How NFT Will Affect the Economy

  • How NFT Will Affect the Economy



    NFTs are the digital hype of the hour. Their economic potential is hardly foreseeable. But even SMEs should get involved with NFTs, especially as they get more exposure via NFT discord promotion.

    Bored Apes are a status symbol. Not for zoo operators, but for social media-savvy users who decorate their profiles with it. The monkeys are unique, purely virtual, and cost six or seven-digit dollar sums. Their secret: They are so-called NFT, short for Non-Fungible Token. The name already reveals what makes NFTs so special – the monkeys are not interchangeable, but can be assigned as clearly as a fingerprint.

    Due to the technology behind the NFTs, the blockchain, it is always clear who owns the respective digital bored ape. Ownership is clearly stored in the blockchain and all sales processes are transparent. But anyone who thinks that NFTs are just a technology of status symbols and that “Bored Apes” and “Cryptopunks” are only the prestige projects of a digital elite is mistaken. Because what comes with NFT is nothing short of a digital revolution.

    The business models surrounding NFTs are limitless

    At present, two usage scenarios dominate with NFTs: On the one hand, the purchase and sale of digital products such as digital monkeys and punks, but also virtual Gucci or Hugo Boss products. On the other hand, the technology can also be used to build digital communities, since exclusive memberships or access can be linked to the NFTs. The well-known entrepreneur Gary Vaynerchuk, for example, relies on this community idea, linking access to conferences to his NFT collection “VeeFriends”, for example.

    Both application scenarios can be easily adopted by other brands and companies in the first step. Of course, any fashion brand could turn their clothing into a digital artifact. Consumer goods manufacturers can launch NFT-based club memberships, for example for product testing and product development. Musicians can play exclusive concerts for their fans, access is regulated with NFT technology. Sports clubs and associations could manage their memberships through technology.

    Timeless Founder: “We’re in a period of greed on NFTs”

    With his investment app Timeless, Jan Karnath wants to introduce a new investment category for small investors: collectibles such as sneakers and watches. 10,000 users have invested since spring, and the company has just completed a round worth million. How big can that get?

    But it goes even further: car manufacturers and sellers can use NFTs to make transactions traceable and at the same time enable individual groups of people to access certain features: For example, NFTs can be used to create transparency about the number of previous owners of used cars. Manufacturers could sell a digital version of their models as an NFT when selling a new car – so I don’t have to do without my car as a status symbol in the Metaverse either. And at the latest when you hear the word car, it becomes clear: the economy should take a very close look at NFT.

    Because NFTs can not only be used sensibly in the end customer business, there are also numerous possible applications for the B2B area. Customer loyalty programs can also be managed via NFTs in the B2B area. Example: Loyalty points are stored in the blockchain for every transaction and can therefore not be copied. When certain thresholds are reached, bonuses and reimbursements can be issued – maybe even in the form of blockchain tokens. Traceability allows for more targeted customer segmentation and addressing.

    Because of its immutability and transparency, the blockchain technology on which NFTs are based can also be very useful in logistics – in the B2B area, for example in supply chains: Machine builders could use NFTs to prove the origin and quality of the individual parts or materials used. In the food industry, producers could use NFTs to document the quality of the raw materials used and reliably show when perishable goods were produced. Thanks to the blockchain, certificates, seals, or other proofs and authentications can also be stored in a forgery-proof manner and at the same time visible to everyone.


    ALSO READ: The Effects of Real Estate on the Economy


    NFTs will also change the economy

    All of this is just the beginning. As was the case with social networks, the number of usage scenarios can hardly be guessed at so far. Just as Facebook, Instagram, and Co. have developed over the years and gone through new iterations, we will also see it with NFT technology.

    Therefore, now is the chance for companies to deal with the technology in good time, while it is still in the early stages of development. This primarily requires time and some digital understanding of individual employees, nothing more. This time could be well invested: If a company deals with NFTs very early on and tries out use cases, there is a chance of developing a new business area before the competition.

    How does the financial regulator actually look at NFT?

    A few weeks ago, the French start-up Sorare raised the largest Series B financing in Europe. This shows how serious investors are about the NFT market. This raises the question: What is the status of NFT regulation?

    Anyone who decides today to set up an Instagram account for their marketing will find it much more difficult than a first mover to establish relevant penetration. It could work the same way with NFT: Anyone who hits the first stake today could be able to retain the first customers tomorrow.

    At the same time, however, there is always a risk with innovations that they will not have the impact that was originally hoped for – virtual reality, for example, is a technology whose breakthrough is often announced and yet not yet achieved.

    NFTs will play a key role in the Metaverse

    Another future technology that’s on everyone’s lips right now — thanks to Facebook founder Mark Zuckerberg — is the Metaverse. Ultimately, this means nothing other than that in the future our lives will take place in the virtual world to a much greater extent than today because the boundaries between the digital and physical world will continue to blur in the future. In the metaverse, NFTs will play a key role – because, as explained at the beginning, they make the exclusive ownership of digital goods identifiable.

    The more things we buy purely virtually in the future, the more important it will be that they clearly belong to us and cannot simply be copied or duplicated – this then applies to digital monkeys as well as digital clothing or 3D avatars. This is exactly what NFTs enable. The more time we all spend in online worlds in the future, the more lucrative it will be for every company to be visible there. Because theoretically every product can be placed in the metaverse – the NFT counterpart can be marketed for every analog good (from screws to houses) in the future.

    This is one of the reasons why medium-sized companies in all their diversity offer huge potential to develop new business models with NFT technology and to play a pioneering role in international competition. Even in industry and companies with a B2B focus, there are opportunities to develop business models with added value and to exploit the potential of the technology. At the same time, it would be a positive signal to the world if any country were to prove itself to be a pioneer in this area – we have been lagging behind in international comparison for long enough when it comes to innovative digital business models.

To Top