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The most prolific buzzword of 2021, the one that has been making its way through the digital world like wildfire, is “NFT,” or non-fungible token.
Around 2016-2017, radical visionaries created projects that linked unique digital assets to the blockchain, most generally on the Ethereum protocol. The cultivation of this concept started with projects widely known today, like CryptoPunks.
What are the big brands doing?
With collections doing billions of dollars in sales in the last eight months, larger and more prominent companies have been drawn to the potential for monetization. They’re jockeying to establish themselves as leaders in this emerging industry.
We’ve seen this with major brands jumping onboard like Twitter, Adidas and, most recently, Nike with its acquisition of RTFK Studios. They are leveraging the idea of digital ownership and the communities that surround them to further bolster their own brand reach and betting on what the future of the digital infrastructure will look like.
This, coupled with the announcement of Facebook changing its name to Meta and million-dollar sales of land in The Sandbox, is a signal for many consumers and creators to look into the potential use for NFTs. Similarly, the average SME owner is likely looking at NFTs and their possible uses and applications for their customers.
Related: 5 Reasons Why NFTs Are The Metaverse’s Ideal Revenue Model
What does this mean for the smaller fish?
With all this movement and change in the digital landscape, you as a customer or business owner might be feeling overwhelmed. Perhaps you’re feeling like you’ve missed your chance. I can confidently say you have not been left behind.
The true strength behind NFTs is that the tools are available to nearly everyone. And the potential for innovation is only limited by your imagination and the community or customer base that surrounds you. This and their willingness to adopt and adapt to emerging technologies.
A prevalent example of the uses of NFTs for small-business owners and freelancers comes from content creators and the elimination of middlemen. We’ve already seen businesses like Patreon allowing artists and content creators to cut out the middleman and reward their supporters with unique incentives like exclusive access to merchandise, Q and A’s and presale access to albums or concert tickets.
The next evolution in the creator economy is with NFTs and digital ownership. NFTs allow creators and business owners to create assets that give exclusive access to similar types of events, but the NFT itself is not fleeting and ephemeral like a monthly contribution to Patreon. Instead, a creator can create monthly NFTs and sell them to their consumers, and these NFTs can give access to intimate concerts, art shows, limited-run merch drops and other bonuses.
Related: NFTs Are So Much More Than JPEGs
The real game-changing aspects of these new digital assets are two-fold. First, people like to be first or “ahead of the curve,” especially when it comes to fandom. These digital collectibles can reward your early adopters as you the creator become more famous. Fans like to say things like, “I knew about them before they were famous.” Now fans can offer digital proof through those NFTs and the blockchain ledger.
Second, the NFT is resellable at any time. Making a resellable asset gives your fans more opportunity to reclaim their investment in the short term if they have a large financial burden unexpectedly. In the long term, it gives them the ability to profit off of being an early adopter.
We’ve seen this with things like rookie baseball cards, concert posters and other limited-supply items in real life selling for huge profits as creators gained stardom. Imagine that your early supporters get a limited-edition NFT and you become famous years later; those early supporters would be rewarded greatly when they sell that limited-edition NFT to supporters who come in later. With this model, your fans also become your greatest marketing asset. This is already true for creators, but the ability to have a direct relationship and create value for your patrons is now even greater.
What does this mean for your business?
NFTs are growing in reach, seeping into new industries at a rapid pace. With the right innovative ideation, they can be a huge asset to your business and brand. The key is to find out how to apply NFTs to your business model in order to create more value for your customers. Going onto a platform like OpenSea with a significant amount of your business capital on hand in order to mint 10,000 tokens for your roofing business just isn’t going to move the needle. You have to move with tact and an understanding of the capabilities of Web 3.0 technology.
There are many innovative applications that cryptocurrency and blockchain technology will add to the digital infrastructure we currently use. For the average business owner, the world can be cluttered, confusing and frustrating. Research and participation are your biggest assets for contextualizing the current possibilities. Understanding the current sentiment and use cases for NFTs will help you and your team ideate the best ways to incorporate them into your business. As new ideas and use cases come to market, trends will be easier to spot and employ.
For large brands, the entrance into the NFT space has been easier than it will be for most small to medium-sized enterprises. For these smaller businesses, it will be about ideating and taking small risks to test the market’s reaction.
Related: Everything You Need to Know About NFTs and Cryptocurrency
What should your next moves be?
Betting on Web 3.0 is a smart move for many companies, but for many, rushing will be a mistake. Allowing innovators to create new technologies while patiently keeping their finger on the pulse will be a tactful approach for businesses looking to use NFTs in their businesses.
Shunning NFTs right now would be like seeing the limited use cases for web apps in 2006 and discounting their ability to iterate into the behemoths they now are. Similarly rushing into the waters could be like spending millions of dollars on building an app that becomes obsolete before it ever gets taken to market.
Be patient, be smart and don’t discount the possibilities that NFTs will bring to the world. Their uses and applications will eventually be as ubiquitous as cellphones and social media. Just because you don’t see the value of a $200,000 JPEG doesn’t mean you should write off the movement as a whole.