First invented in 2014, NFTs, or non-fungible tokens, represent a blockchain development for digital assets that continues to grow in both recreational and enterprise popularity. NFTs are digital assets that have been tokenized with unique digital certificates by their creators, making them valuable to buy and sell much like collectible trading cards. These tokens are published on blockchain technology, but unlike cryptocurrency and other blockchain units, NFTs themselves carry no inherent value; all of their value is derived from the digital asset or file that they symbolize.
Many people have heard about NFTs in the digital art and celebrity media space, but what do NFTs look like and mean for the future of enterprise digital assets?
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How an NFT Works
At the most basic level, NFTs are digital units that can be trademarked, bought, and sold by virtually anyone. But ownership and transactions in the NFT world look different from other kinds of digital commerce.
Other people may have a nearly identical copy of your digital file, but NFT ownership means that you own the original, verified file from the creator. Creators place unique authentication signature codes on all NFTs that they sell, so when you buy an NFT, you own a unique digital piece that can be verified on any server, browser, or other platform. This ownership also means that you have the freedom to resell the NFT, but creators can usually collect a percentage each time the NFT is resold.
Digital auction platforms sell NFTs online, allowing you to review a visual gallery, bid on, and sell a variety of digital assets. Some of the best known NFT platforms include OpenSea, Rarible, Foundation, and Mintable. On May 11, 2021, eBay also announced that they would be selling NFTs on their platform, making them the first e-commerce enterprise to step into the NFT space.
But before you can make a purchase on one of these platforms, you’ll need to open a digital wallet and invest in cryptocurrency. The digital wallet allows you to exchange cryptocurrency for and store NFTs after purchase.
Turning Digital Assets Into NFTs
Any asset that can be digitized has the potential to become an NFT. Some of the most common NFTs on the market are digital art, video clips, and brand and celebrity collectibles. These NFTs are mostly created and sold by artists and influencers, but there’s also a growing market for enterprise assets in the NFT world. Patient records, supply chain procedures, and other valuable enterprise data have increasingly been codified into NFTs.
Top Concerns with NFTs
Because NFTs are so fresh to the digital market, buyers, sellers, and experts alike share a few concerns about their longevity and practicality:
Value of the Original vs. the Copy
Because an NFT represents a digital file, it’s fairly easy to make or access an exact copy of the original file. Traditional collectibles like paintings cannot easily be replicated in any form other than a print, so the owner of the original claims something completely different from everyone else, making it extremely valuable. This uniqueness is technically true with NFTs as well, but many people do not buy into the value of an original video file versus the same video clip on YouTube, since the original and the copy are effectively the same.
Again, digital files can easily be copied and widely distributed. For artists and the owners of NFTs, major concerns have arisen about who can copy these files and who has the right to extend those copying privileges. In the enterprise world, there are concerns about what other businesses might be able to access information about processes and procedures.
At present, most NFTs sell like high-value trading cards, going for thousands and sometimes millions of dollars. NFTs have already become a major buying and selling trend amongst celebrities and the ultra-rich, but the price point of most NFTs limits who can logically enter the market as a buyer.
Mass Production Capabilities
The most renowned NFT exchanges have been for a few highly valuable assets auctioned off as collectible items or events. But creating, selling, and buying NFTs en masse is often too costly and complicated for both creators and the platforms that sell NFTs.
Investing in the Future of Enterprise NFTs
Enterprises are already discovering several ways to incorporate NFTs into their business models, and experts predict that enterprise NFT use cases will only grow as companies leverage the technology in transactions and customer interactions:
Secure Transmission of Sensitive Data
A growing class of enterprise NFTs is less focused on collectibility and more focused on secure and limited transmissions of data. Particularly in the realm of healthcare records and other highly sensitive files, NFTs have proven beneficial because they require special infrastructure to be transferred between parties. Usually exchanges of this sort of information require a letter of hypothecation (an asset extended as collateral security to a lender) or other legal proof of credibility, but NFTs act as digital hypothecation letters with more built-in security.
Simplified M&A Procedures and Business Transactions
Major B2B transactions, such as mergers and acquisitions, usually take a considerable amount of time and cost a lot of money to reach completion. The opportunity costs of time and money can be cut down significantly when corporate assets are exchanged in NFT format. NFTs make digital assets more accessible and liquid on the market, meaning that the buying and selling parties can more easily review and make decisions about assets without working through as much legal or bureaucratic red tape.
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Customer Experience Gamification
One of the most exciting frontiers in enterprise NFTs comes in the form of customer experience gamification. Some enterprises have already leaned into customer-facing NFTs, with airlines and other travel companies using NFTs to track customer interactions with their brand.
NFTs allow enterprises to launch longterm tickets and ledgers of their customers’ interactions, which provides a detailed and accurate glimpse into company performance metrics. Enterprises are also starting to use these ledgers to track and reward customers when they reach certain milestones within the company, which simplifies efforts like company loyalty program tracking. In the future of customer experience NFTs, many experts are predicting that NFT bundling and unique offers will become a driving force in customer and brand loyalty strategy.