NFT Boom Projected To Continue In 2022 – Technology



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NFT Boom Projected To Continue In 2022


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Non-fungible tokens or “NFTs” are projected to
continue to grow as an integral part of branding strategies during
2022. NFTs are unique and verifiable digital assets that, like
cryptocurrency, are stored on a digital ledger or
“blockchain” (such as Ethereum) and can be traded via
online platforms that support NFTs (such as OpenSea). Unlike
cryptocurrency that can be traded or exchanged one-for-one with a
like kind (i.e., one bitcoin equals another bitcoin), each NFT
contains a digital signature that renders it
“non-fungible” or one-of-a-kind. NFTs are generally
digital representations of real-world items such as music, audio,
video, text and art. NFTs first garnered widespread media coverage
in March 2021 when the artist Beeple sold an NFT representing a
collage of 5,000 digital images at auction at Christie’s for
over $69 million.

NFTs were increasingly used in 2021 by brand owners, talent,
athletes, influencers, artists and others to increase awareness
through content creation and consumer engagement. NFT sales rose to
$10.7 billion in Q3 of 2021, an eightfold increase from the
previous quarter, as tracked by DappRadar and reported by Reuters.
2021 saw use of NFTs to expand brand recognition and product
offerings. In October, Mattel announced its launch of a Hot Wheels
NFT Garage, releasing 40 new NFT designs for fans and collectors.
The Hot Wheels NFT collectables allowed fans and collectors access
to rare digital art, and offered the chance to own limited, real,
die-cast vehicles when certain NFTs are collected. Brands also
increasingly used NFTs to promote products while simultaneously
engaging in purpose driven marketing and giving back to their
communities, including Taco Bell’s sale of NFTs depicting art
of its Spicy Potato Soft Tacos. Taco Bell donated the profits from
those NFT sales to the Taco Bell Foundation, which empowers youth
to discover and pursue career and educational pathways. More
recently, in December 2021, NFTs were used by winemaker Robert
Mondavi to authenticate a limited series of wine sold to
collectors, while also providing art depicting the wine bottle
itself.

NFTs can be used to surprise consumers and to create cache and
suspense around product launches and to give back to customers and
communities. NFTs offer consumers and buyers transparency and
security in the ownership and acquisition of NFT rights. When
applicable, brand owners that mint and then sell NFTs can embed
royalty structures in NFT technology, ensuring recurring delivery
of royalties and monetary return each time the NFT is sold. NFTs
can also enable expanded generation of revenue by turning elements
of more traditional advertising into NFTs. The spectrum of uses of
NFTs will only grow in 2022, and continue to become more
mainstream.

Takeaway: As use of NFTs grows, advertisers are
cautioned to ensure that their intellectual property rights
underlying their NFTs are protected and that NFTs are properly
minted through smart contracts embedded in the NFTs that will
assign NFT rights as to ownership and transferability.

Originally published December 8, 2021

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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