Many big businesses and brands have jumped on it token nonfungible (NFT) bandwagon, including Nike, the National Basketball Association, Pepsi and even Taco Bell. But is this just for show, or is this NFT creating value? As digital services become important to every business in and outside the technology sector, I believe that tokens – and, in particular, NFT – may be very important in a growing Web3 economy for at least two reasons.
First, my password display those NFTs tokenize ideas on an atomistic level, creating competition and exclusivity around goods or services. Markets cannot be formed when goods and services do not compete – when one person’s consumption is not sold to another – or when they are inseparable – when it is too expensive to access goods or services through a price mechanism. NFT, on the other hand, creates competition and exclusivity by using smart contracts in the blockchain that send NFT to people’s digital wallets when they buy.
Second, I also believe that organizations can use NFT to engage and engage different customers in unique ways. Whereas traditional marketing involves the sale of goods and services at a discount, perhaps for a limited time, NFT allows brands to target specific customers and reward those who want to participate. For example, a fashion brand may decide to send out discount codes or special offers that are not available elsewhere to NFT holders. Normally, it would be too expensive to do at scale, but NFT gives way.
However, to date, NFT applications have generally been among the larger brands – or at least, so it appears based on media coverage. But either way, smaller organizations and those with independent businesses will benefit from NFT in the years to come if they invest the time and energy to understand how it works. In fact, just think about the types of businesses that are most likely to benefit from NFTs: Smaller organizations that don’t have the marketing budget to implement campaigns and large discounts that benefit from cost reductions. that NFT provides to target consumers and invites them to the community.
Forget the thousands or hundreds of thousands of dollars you want to buy email lists, create sales funnels, and conduct surveys and market research. Understanding the competition and knowing your customers is certainly important, but the landscape is really different when you think about reaching people on the block based on preferences and the ability to track what people buy and do in a transparent way. .
That’s not to say marketing isn’t an issue. Marketing and visibility are really important because consumers need to learn about the goods and services being offered. But the mechanism behind it all is changing – just having a big budget isn’t going to get you much like a smaller organization or an independent business owner who has a community of loyal customers. NFT is simply a new technological mechanism for delivering competitive and exclusive goods and services to those who value it – so it is not a substitute for creating essential goods and services.
Take, for example, the positive effects of airdrops and governance tokens, which I’ve covered in Cointelegraph Magazine before, cites Gary Vaynerchuk and 3LAU. When used with intentionality and prudence, airdrops are a great way to reward early adopters and build a close -knit community. Then, as momentum is built, the community grows and enters a new phase.
Improve B2B services
The principles are the same. Imagine, for example, a consultation where businesses bid over time with different consultants by buying their NFTs. Then, consultant income will vary based on market demands and supply, providing a stronger incentive for everyone to carry weight and add value in the process, as well as opportunities for businesses to hire their most preferred talent.
The same is true for higher education institutions where faculty produce NFT content and can license it to businesses as an additional source of income, reducing the need for tuition. The approach will also encourage faculty to create content that truly matches the demands of the market, rather than just talking about it.
Beyond the external -facing components, think about the influence of tokens on an organization’s internal labor market. One of the biggest challenges in the organization is the lack of a pricing mechanism, since the donation of Nobel laureate Ronald Coase in 1937. paperalso another Nobel laureate Oliver Williamson in 1981 paper.
Since prices in the market function to supply supply and demand, there is a problem in organizations: There is no price! Instead, the internal labor market and organizational decision making function through a hierarchy. But this isn’t efficient, and there are a variety of transaction costs – or factors that make the wedge between what is wanted and what needs to be exchanged.
The friction can be solved by using an internal economic system where tokens are used to facilitate exchange. For example, raising an employee’s salary can be a risky bet, but paying in tokens creates additional skins in the game and an incentive to do so since tokens can only be redeemed if the employee remains in the organization. Obviously creating such an internal ecosystem is not simple, and there are costs and benefits to evaluate in more detail, but at its core, tokens have the potential to fundamentally change the conversation about transaction costs.
It’s easy to get caught up with the buzz about NFTs – and even fungible tokens – without knowing why. Clearly, there is something special about the Web3 revolution that we are working on, but it is sometimes difficult to determine why. I believe the secret sauce is in the ability for NFTs to create competition and exclusivity at an atomistic level around ideas – and that has deep implications worth exploring further.
This article does not contain any investment advice or recommendations. Every investment and trading move involves risk, and readers should do their own research when making a decision.
The views, thoughts and opinions expressed herein are those of the authors only 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 chief technology officer and founder of Living Opera, a Web3 multimedia arts technology startup. He holds a doctorate in economics and management and engineering from Stanford University.