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HomeNFT NewsBeyond the hype: NFTs have the potential to transform business experiences

Beyond the hype: NFTs have the potential to transform business experiences

Many businesses and large brands have already joined the nonfungible symbol (NFT) bandwagon. These include Nike, Pepsi, Taco Bell, and the National Basketball Association. These NFTs are not just for show or creating value. Tokens, and specifically NFTs, are becoming increasingly important in the new Web3 economy. This is similar to digital services being essential for all businesses, inside and outside the technology sector.

First of all, I believe that NFTs tokenize ideas at an atomistic level, creating competition and exclusivity around products or services. Non-rival goods and services can’t form markets. This means that one person’s consumption doesn’t trade with another’s. Or when they are not exclusionary — when it is prohibitively costly to provide access to a good, or service, with a price mechanism. NFTs, however, are able to create competition and exclusivity through leveraging smart contracts on blockchain that deliver NFTs directly to people’s digital wallets upon making a purchase.

Second, I also believe that organizations can use NFTs to efficiently attract and engage different tiers of customers each in their own unique way. NFTs are a way for brands to target customers and reward those who engage. Traditional marketing is about selling products and services at a discounted price, sometimes for a short time. A fashion brand might decide to offer discounts codes or other special offers that are only available to NFT holders. This would normally be prohibitively costly to do on a large scale. However, NFTs allow for this possibility.

Related: Why are major global brands experimenting with NFTs in the metaverse?

Building community

To date, however, most of the NFT applications have been among bigger brands — or at least, so it seems based on media coverage. However, NFTs will be a boon for smaller businesses and owners of independent businesses in the future if they are able to learn how they work. Think about which types of businesses are most likely to reap the benefits of NFTs. It is the smaller companies that don’t have the marketing budget to run large-scale campaigns or offer discounts. They also benefit from the lower cost of NFTs to reach consumers and invite them to join a network.

Forget thousands or hundreds of thousands of dollars that go toward buying email lists, creating sales funnels, and conducting surveys and market research. Knowing your customer and understanding competition is important. But the landscape changes when you consider reaching people through a blockchain. This is based on the opting in of the user and allows for transparent tracking of what people are buying and engaging with.

Marketing is important, however. Visibility and marketing are important in order to make sure that consumers know about the products and services being offered. The mechanism behind all this is changing. A large budget will not make a difference if a small business or an individual has a loyal customer base.

Related: ,,

. Web3 relies on participatory economics, and that is what is missing — Participation.

Related: Web3 relies on participatory economics, and that is what is missing — Participation

Take, for instance, the positive effects of airdrops and governance tokens, which I’ve covered in Cointelegraph Magazine before, citing Gary Vaynerchuk and 3LAU. Airdrops can be a great way to reward early users and build a community. As momentum builds, the community enters a new phase.

Enhancing B2B services

Although it’s easy to see how NFTs can enhance the consumer experience, ranging from fashion to content creation, what about businesses that sell services to other businesses? The principles are the same. Imagine, for instance, a consulting firm where different consultants are hired by businesses who then buy their NFTs. Consultant income would then vary according to market demand and supply. This would provide stronger incentives for each person in order to add value and carry their weight, and also give businesses the opportunity to hire their top talent.

The same idea could be used by an institution of higher learning where faculty can produce NFTs from their content and license it to businesses as an extra source of revenue. This would reduce the need for tuition growth. This would encourage faculty to produce content that is relevant to the market, and not just talk about them.

Think beyond the external component and consider the potential impact tokens have on an organization’s internal labor market. One of the biggest challenges within organizations is the absence of a price mechanism, dating back to contributions by the late Nobel Laureate Ronald Coase in a 1937 paper, as well as another Nobel Laureate Oliver Williamson in a 1981 paper. Since prices in a market function as a way to allocate demand and supply, there is a problem within organizations: There’s no price! Instead, the internal labor markets and organizational decision making function through hierarchies. These are inefficient and have a lot of transaction costs.

Related: Demystifying the business imperatives of the metaverse

Such frictions can be resolved through the use of an internal economic system where tokens are used to facilitate exchange. It might seem risky to raise an employee’s salaries, but tokens give them additional skin and incentive to perform. Tokens cannot be redeemed if they are still employed by the company. Although it is difficult to create such an internal ecosystem, there are benefits and costs to consider. But at their core, tokens can fundamentally change the conversation around transaction costs.

Taking stock

It’s easy to get caught up with the buzz about NFTs — and even fungible tokens — without knowing why. It’s clear that there is something special about the Web3 revolution, but it can be difficult to pinpoint why. The ability of NFTs to create competition and exclusivity at atomistic levels around ideas is what I believe is the key ingredient. This has deep implications that are worth further exploration.

This article does not contain investment advice or recommendations. Each investment and trade involves risk. Readers should do their own research before making any decisions.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Christos A. Makridis is a research affiliate at Stanford University and Columbia Business School and the chief technology officer and co-founder of Living Opera, a multimedia art-tech Web3 startup. He has a doctorate in engineering and management science from Stanford University.

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Henry Hicks
Henry Hicks
NFT and Crypto Enthusiast. Loves Travelling and Exploring the Metaverse!


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