You’ve certainly seen the abbreviation NFT floating around online recently; it stands for “Non-Fungible Token” and it’s been named Collins Dictionary’s word of the year due to the staggering growth it’s expected to experience (over 11,000% by 2021). According to the Dapp Industry Report 2021, NFTs produced $23 billion in a trade last year, which is likely why so many people are interested in learning more about how to get into this industry.

So, what exactly are NFTs and the Blockchain?

Token, in the context of technology, refers to a digital representation of an asset, whereas non-fungible refers to an item that cannot be exchanged for another of the same kind. Consider the art market as an easy-to-understand illustration: how many Van Goghs would a Mona Lisa be worth? They’re completely separate and independent creations that have no common ground. However, owing to the fungibility of the Euro, two 5-euro notes may be exchanged for one 10-euro note.

Blockchain is a mechanism for recording transactions in digital currencies like Bitcoin, and it is also used to record these unique, distinct, and irreplaceable electronic codes. Blockchain uses cryptography to record transactions in a manner that makes it almost impossible to tamper with the data recorded there. By connecting the digital asset’s one-of-a-kind file to its one-of-a-kind certificate on the Blockchain, authenticity and ownership of the asset are ensured.

In broad terms, an NFT is a one-of-a-kind digital certificate that is recorded in a Blockchain and is used to verify ownership of an asset. Thus, any entity may use NFTs to store and track both digital and physical assets.

One of the newest technologies

Brands have endless opportunities, and developing micro trends may be traced back to shifts in consumer behavior and technical advances. Since its breakthrough, businesses across industries have been using NFT-based branding strategies to strengthen their existing relationships with consumers and attract new ones.

In the realm of fashion, both GAP and Adidas have released limited-edition NFT collections that can only be purchased in physical form. The plan of action that emerges from this endeavor is meant to create a sense of scarcity around the brands, with the ultimate goal of fostering the formation of fan clubs and the retention of loyal customers.

Fast food chain McDonald’s launched a promotion for the introduction of a new burger that offered a free NFT to consumers who followed the company on Twitter.

Should money be put into NFTs?

That’s the million-euro question, and it’s clear that businesses are changing the way they interact with their target audience by providing them with unique experiences and fostering connections in ways that were previously unheard of. Successfully redefining community, fortifying customer loyalty, introducing authenticity, and giving customers a voice are all within reach with NFT. In addition to the retail, catering, and film industries, NFT is also used by the technology, sports, and even real estate industries.

Many more advancements are sure to come, but the lightning-fast response of the market to NFTs demonstrates that the future is here right now.