other businesses?
The principle is the same. Imagine, for example, a consultant company where a company spends time bidding with different consultants by purchasing an NFT. Second, the consultant’s income changes based on the supply and demand of the market, providing stronger incentives for each person to weigh and add value in the process, and the company likes it. We provide the opportunity to hire top talent.
The same applies to higher education institutions where teachers can create NFTs of content and license it to businesses as an additional source of income, reducing the need to increase tuition fees. Such an approach also encourages faculty to create content that actually engages in market demands, rather than simply talking about market demands.
Beyond the outward dimension, think about the potential impact of tokens on an organization’s internal labor market. One of the biggest challenges within the organization is the lack of a pricing mechanism that dates back to the contributions of the late Nobel laureate Ronald Coase in the 1937 paper and another Nobel laureate Oliver Williamson in the 1981 paper. ..
There is a problem within the organization because market prices serve to allocate supply and demand. There is no price. Instead, internal labor markets and organizational decision-making work through hierarchies. However, these are inefficient and have various transaction costs, or factors that drive the wedge between what people want to exchange and what they need to exchange.
Related: Explain the business essentials of Metaverse in an easy-to-understand manner
Such friction can be resolved by using an internal economic system that facilitates exchanges using tokens. For example, raising an employee’s salary can be a dangerous bet, but paying with tokens can only be redeemed for tokens if the employee remains in the organization, so with additional skins to the game. An incentive to do is created. Obviously, creating such an internal ecosystem is not easy, and there are costs and benefits to assess in more detail, but at the core of it is that tokens radically change the conversation about transaction costs. There is a possibility.
Even if you don’t know why, it’s easy to get caught up in the topic of NFTs and even alternative tokens. Obviously, there’s something special about the Web3 revolution we’re working on, but it can be difficult to understand why. The secret is that NFTs have the ability to create competitiveness and exclusivity at the atomic level around ideas. This has profound implications that are worth further investigation.
This article does not contain any investment advice or recommendations. All investment and transaction movements carry risks and readers need to do their own research when making decisions.
The views, ideas and opinions expressed herein are for the author only and do not necessarily reflect or express the views or opinions of Cointelegraph.
Christos A. Maccridis He is the Chief Technology Officer and Co-Founder of Living Opera, a research affiliate of Stanford University and Columbia Business School, and a multimedia art tech Web3 startup. He holds a PhD in Economics and Business Sciences and Engineering from Stanford University.