Many companies and big brands have already jumped on the bandwagon (NFT), including Nike, the National Basketball Association, Pepsi and even Taco Bell. But are these just for the show, or are these NFTs creating value? As digital services have become essential for all companies inside and outside the technology sector, I believe that tokens – and especially NFT – are likely to become equally important in a growing Web3 economy for at least two reasons.
First, my view is that NFTs represent atomic ideas, create competition and exclusivity around products or services. Markets can not be created when goods and services are not competitive – when one person’s consumption is not shared with another – or when they are not excluded – when it is excessively expensive to provide access to goods or services through a price system. NFTs, on the other hand, create competition and exclusivity by leveraging smart blockchain contracts that deliver NFTs to people’s digital wallets when they make a purchase.
Secondly, I also believe that organizations can use NFT to attract and engage different groups of customers, each in their own unique way. Because traditional marketing involves selling products and services at a discount, perhaps for a limited time, NFT allows brands to target specific customers and reward those who want to participate. For example, maybe a fashion brand decides to send out discount codes or special offers that are not available elsewhere for NFT owners. It would normally be exorbitantly expensive to do so on a scale, but NFTs provide a way.
Connected: Why are the major international brands experimenting with NFTs in metaverse?
Build a community
To date, however, most NFT applications have been among the major brands – or at least, so it seems based on media coverage. But either way, smaller organizations and even independent business owners will benefit from NFTs in the years to come if they invest the time and energy to understand how they work. In fact, just think of the types of companies that are most likely to benefit from NFTs: It is precisely smaller organizations that do not have as much marketing plan to carry out large campaigns and discounts that benefit from the cost reduction that NFTs provide to target consumers. and invite them into the community.
Forget the thousands or hundreds of thousands of dollars that go into buying email lists, creating sales funnels, and doing surveys and market research. It’s always important to understand competition and know your consumer, but the landscape is fundamentally different when you think of reaching people on the blockchain based on their choice and ability to track what people are actually buying and pursue in a transparent manner.
This is not to say that marketing does not matter. Marketing and visibility are important in that consumers need to familiarize themselves with the products and services offered. But the hardware behind it all is changing – simply having a large budget will not have as much pressure as a smaller organization or an independent business owner who has a clear community of loyal customers. NFT is simply a new technology system to deliver competitive and exclusive products and services to people who value them – they are not a substitute for creating valuable products and services in the first place.
Connected: Web3 is based on participatory economics and that’s what is missing – participation
Take, for example, the positive effects of air droplets and control signals, which I have covered in Cointelegraph Magazine before and quoted in Gary Vaynerchuk and 3LAU. When used intentionally and prudently, air drops are a great way to reward early users and build a close community. Then, as momentum increases, society grows and enters a new phase.
To expand B2B services
While it’s easy to see how NFTs can enhance the consumer experience, from fashion to content creation, what about companies that sell services to other companies?
The principles are the same. Imagine, for example, consulting where companies offer over time with different consultants by purchasing their NFTs. Advisers’ incomes would vary according to market demand and supply, providing stronger incentives for each individual to carry their weight and increase value in the process, as well as opportunities for companies to hire their chosen talents.
The same could apply to higher education, where faculties produce NFT from their content and can grant companies licenses for it that increase the source of income, which reduces the need for increasing teaching. Such an approach would also encourage the department to create content that is actually related to market demands, rather than just talking about them.
Aside from the outward-looking factor, think about the impact that symbols can have on an organization’s internal labor market. One of the biggest challenges within institutions is the lack of a price system, which goes back to the contribution of the late Nobel Laureate Ronald Coase in 1937, as well as another Nobel Laureate Oliver Williamson in 1981.
Since market prices work to allocate supply and demand, there is a problem within institutions: There is no price! Instead, the internal labor market and organizational decision-making operate through a hierarchy. But this is inefficient and there are a variety of transaction costs – or factors that drive a wedge between what people want and need to exchange.
Connected: Substitute the business need of the other metavers
Such friction can be solved by using an internal economy where symbols are used to facilitate replacement. For example, it could be a risky bet to increase an employee’s salary, but paying them with tokens creates more skin in the game and an incentive to perform as the tokens can only be redeemed if the employee remains in the company. Obviously, creating such an internal ecosystem is not easy, and it is a cost and benefit that needs to be weighed further, but at its core, symbols have the potential to transform the conversation about business costs fundamentally.
To make an assessment
It’s easy to get in touch with NFT buzz – and even variable characters – without knowing why. There’s clearly something special about the Web3 revolution we’re in, but sometimes it’s hard to pinpoint why. I believe that the secret sauce lies in the NFT’s ability to create competition and exclusivity at the atomic level around ideas – and this has profound consequences that are worth examining further.
This article does not include investment advice or advice. Every investment and trading business involves risk and readers should do their own research when making a decision.
The views, thoughts and opinions expressed herein are the sole responsibility of the authors and do not necessarily reflect or represent the views and opinions of the Cointelegraph.
Christos A. Makridis is a researcher at Stanford University and Columbia Business School and Chief Technology Officer and co-founder of Living Opera, Web3’s multimedia art technology startup. He holds a Ph.D. in economics and management science and engineering from Stanford University.
Mail Bonus – #hype #NFTs #lead #transforming #business #experience