How companies are using NFTs

Non-fungible tokens (NFTs) will be gaining mainstream popularity in 2022. They are being used as profile pictures on
social media platforms such as Twitter and Reddit, with Facebook and Instagram, are expected to follow. Despite a lack of understanding about NFTs among mainstream consumers and the limited usability of the underlying blockchain technology, NFTs are expected to be a significant part of the future of digital commerce and provide a way for companies to reclaim control of their digital consumer relationships.

Following are some of the ways companies started using NFTs.

Existing Product line extension to NFTs

Companies are launching NFT collections, ranging from exclusive releases of digital art of their existing physical products, as a first step in exploring the use of non-fungible tokens (NFTs). However, brands must consider
what comes next and how NFTs can be integrated into their business strategies.  Following are some real-world examples of companies using NFTs

  1. Ralph Lauren: Ralph Lauren is a fashion brand selling branded digital apparel in virtual worlds like Zepeto. This allows consumers to purchase and wear digital versions of Ralph Lauren clothing and accessories in these virtual worlds.

  2. Bud Light: Bud Light is launching its first non-fungible token (NFT) project called the “Bud Light N3XT Collection,” which will feature 12,722 unique tokens designed with color cues from the Bud Light NEXT brand. Customers who purchase an NFT as part of the project can vote on Bud Light NEXT merchandise, have access to Bud Light NEXT brand and partner events, and receive other surprises.

  3. Nike: Nike, the sportswear company, has acquired RTFKT, a startup specializing in NFT-based digital sneakers. This allows Nike to create and sell digital versions of its physical sneakers, which can be collected and traded as NFTs.

  4. Disney: Disney has released non-fungible tokens (NFTs) through the VeVe app-based marketplace, specializing in licensed NFT drops from major brands.

  5. Coca-Cola: Coca-Cola released an NFT collection featuring digital apparel. This includes digital versions of Coca-Cola t-shirts, hats, and other clothing items that can be collected and worn in virtual worlds.

  6. Campbell’s Soup: Campbell’s Soup released an NFT collection featuring art created from Campbell’s soup cans. This collection included digital art pieces created using Campbell’s soup cans as a starting point, which were sold as one-of-a-kind NFTs.

  7. White Castle: White Castle, a fast food chain, has partnered with Doodle Labs, a company that focuses on bringing established artists and brands to the blockchain using generative art, to release a collection of non-fungible tokens (NFTs) on the Ethereum blockchain.

Digital Consumer connection through NFTs

Extending the physical product and services into NFT is one way to start the journey into the world of NFTs. Companies start gaining long-term benefits by using NFTs as a central digital touchpoint between their product and services and consumers, controlled by the company itself. Following are some ways companies use NFT as a digital touch point to integrate their real-world product and services with the virtual world.

  1. Nike’s Crypto Kick patent: Nike has developed a system called “Crypto Kicks” that also allows buyers of physical sneakers to receive a digital asset tied to a unique shoe identifier. The digital asset represents a “Crypto Kick,” and its production is linked to the production of the physical sneakers. Ownership of the sneakers can be transferred by trading both the physical shoe and the associated digital asset, which can be stored in a “Digital Locker” app. In addition, owners of “Crypto Kicks” will be able to “breed” digital shoes to create “shoe offspring” and have the offspring made as a new physical pair of shoes.

  2. Tokenizing physical products: Physical products often have limited value and lifespan for consumers, but by creating digital tokens based on their unique microstructure, it is possible to unlock additional value, access new communities, and increase engagement with the product. For example, a consumer who buys a physical toy and takes a picture of its microstructure could be rewarded with a token that allows them to join a decentralized community and access new opportunities through digital assets. Veracity Protocol is a technology that facilitates the creation of digital identifiers encoded into NFTs and derived from the physical properties of objects. 

  3. Boson Protocol: Boson Protocol uses non-fungible tokens (NFTs) to support new forms of digital commerce, starting with “metaverse commerce” or the use of virtual worlds like “Decentral and” for socializing and shopping. Boson Protocol has purchased a piece of real estate in “Decentral” to build a virtual mall where consumers can participate in gamified, branded quests and buy digital items or wearables. The company’s vision is to build an ecosystem of 3D designers and virtual real estate that can support retail and brand partners by creating virtual malls in different virtual worlds and connecting brands to technology and partners.

  4. Dynamic non-fungible tokens: Dynamic non-fungible tokens (dNFTs) are NFTs that can update aspects of their metadata based on external conditions. This is achieved through smart contracts, which instruct the underlying NFT on when and how its metadata should change. dNFTs offer a way to update data in NFTs, which is impossible with static NFTs, whose metadata is fixed once they are minted on a blockchain. dNFTs can be used in various contexts, such as tokenizing real-world assets, building progression-based video games, and creating blockchain-based fantasy sports leagues. The dNFT helps companies constantly keep in touch with their customers through dNFTs.

Adoption of NFTs

Adopting new technology and understanding how to integrate it into existing business processes can take time, as demonstrated by the evolution of the internet from Web1 to Web2 and now Web3. Some companies may have been slow to adapt to Web1 and Web2, resulting in missed opportunities to survey the market and understand new technologies. As we are currently in the early stages of the development of Web3, companies need to take action and consider how they can adapt to this new technology to avoid missing out on potential opportunities. Web3 includes various technologies such as blockchain, decentralized applications, and non-fungible tokens (NFTs), which have the potential to impact a wide range of industries and change the way businesses operate. Companies that are proactive in understanding and utilizing these technologies may gain a competitive advantage in their respective markets.

Following are some of the ways companies can start their NFT adoption journey:

  • Companies need to pay attention to how exclusive or available their non-fungible token (NFT) collections are, as too much or too little exclusivity can affect consumer interest. NFTs can be more engaging and interactive through their programmability, such as by allowing multiple common NFTs to be merged into limited ones or adding community features. The social value of an NFT collection may also be a factor in maintaining consumer interest.
  • Companies can make their NFT collections more closely associated with their brand by connecting them to their products or services, adding a philanthropic aspect, or linking them to exclusive branded experiences. Other ways to strengthen the connection between NFTs and a brand include offering physical products with digital NFT collectibles, using NFTs to document attendance at exclusive events, or enhancing loyalty programs with NFT collections. Brands must find innovative ways to use NFT technology to engage with consumers.
  • Companies should be careful when adopting non-fungible tokens (NFTs). They should aim to understand how to effectively use them through trial and error and by learning from the successes and failures of others. Companies need to avoid superficial attempts to appeal to the crypto community and instead focus on metrics that reflect the potential of NFTs to connect real-world products and experiences with the digital world in the long term. The full impact of NFTs will take several years to be realized, giving brands time to understand and navigate this technology.