What: GDR’s head of strategy explores how NFTs can help retailers and brands imagine the next potential developments of the ‘token’ economy.

Why it's important: NFTs and crypto-tokens could become a key weapon in every brands’ arsenal as digital and physical worlds converge.

NFTs (Non-Fungible Tokens) are an application of blockchain technology where each crypto token is unique. Because of this, NFTs can be used to prove ownership or authenticity of a virtual object like a digital artwork. NFTs contain information about the product’s past and present. They keep a dynamic track of ownership and usage, and the record is transparent and accessible to all.

NFTs now: they’re great at creating excitement and PR

There is a lot of excitement around using the tech to sell digital art. Well-off digital art patrons can purchase 6-figure crypto-art pieces. Gucci released a Gucci Ghost gif, bought for USD 3,600 back in February that is up for sale with a new price tag of USD 16,000. Since November 2017, there has been a total of USD 174 million spent on NFTs. It may be hard to imagine the real long-term applications for NFT, but many believe that the new ‘token’ economy is a revolution that is ready to have an impact on retail.

Fashion brands are leading the way

NFTs have allowed fashion studio RTFKT to offer viral sneaker designs, memes, and collectable exclusives offered to gamers which they can wear in games and virtual worlds. With NFTs, RTFKT can offer unique and exclusive digital products to each customer, allowing them to justify the five-figure price tags.

NFTs have also broken into the virtual home space. Argentinian designer Andrés Reisinger recently sold ten pieces of virtual furniture on Nifty Gateway, a digital design marketplace, where the most expensive piece sold for almost USD 70,000.

Nike has used NFTs to link physical objects as a way to prove authenticity and fight against counterfeits. Nike’s CryptoKick blockchain-enabled system will be used to track ownership of the physical shoe and give owners a digital replica to be used in virtual worlds which are stored in a digital locker.

NTFs application are virtually unlimited. So what’s holding us back?

Tokens, like NFTs, reduce friction in transactions and offer a quicker analysis of market conditions providing greater transparency and decentralization. There is also a higher level of customization for digital products and services.

What is holding us back?

• No common network or agreed upon platform
• A variety of cryptocurrencies and tokens that exist
• No regulation and legal frameworks in place yet

NFTs tomorrow: an opportunity to reinvent your retail experience

Once we get over these obstacles, NFTs’ applications are virtually unlimited. The retail experience could be reimagined around decentralization and transparency. Currently, NFTs and cryptocurrencies are already the lifeblood of virtual worlds, like Decentraland, where you can buy virtual real estate and even create a business hiring real humans to work in your virtual business.

Decentraland will soon open museums to display NFT artwork. The next move will be into retail and virtual shops. Decentraland will be hiring real human shopping assistants to sell NFT-backed jackets, shoes, and accessories. The metaverse world is becoming more human. Eventually, our lives will be completely intertwined between physical and meta.

Embracing the digital future

The possibilities for future innovation as digital and physical worlds continue to merge are almost limitless. The first-mover advantage is paramount so brands and retailers should move fast if they think the transparency and exclusivity offered by NFTs can elevate their brand proposition. Brands and retailers can leverage NFTs to create exclusive limited editions, provide GenZers and gamers with virtual replicas of iconic physical products, invest early in metaverse real-estate, and offer customers the opportunity to pay with crypto in both worlds.

NFTs: what do they mean for retailers and brands?