How Can Businesses Take Advantage of Non-Fungible Tokens?May 8, 2022, 2:24PM
Businesses worldwide are using this new phenomenon to create new business models, save costs, and take their business to the next level.
Recently, much buzz has been created by non-fungible tokens on the crypto market.
What is an NFT?
An NFT (non-fungible token) is a digital asset, almost always on the Ethereum blockchain, with unique properties that are not interchangeable. Blockchain technology guarantees the uniqueness of the NFT it is based on.
NFT tokens usually represent digital ownership of items, such as artworks and collectibles. NFTs are also often used for gaming purposes, to grant ownership of in-game items, for example.
The main difference between NFTs and cryptocurrencies is that cryptocurrencies are fungible, meaning one unit can be interchanged for another unit. For example, you can exchange 1 Bitcoin for another Bitcoin. This is not applicable to NFTs, since each token has its own set of characteristics.
Uses of NFT in Businesses
The best use of NFTs is in industries that need to prove authenticity and ownership.
For example, the digital collectibles market has seen a phenomenal rise. It started with CryptoKitties, a digital collectibles game built on the Ethereum blockchain. Today, there is no shortage of several games like the popular royal vegas reviews Gods Unchained trading card game that generates millions in sales.
NFTs are also used for loyalty programs. Companies can create NFTs for their customers and offer them rewards for their loyalty points. This is a great way to build brand loyalty and increase customer engagement.
NFTs are used as currency in some cases too. Blockchain game Upland uses NFTs to represent real-world assets with scarcity. Players can use its native token UPX to buy these assets and then sell them at a profit later on.
Brands also use NFTs to create digital branding assets like limited-edition sneakers and artwork. In 2018, British artist Banksy created an edition of his "Love Is In The Air" artwork on the Ethereum blockchain and sold it for $95,000 in ETH.
The Pros of Using NFT Tokens
NFTs are gaining popularity in recent years — and for good reason. The following are the primary advantages of employing NFTs.
You can monitor your supply chain
You can track where your products are in the supply chain. If you have distributed inventory across several warehouses, you can track the location of each item and figure out which items are in demand. This helps you reduce costs because you don't have to store excess inventory that doesn't sell well.
You can verify authenticity
Authenticity is an essential part of any business model — especially for luxury brands like Louis Vuitton and Rolex, which sell high-end goods to wealthy consumers. Using NFTs, sellers can verify that their goods are genuine and not counterfeit or stolen property from previous owners.
You can track your inventory
Another way that using NFT tokens in your business is in a way that will be a win-win situation for you and your clients is by tracking inventory more effectively. If you have an item popular with one group of people but not so much with another group, you'll be able to see where there are shortages so as not to overstock those items or understock others.
It can help you reduce shrinkage
One of the biggest concerns with having employees who handle cash is the potential for shrinkage. When you have NFT tokens in your business, it will help reduce the amount of cash in your store, which ultimately helps you to reduce shrinkage because there is less cash to steal.
You can make personalized interactions with customers
The best thing about having NFT tokens in your business is that they allow you to personalize the customer experience. You can offer discounts or other incentives based on how many tokens a person has used, which will make customers feel more appreciated and valued when they come into your establishment.
The Cons of Using NFT Tokens
As with any new technology, the NFT space has its growing pains. In this article, we will talk about some of the most common complaints that have been levied at non-fungible tokens.
- The system is difficult to utilize. People who wish to purchase and sell NFTs without utilizing cryptocurrencies have limited choices (namely, Bitcoin or Ether).
- When buying an NFT, there's no way to tell whether you're getting a good deal. NFT prices seem to be all over the place right now, and there isn't much consistency in pricing them.
The future of NFT is likely to be an exciting one. There are many possibilities for brands looking to make their mark in the next wave of advertising innovation, and some of these systems will undoubtedly stick around for a while.
Disclaimer: information contained herein is provided without considering your personal circumstances, therefore should not be construed as financial advice, investment recommendation or an offer of, or solicitation for, any transactions in cryptocurrencies.