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If you’ve ever spent a second on the internet right now, you likely would have heard about non-fungible tokens or NFTs. It’s the latest craze among digital fans, and it is a digital collector’s dream. It is dubbed the future of e-commerce, and it’s here to stay.
From digital music sold at $6 million to a few seconds of basketball highlight reels sold for $200,000, NFT is a goldmine of high-value content. Here’s why NFTs are the future of E-Commerce and why you should jump on the bandwagon right now.
What Are Non-Fungible Tokens?
To understand all the hype and prepare your e-commerce business plan, you need to know what NFT is. Non-fungible tokens or NFTs are specific types of tokens that contain content. Non-fungible means the token cannot be separated, broken apart, or exchanged for something of equal value.
This means that an NFT is a unique and one-of-a-kind item that cannot be replaced by anything else. This tech allows any organization to release any digital asset they want, make it unique, and create a digital asset that can never be interchangeable.
These elements present in an NFT are crucial in creating an E-commerce space that offers traceability, security, and value. Moreover, these apply to different kinds of E-commerce products, especially for digital materials. This makes NFTs a valuable commodity with nearly unlimited potential.
How The Market Works With NFTs
Even if NFTs are a relatively new technology, they are some of the most utilized blockchain technologies in the world apart from cryptocurrency. Therefore, the target market segment for non-fungible tokens is the younger crowd and those who have a background in tech.
Everyone from Gucci, Christie’s, to the NBA is taking advantage of the tech. Even AAA gaming companies like Ubisoft and Electronic Arts (EA) think it’s the future, but what applications are there for NFT? There are several types of NFTs, depending on the content of the token itself. These include:
- Video game items
- Trading Cards/Collectibles
- Domain names
- Special privileges
- Virtual fashion
- Online merch
As you can see, the NFT is creating a specialized market that uses digital materials as a unique possession that only a few people can take advantage of. The rarity and value of digital collectibles make a high-value market that will surely disrupt how people shop online.
In traditional e-commerce, the value of NFTs comes from their uniqueness and security. A robust use case for them is to create authenticity for the actual products, making a way to streamline sales online and build a level of product tracking unseen before.
Their value as a replacement for famous tracking information is also notable. An NFT can replace SKUs in high-value products and support emerging brands. It can even help with e-commerce data tracking, including lifetime tracking through the product’s shelf life.
The Growing NFT Market Today
The growing market is creating unprecedented demand. There are several examples of different brands taking advantage of the power of the blockchain and non-fungible tokens.
For example, NFTs auction houses can include a non-fungible token as a digital equivalent for the products that they sell. This allows the user to keep a proof of authenticity that will keep a far longer record than a piece of paper. It will also help confirm provenance for the product.
Another use case for NFTs is in-game items for video games. Much like the original real money marketplace for Valve’s Team Fortress 2 and Counter-Strike: Global Offensive skins, NFTs create a level of legitimacy for each item. Every rare in-game item that you can keep can be tied to a non-fungible token that will help tell people that the product is legitimate.
NFTs work nicely as e-commerce products for companies that have a collectible value in them. Companies are naturally acquainted with the practice in the sports industry, from trading cards to highlight reels. The NBA, for example, created the NFT marketplace NBA Top Shot, which allows them to sell “moments” to the interested parties.
Why Are NFTs So Appealing?
Scarcity appeals to customers, and the popularity of non-fungible tokens comes from the type of supply available in the online market. Many of the e-commerce applications of NFT now come from their difficulty to obtain, together with the exclusivity of ownership that they bring.
Most NFT sellers are doing their best not to flood their market to prevent the devaluation of their products. Regardless, these tokens as an additional revenue stream give sellers several ways to leverage their value.
For starters, they can be sold as purely digital goods, working as a must-have product for the buyers. At the same time, the value growth allows the buyers to resell the product and even sell the products for higher than the original value.
Some brands sell it complimentary to their physical goods, which allows the owner of the NFT to have unique experiences through the lens of the brand. For example, some brands put amazing discounts, in-store experiences, and unique treatments. In addition, as the NFT’s current owner is verifiable, the brand can ensure that no fraud happens.
The Future of Non-Fungible Tokens
non-fungible tokens create a future that puts the power back into the hands of the consumer. For the longest time, billionaires controlled how people shop and do E-commerce. By eliminating e-commerce intermediaries, big companies and small retailers can enjoy a marketplace that shares a more even playing field.
It enables small retailers to reclaim their space within a market where only the big players profit and, in turn, fulfilling much of the original goals of blockchain and cryptocurrency in general. However, current commercial activity in the world of blockchain is primarily digital, which prevents billion-dollar commerce from penetrating it at the moment.
The Bottom Line
Are non-fungible tokens the future of E-commerce? As it is, NFTs are the growing choice for digital collectibles at the moment, and whether this stands for the next few years is anybody’s guess. Then again, with all the benefits of NFT and the security elements that come with it, it can shape how online commerce happens.
Start your research if you’re in e-commerce and considering NFTs as an option as new products or a complement to what you have right now. It’s a new world out there, and while you don’t have to be among the pioneers, starting early on, NFTs can give you the advantage you need.