Do you find yourself wondering, "What in the world are NFTs?" You aren't alone. While they seem to be the latest digital trend, many of us have little understanding of what they actually are and how they work. As an entrepreneur or business owner, you've probably heard there are ways you can potentially capitalize on this movement. Use this beginner's guide to get started.
We chatted with a few experts in the cryptocurrency and digital assets space to shed some light on NFTs and how you can put them to work for your business. This guide covers everything to know about NFTs so you’ll be able to introduce them into your future business plan.
What Are NFTs, Anyway?
NFT stands for "non-fungible token." That clears things up, right?! An NFT can be “anything under the sun...as long as you can convert them into a digital form,” explains James Page, a writer from Crypto Head. For example, photographs, artwork, music, tweets, videos and GIFs can all be NFTs. They are, in essence, digital pieces of art, and each one is totally unique.
To understand NFTs completely, you also need to understand some basics about cryptocurrency and the blockchain. “[NFTs] are stored in what is known as a blockchain — a huge chain of blocks each containing specific digital information,” says Iryna Kidyba, financial manager at Simple App. Cryptocurrencies also run on blockchain technology and are what you use to purchase or trade for NFTs.
The blockchain is difficult to break and, therefore, creates a completely secure and unique token. “Each of these tokens is unique, indivisible and exists in a single number,” explains Kidyba. This uniqueness is the main reason why people are willing to spend so much money on purchasing NFTs. Page says, “Because NFTs can only be owned by one person at a time, enthusiasts consider their artwork as minted due to their exclusivity.” It’s effectively like buying and collecting digital art.
Who Are NFTs For?
NFTs are for everyone. You don’t need to be an investor or an art collector to develop or purchase an NFT. “Anyone with motivation, creativity and the technical knowledge of the space can benefit from selling or buying an NFT,” says Angela Ribbler, head of marketing for the world’s first NFT community-crafted music festival, W3BSTOCK. It’s simply another form of buying and selling assets, which can be applied to almost every industry.
“These NFT collections are being developed daily for almost every hobby, passion and industry. From cannabis NFTs to sport NFTs to charity NFTs, there is truly no end to what can be created and accomplished in this emerging space,” says Ty Daniel Smith, CEO and founder of Coinbound.
While at first, you might think of NFTs as only being relevant in the art world, they can actually be utilized across multiple industries and businesses. In fact, according to data collected from nonfungible.com, sport and collectible NFTs were the most popular category in 2021, over art, games and metaverse NFTs.
While the NFT space is certainly being dominated by millennials, who are so far accounting for most NFT collectors, interest is beginning to spread further. A survey conducted by Morning Consult found that 29 percent of all U.S. adults are interested in getting involved with NFTs and this is growing at a rapid rate. This growing market potential is going to benefit any business that decides to get involved early on.
Getting Started in the NFT Space
While entering the NFT space as a beginner, it can be very overwhelming to know where to start. Here are some important steps to take if you’re considering introducing NFTs into your business plan.
1. Do Lots of Research
Just starting out? Your best bet is to do your research. “There is a vast amount of educational content out there for anyone to educate themselves and start investing in NFTs,” says Smith. There are some great podcasts, content creators and blogs, such as The Crypto Marketing Podcast, Crypto Wendy O and BitBoy, which can provide plenty of knowledge in this space.
2. Find Your Niche
Once you have a good grasp of the broad topics like minting, trading, valuing and marketplaces, you can start to narrow down your research and knowledge. “Start doing market research into trending topics, collections, mints, etc.,” says Smith. This will show you what kinds of NFTs might suit your particular business or passion. As with any sort of business, finding your niche will allow you to establish an audience, market, community and product that plays to your strengths.
3. Find Your Community
The next step is finding your community in the space. Connecting with individuals who have already been successful in the NFT world and in your niche will help shed light on how you might be able to use NFTs for your business.
“Twitter and Reddit are great sources to find like-minded NFT collectors to chat with and learn from, who can get you into private chats and alpha groups and allow you to keep up with NFT hype and progress,” explains Smith.
Navigating this space alone rarely leads to success and reaching out to others will help you understand how it all works as a beginner.
How to Succeed with NFTs
“The same elements that are crucial to having a successful non-NFT business venture are the elements that make an NFT business successful,” explains Ribbler. You can apply and use the same business tools in the NFT space as you would in the non-digital world.
Marketing Is Key
The NFT market is getting more saturated every day as it grows and more people enter the space. Just like any other industry and market, you need to differentiate yourself. “Think of an NFT project like you’d think of a brand,” Ribbler says. You need to market and brand your projects, just like you would any other product or service in the business world.
Establish a Brand Identity
With so many new trends taking off every day, you need to work out what sets you apart from other NFT sellers. “You need to establish a brand identity as well as awareness and hype around that brand identity, so people can be excited to buy your NFT,” explains Ribbler. You should think about what makes your NFT unique, special and worth the value that you put on it.
“I believe that part of the reason why people are readily spending thousands of dollars on these digital artworks are the exclusive ownership rights they get from it,” says Page. If you market your NFT as being desirable and unique and from a distinctive brand identity, you’ll more than likely be on your way to success.
Take a Leap: Venture into New NFT Territory
NFTs can be a daunting and unknown space to get into as an entrepreneur or business owner. However, the huge growth potential of the area of digital assets makes it a really appealing space to get involved in. You should look at buying and selling NFTs as you would any business venture — if you do your research, know your niche and community, establish a brand identity and have a marketing plan, you’ll have a greater chance of succeeding in the NFT world. For more financial guidance and assistance, Incfile's Accounting and Bookkeeping service offers an array of resources.
Jenna Scatena is a writer and content strategist with a love for stories that have never been told before. More than a decade of working with prominent magazines and brands informs her approach to impactful storytelling. Her stories have reached more than 30 million readers, won multiple awards and been anthologized in books. Jenna's work has appeared in Conde Nast Traveler, Vogue, Marie Claire, The San Francisco, BBC and The Atlantic. She's the founder of the editorial consultancy, Lede Studio.