Benefits of NFTs
Since the start of the Covid-19 pandemic blockchain technology and cryptocurrency have drawn a lot of attention from all over the globe. They have attributed many new creators, engineers, investors and artists. Trading volume in many crypto exchanges kept reaching higher levels. This kind of growth led to the creation and expanding of new sectors. One sector that I am particularly interested in is Non-Fungible Tokens(NFTs). First of all, let me explain you what NFTs exactly are. NFTs are unique digital tokens that represent ownership or proof of authenticity of a specific item or piece of content, such as artwork, music, videos or virtual real estate. Unlike cryptocurrencies like Bitcoin or Solana, which are interchangeable and have the same value, NFTs are unique, making each token distinct and irreplaceable. They are built on blockchain technology, which is a decentralized and transparent system that securely keeps record of transactions. This technology ensures that the ownership history of NFTs are publicly accessible. Now that we have a basic understanding of what NFTs are, let us delve into their 2 major benefits.
1.Revenue Generation
Firstly, NFTs offer artists and creators amazing opportunities to generate revenue. By tokenizing their digital assets, such as artwork, music, or virtual real estate, artists can establish the uniqueness and scarcity of their creations. This exclusivity attracts buyers who are willing to pay a premium for owning these one-of-a-kind digital items. *** Smart contracts embedded within NFTs play a crucial role in revenue generation. They ensure that creators receive a percentage of the sales whenever their NFTs are sold or resold. This means that as the value of their work appreciates over time, artists continue to earn royalties, creating a sustainable revenue stream. Additionally, creators can fragment their works into smaller pieces, enabling them to sell individual parts, limited editions, or licenses. This diversification expands their revenue streams and opens up new avenues for monetizing their creativity.
Let's look at an example to see how much can NFTs be worth. In March 2021, the digital artist Beeple sold a digital artwork titled "Everydays: The First 5000 Days" as an NFT for an unbelievable $69 million at an auction. Beeple received a significant portion of the sale proceeds, showing the financial possibilities of selling unique digital creations through NFTs.
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2.Community Building
Another advantage that NFTs offer is creating communities. ** NFTs have become a catalyst for fostering vibrant communities centered around artists and their digital assets. Owning an NFT grants individuals access to exclusive content, experiences, and communities associated with the creator. This exclusivity creates a sense of belonging and enhances the perceived value of the NFT. It becomes a gateway to a community of like-minded individuals who share a common passion and interest. These communities thrive on social platforms and marketplaces. For example, platforms like Discord have seen an increase in NFT-related communities. Artists and collectors come together to share their experiences, collaborate on projects, and showcase their NFT collections. These communities offer a supportive environment where members can connect, learn from each other, and discover new opportunities.
One remarkable example of community building through NFTs is the Board Ape Yacht Club (BAYC). BAYC is a collection of 10,000 unique, hand-drawn apes. The owners of these NFTs gain entry into an exclusive club with access to an online community. BAYC has built a strong sense of identity and comradery among its members, who actively organize virtual and real-life events and collaborate on multiple projects. This community has evolved into a valuable network for collaboration, creativity, and business opportunities, with members supporting and empowering each other. There are a lot of celebrities in the Board Ape Yacht Club community such as Snoop Dogg, Tom Brady, Jimmy Fallon and Eminem.
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References:
Mueller, J. (2022). Taking Advantage of NFTs to Enhance Your Online Community. California
Review Management, 62(2). Schmidt, J. (2021). What you need to know about non-fungible tokens (NFTs). Forbes: https://www. forbes.com/advisor/investing/nft-non-fungible-token
