Why are Big Brands Spending Millions on NFTs?
Non-fungible tokens (NFTs) are one of the most unusual alternative investing options. An NFT refers to a digital asset that is on the Ethereum blockchain. Investing in NFT entails buying a digital piece of art, a character that can be used for play-to-earn games, or the rights to a logo or tweet.
Although investing in a digital item is not strange, NFTs are currently gaining more popularity. For instance, Justin Bieber paid $1.29 million for a Bored Ape Yacht Club (BAYC) NFT (an amount that is 300 percent more than the valued market price).
Also, big brands are getting involved in NFT, with brands like Pizza Hut, Taco Bell, and Pringles creating and releasing their NFTs. Visa also bought an NFT for $150,000 while Adidas paid over $156,000 for digital art.
So, why are all these big brands spending millions on NFTs that nobody will ever touch? Read on to find out.
Brands are Riding the Wave
Big brands are spending lots of money on NFTs because they want to ride the wave. The increased adoption of NFTs tends to take on a life of its own. Also, NFTs are increasingly becoming a crucial part of our lives.
Brands are Looking for Ways to Increase Their Revenue
Companies spend lots of money on NFTs because they are driven by the possibility of earning more. Since NFTs are a new income stream and engagement tool for businesses, they can help in boosting earnings.
Brands, such as Louis Vuitton, thrive on scarcity. That explains why they are exploring NFTs for the metaverse. Brands also want to increase engagement with their customers and they are using NFTs for this purpose.
Brands can use NFTs to reward and incentivize their customers via exclusive access, innovative gifts, and lots more.
Businesses are Following Trends
More and more people are spending their time in virtual worlds. When customers moved towards malls, brands moved in that direction. When customers moved toward e-commerce, brands also followed. Now that customers are moving toward Web 3.0, digitally-inclined, brands are also following, thereby increasing their demand for NFTs.
We are currently in the growing hype stage of NFTs. A time will come when there would be a significant drop in the demand for NFT Art. At that point, critics will refer to NFT as a fad (the same way they called e-commerce a fad during the dot-com hype). After this period, NFTs will rise again and they will become part of our daily lives.
Metaverse is the Future
Big brands are spending millions on NFTs because the metaverse is the future. There are already many people that spend significant hours in virtual worlds every day. This number will keep increasing.
Popular artists, such as Justin Bieber, the Weekend, Travis Scott, and Ariana Grande, are already performing concerts in the Metaverse.
What You Need to Know About NFTs
Although big brands are spending millions on NFTs, there are many reasons why you need to tread with caution. If you are a starter, you need to realize that the virtual aspect of NFTs implies that the industry is a feasting ground for scams. For instance, fake NFTs can be marketed to investors.
Ensure the person that is selling you the token owns the rights to what they are selling. Also, before you buy any NFT, you need to research the NFT and make sure the person is not scamming you. With big names joining the NFT space, scammers will want to benefit from the hype.
Furthermore, it is important to educate yourself on the utility of NFTs and the basics of cryptocurrencies before you even think of investing in NFTs. Apart from learning more about the basics of blockchain technology, you also need to understand how you can open and use a wallet.
Lots of NFT communities are popping up. This is why you must immerse yourself in this technology and ask questions. Asking questions and connecting with other NFT investors will help you learn more about this investment option.
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