If you love kittens and have been around the internet for a while, you know about cryptocurrency and the rise of NFTs. Spelled out as Non-Fungible Tokens, NFTs are a new form of bitcoin that is being discussed extensively in the creative industry and beyond – but particularly in relation to the Creator Economy.
You may remember the story of the Nyan Cat meme being sold to the highest bidder for $560,000. This is the power of the NFTs; and if the very idea of a meme being sold for such a ridiculous amount makes you frown, you have come to the right place to learn why it shouldn’t.
In truth, all the hype is rather justified. If used correctively and extensively, NFTs could resolve a number of issues for content creators all around the world – and of course, provide countless opportunities for advertisers and marketers.
Just what are NFTs?
I’m going to get a bit technical here, so bear with me for a bit.
As mentioned, Non-Fungible Tokens are a form of cryptocurrency that is set to revolutionise the creative industry – media and asset ownership in particular. In his article for IPG Media Lab, Richard Yao explained them quite perfectly. Though they have been around since 2017, they have only been popularised by CryptoKitties, a video game in which users could exchange NFTs in the form of virtual kittens. Some of them even sold for hundreds of thousands of dollars.
What sets NFTs apart from other forms of cryptocurrencies is their non-fungibility. In layman terms, each NFT is unique; think of them as a serial number in a limited edition collectible item. As they are encrypted, each NFT is assigned a digital hash that sets them apart from any other NFT of the same kind. This means that every single token is unique in its own right.
If you still don’t see the appeal of NFTs in general, it may be because you’re not thinking like a collector. Everybody can make prints of an old Van Gogh, but only one person will own the original – and that original has unbelievable value in the market. Now apply the same concept to digital assets, and you have a pretty solid conceptualisation of what NFTs truly are.
With digital kittens in CryptoKitties, every single virtual cat was assigned a NFT. This meant that every cat was different and unique, and there were no other cats like it in the entire world, virtual or otherwise. People could snap screenshots of that cat, even recreate it piece by piece in Adobe Illustrator or even Blender; but it would still not be the same cat. The Non-Fungible Token attached to the virtual kitten acted as a certificate of authenticity. Which is why kittens on CryptoKitties sold for so much money.
With an NFT, our top illustrator James Birks could sell a non-fungible and unique copy of this Meghan Markle illustration as an original. Same for every other illustrator’s work out there.
This concept may result challenging to grasp for some digital natives. I know it is for me; after all, if something is online, how can it be unique? You can just recreate it and replicate it as many times as you like. In truth, the NFTs insert themselves right in that position to fix that loophole; with each NFT acting as a unique “serial number” for the attached asset, every piece of work connected to an NFT is, for all intents and purposes, unique. One of a kind. The next one may be a replica, but it won’t be the original.
Collectors of course see a lot of value in this. When people trade NFTs, their unique identifier is encrypted into the token to identify ownership – meaning that, even when the asset has moved to a new owner, a trail of owners is still available to trace it back to the creator.
Initially, NFTs were being attached to virtual kittens and memes, then sold on the market for thousands or millions of dollars. Things are starting to change and breach the borders of the dataspace now, but NFTs are still fundamentally tied to digital assets, art and virtual goods in games. This solves one huge problem that the Creator Economy has been trying to solve for ages: the matter of ownership and copyright.
Because each NFT can be traced back to its origin, it’s easy for creators to retain rights on a certain piece of work, and even to earn royalties based on future sales of the item. This makes NFTs not only unique, but also distributable and remix-able.
The implications of this are, of course, huge. Whatever copyright laws have been struggling to regulate in the web could be solved by a widespread use of NFTs. Which is why this new form of cryptocurrency is so important for creative professionals worldwide.
NFTs in the creative & advertising industry
When memes and kittens first started being sold as NFTs, somehow the news broke and people worldwide were suddenly aware of the existence of these tokens. According to research from The Harris Poll and R&CPMK, 46% of consumers familiar with NFTs would be interested in brands offering them as commercial products. This means that marketers and advertisers could easily capitalise on NFTs to drive increased revenue and awareness.
Because of their intrinsic nature, NFTs carry an unspoken value that is connected to their uniqueness. Brands are already experimenting with tying them to physical products, often as a certificate of authenticity. NFTs can be indicators of luxury, give a premium feel to a product, but they can also easily be used simply as an extra means to drive awareness. Taco Bell, for instance, sold a series of 5 animated videos as NFTs, and Nike specifically has patented a “CryptoKick” pair of blockchain-based sneakers which gives you a NFT as part of the purchase.
Image by Jonas Jota from Pixabay
Outside of Adland, creative professionals can take advantage of the NFTs as well. 3D artists can sell video game assets; illustrators can sell artworks; and celebrities are stepping into the scene as well for a variety of reasons, from selling the first Tweet ever made ($2.9m) to selling unique Discord server access. Because of their flexibility, NFTs can be used for literally anything, be it more tangible like a video or clip, or intangible like a service or premier/lifetime access to an exclusive community.
They also enable creators to receive direct support for their hard work. NFTs create a feeling of scarcity which has been fuelling the collectors’ community for decades; except now, that spirit has moved into the digital world.
You can think of NFTs as unique, signed copies of a book, sculpture or even live event ticket; animated artworks, digital collectibles and purchases are easily attributed to a user without the need for a third-party identifier – such as a cookie. Perhaps I’m being overly optimistic here, but I do like to think that the cookie-less future may well pass through NFTs.
Downsides of NFTs
Being a much young form of blockchain currency, NFTs come with their own sets of challenges. Perhaps the most significant one is their massive carbon footprint. Being part of the blockchain family, NFTs require a huge volume of electricity and computational power to be generated. This leaves an impact on our environment, and a number of early adopters have already dropped out of NFT sale or distribution due to just that. With that said, there are companies taking steps to make sure that NFTs become more sustainable, and we should be able to see considerable improvements in the scene in the near future.
There is also the problem of displaying NFTs in real life or otherwise. Being often tied to collectible items, a collector will hardly want to keep a NFT artwork in one random folder of their computer and there are currently very few ways to display your NFT collection. Over time, however, these issues will be solved by a range of new solutions and technologies specific to NFTs, and creators all over the world will be able to increasingly take advantage of this new type of cryptocurrency.
Are NFTs the next big thing?
It’s hard to say if NFTs will take off completely and enter the absolute mainstream at some point, but one should certainly wish they do. NFTs solve a number of issues for creators all around the world, provide unique opportunities for brands to monetise and drive brand awareness through premium, and they are an excellent solution to the ever-discussed issue of asset ownership on the Internet.
The next logical step, of course, would be to help creators gain royalties every time an NFT replica is displayed anywhere. With the NFTs being as traceable and unique as they are, reproductions could easily be traced back to the original. But can you imagine social media having to pay royalties on every shared meme?