NFTs – nonfungible tokens – are going mainstream in markets like Japan, China and the United States where, according to a recent Harris Poll, 40% of US millennials are both familiar with NFTs and likely to buy one, and, according to Morning Consult, 25% of collectors of physical items say they also engage with NFTs.
Facilitated by the digital frontier being challenged – and extended – by the decentralisation of the web and the creation of new areas or metaverses on what seems like a daily basis, NFTs make the news almost as regularly.
In November 2017, Dapper Labs launched Cryptokitties, a blockchain-based virtual game that allows players to adopt, raise and trade virtual cats, to the public. Within weeks, it experienced so much activity, it nearly took down the entire Ethereum blockchain – and its most expensive kitties sold for over $100 000.
In March 2019, Estate 311 or The Secrets of Satoshi’s Tea Garden, a parcel of land in digital world Genesis Plaza, sold for just over $80 000.
In March 2021, ‘Everydays – The First 5000 Days’ by digital artist Mike Winkelmann (better known as Beeple) was auctioned by Christie’s for just shy of $70 million, or 42329.453 Ethereum.
“Not a bad progression for a concept that, despite being kicked around in 2012, only hit its stride in 2017 when Ethereum Request for Comments 721 (ERC721) was released as a cryptocurrency standard for NFTs. It was this Standard that enabled CryptoKitties’ success in what has been coined as ‘the big debutante ball moment for NFTs,” HaveYouHeard Durban managing director, Kirsty Bisset, pointed out.
“But, given these big prices, how can brands use NFTs to engage with South Africans?”
To answer, Bisset considered how brands already are using NFTs.
“While people are buying virtual trading cards and digital land as investments for the future, fashion, art and entertainment are the hottest NFT commodities, and it’s here where many brands are playing.
“In April this year, the world’s first luxury NRT watch, the Jacob & Co Epic SF24, was auctioned for $100 000 by ArtGrail. According to the Jacobs & Co website, the price of the physical version of the watch is only shared on request, but there are versions available for as ‘little’ as $32 310 or as much as $395 057. If I owned either, I’d prefer to wear them on my wrist than have an NFT reside on my device or in the cloud, but the PR value for ArtGrail and Jacob & Co must have been worth the effort.
“While Stella Artois became the first beer brand to create horse-racing avatars – and auction off these NFT steeds – plus a digital experience in which fans could race them, Toyota has already sold over 1.3 million virtual Gazoo Racing Supra and 530 000 virtual Gazoo Racing Yaris vehicles for use in virtual car races.
“CNN has said it will sell items from a ‘collection’ it has created: Vault by CNN – Moments that changed us. These ‘moments in time’ will include historic moments from CNN’s archives packaged and sold as NFTs.
“An Argentinian designer, Andrés Reisinge, created and sold 10 pieces of virtual furniture on Nifty Gateway, the most expensive for almost $70 000, and fashion brand THE DEMATERIALISED suggests numerous ways owners can make the most of their NFTs suggesting they display them on their blockchain profile, that they wear them on social media and that they port their asset into a game or metaverse.
“According to ARK Invest, the virtual good ecosystem is expected to reach $400 billion by 2025. In South Africa, NFTs have the potential to become the next ‘off-the-rack’ or ‘wearable collection’ for fashion and accessory brands, luxury cars, perfume houses. If, in 2000, we couldn’t afford a Gucci bag so we bought the keyring, perhaps we will, in 2021 and beyond, buy the bag as a NFT strut with it in the games we play or the metaverses we inhabit?
“And, yes, much as brands are exploring the technology in the East, Europe and the Americas, it affords local brands the opportunity – free of copy-cats or manipulators thanks to the security blockchains afford – to engage in new ways with their customers.
“These include but are not limited to (to coin a currency phase) ‘minting’ bespoke artwork or iconic images or even favourite ad campaigns and offering them as prizes or collectables, collaborating with celebrities or performance and entertainments artists to offer tickets to events for life, creating luxury items or fashion items that could also be offered as prizes or collectables, and creating unique experiences open to only a very few.”