With the support of one of the leading SEE early-stage venture capital funds Eleven Ventures and Visa Innovation Program, The Recursive worked on a series of explainer articles that demystify how startups in the region can approach their growth plans. These Visa Innovation know-how articles aim to help regional founders benefit from the wide knowledge generated by the team of Eleven Ventures.
Who would have guessed that times will come when 20-year-old artists will make hundreds of thousands of dollars by selling their art on the blockchain? 2021 was definitely the year when the NFT technology boomed in popularity and enabled talented creators to make fortunes. Yes, fortunes, indeed. How does $69M sound for the purchase of a single NFT, that is how much Beeple, the artist name of Mike Winkelmann, made in the historic sale of his digital art piece titled “Everyday: The First 5000 Days”.
Even leading financial services corporations, such as Visa, have shared their excitement for NFTs, highlighting the potential of the technology to fuel SMEs in powerful new ways. “We think NFTs will play an important role in the future of retail, social media, entertainment, and commerce. To help our clients and partners participate, we need a firsthand understanding of the infrastructure requirements for a global brand to purchase, store, and leverage an NFT,” Cuy Sheffield, Head of Crypto at Visa, has shared.
This all sounds exciting and maybe you want to start making money with NFTs, right? Well, first you have to understand them and see whether there is a use case for you as a digital creator or an SME owner. In this guide, you can find out what NFTs are, what are their current use cases in digital art and how they can be used for SME growth as well as where and how to start your NFT journey.
NFTs or non-fungible tokens are tokens that exist on a blockchain and represent ownership of unique items. NFTs cannot be traded or exchanged because each NFT is one of its kind, unlike cryptocurrencies which are fungible tokens.
They are cryptographic meaning they look like digital images, but the fact that they are built on the Ethereum blockchain and have some unique properties makes them a powerful tool for businesses of any size. Here are some of the characteristics that make NFTs a technology worth exploring by SME owners.
Basically, they are immutable which means that their ownership is passed from person to person. In addition, NFTs can’t be counterfeited because all of the information of every asset is stored on the blockchain ledger. They open up new investment opportunities and allow the original owners to make a small profit on every transaction in which the NFT participates.
So why should SMEs consider using NFTs as a tool for business growth? Simply said, timing is everything in business. As a business owner, you can get ahead of your competitors by driving customer engagement, increasing customer loyalty, attracting new customers, and having an additional revenue stream.
To bring more perspective into the topic, on the 8th March, Visa Innovation Program and Eleven Venture, organize a “Fireside Chat: NFTs – The Next Frontier of Digital Commerce”. During the webinar, Nikola Plecas, CFA Crypto Lead Europe at Visa, Stoyan Angelov, Co-Founder and CEO Fragmint.app, Veselina Markova, Fintech Program Manager at Eleven Ventures, and Lazaros Penteridis, Co-Founder and CEO of ComeTogether, will discuss how NFTs are transforming the way individuals and businesses engage with fans and digital communities. The discussion will be facilitated by John Kraski, Director of Strategic Partnerships at NFT Genius.
To summarize: NFTs exist on the blockchain which makes transactions secure, they cannot be replaced with fake substitutes, and they can be traced back to the original creator. Let’s now explore some of the use cases of NFTs for businesses.
NFTs can augment or even replace the traditional loyalty-reward digital programs. Instead of just offering customers potential for future rewards, businesses can utilize the power of NFTs to drive more engagement. The additional value for the customer is that the NFT loyalty card becomes an asset and they can sell it to make a profit on it.
NFTs can also be used to offer customers special promotions and vouchers to drive more loyalty and engagement. In addition, single-use digital promotional tools such as codes for discounts are hackable. On the other hand, with NFTs, businesses can generate blockchain QR codes for unique discounts assets.
Businesses with specific goals and financing needs and launch campaigns involving NFTs to raise the necessary funds. Business owners can, for example, work with artists to create the NFT drops and then monetize them by communicating the mission they want to achieve with their communities. The US celebrity Ellen Degeneres hold her own series of NFT auctions in April 2021 to raise over $33K for a charity foundation.
Similar to loyalty cards, NFTs can be used as tokenized event tickets that have unique features written into them such as VIP backstage visits, or free drinks. After the end of the event. The NFT tickets turn into a collectible and the owner can resell it to other fans.
Businesses that sell physical items can also take advantage of tokenization by issuing an NFT digital representation of their products that customers can use in future metaverses. For instance, in January 2022, Hennessy released its first NFTs at a price of $226K that represent physical and digital ownership of the first and last bottles of its limited-edition cognac.
NFTs have the potential to become a solution to the problems in the slow and expensive patent industry. By minting an NFT, businesses can prove the rights they have on a product in a cheaper, faster, and more reliable way.
To explore some of the newest use cases of NFTs, we had a conversation with Volen Tsolov, Chief Operating Officer at GLOZAL, a Miami-based music technology company that develops the world’s first NFT Player™.
Everything so far sounds interesting? If you are ready to explore further and find the provider for your business case, here are some examples of international embedded finance providers opening in Europe:
First, outline what are the benefits that you want to bring to your customers. Is it an NFT loyalty card, a promotional code, or an event ticket that you want to create? If you don’t have the skills to make your own art, consider hiring a freelancer.
Even though the most common blockchain that holds NFTs is Etherium, there are other blockchains such as Binance Smart Chain, and Polkadot that are viable options. Factors to consider here are the transaction fees on these blockchains as well as the types of cryptocurrencies that the majority of your customers own.
Depending on the blockchain you have chosen to hold your NFTs on, you will have to create a digital wallet that is compatible with that blockchain. For example, if you have chosen Etherium, you can sign up for a crypto wallet in Coinbase and MetaMask, among others.
Usually, when you are creating NFTs, you will need to pay some transaction fees. That is why you should load your crypto wallet to cover these initial costs. Some NFT marketplaces also require fees upon registration.
Some of the places where you can upload your digital art and create an NFT are OpenSea, Mintable, and Rarible. Again, this will depend on the type of blockchain. After you create your profile and connect your crypto wallet, you can customize your account. Then you would be able to create (mint) an NFT by uploading a file, naming it, and adding a description.