NFTs are all the rage nowadays, but not everyone understands their true potential. Most people think it’s a marketplace for digital art and discard it as gambling or something that is only for the wealthy. I believe it’s the beginning of a new era for all content creators — bloggers, podcasters, YouTubers, artists, storytellers, photographers, basically everyone who likes to share. Let me tell you all about why I think so and how content creators can leverage this opportunity. But first, let’s understand what an NFT is.
What is an NFT?
NFT stands for Non-Fungible Tokens. It is a unique digital asset such as art, trading cards, memes, gifs, video clips, audio clips, tweets, this article or an ebook, basically anything that one can create, store and sell on the blockchain. Once tokenized, these assets can be bought, sold and traded using cryptocurrency.
Why is it called “non-fungible”?
Fungibility means interchangeability. So, any two units that can be evenly exchanged are fungible. Let’s say I give you a $10 bill. If you give me two separate bills of $5 each in return, we are even. It’s because every $5 bill holds the same value no matter what. So, money or fiat currencies are fungible assets. Similarly, bitcoin is a fungible token.
On the other hand, let’s think about two Harry Potter books. They may have the same story and book cover, but one of them is the first edition signed by J.K Rowling. So, you can’t exchange them evenly, and therefore they are non-fungible.
The Magic of NFTs
For a moment, picture this sequence of events:
- It is 1990, and K. Rowlingis on a train, travelling from Manchester to London King’s Cross brewing ideas to write Harry Potter.
- She takes a selfie with the train and converts the image into an NFT.
- She then begins writing the script in longhand, making notes on scraps of paper. She clicks pictures of the notes on which she first describes Harry, Hermione, Ron, Dumbledore and Voldemort, and converts each into an NFT.
- She now has a total of six NFTs in her crypto wallet.
- While publishing Harry Potter and the Philosopher’s Stone, she creates 100 NFTs and calls them the “First Exclusive Edition”.
- In 1997, her first book becomes a bestseller, and Harry Potter becomes a household name.
- Just before the release of her second book, she puts her NFT collection up for auction and announces that owners (and their families) of “First Exclusive Edition” get access to the private launch party of every new Harry Potter book release. They also get access to a yearly conference where Rowling reveals her plans for the upcoming books. The auction is sold out and manages to generate about 120 ETHin total revenue.
- Fast forward to 2002, the first Harry Potter movie is released and becomes a blockbuster success. Rowling’s popularity has soared to new heights.
- By now, the “First Exclusive Edition” NFTs are being traded at ~25 ETH, 20–25 times the initial purchase price at the auction. Not only are her fans generating revenue, but every time an NFT is traded, Rowling also gets a 10% royalty. So, if an NFT gets sold for 25 ETH, she automatically receives 10% of it in her account, i.e. 2.5 ETH.
- Rowling now creates 100 new NFTs called “House Gryffindor” that also acts as an access token to a private screening of every new release with the actors. Those tokens go for auction at ~50 ETH each.
- By 2010, she reveals the six NFTs that she had initially created while writing the first book. Those NFTs are worth millions of dollars in ETH.
The above scenario may have been one of the most successful NFT stories ever. Imagine how much revenue Mark Manson would have already generated for his readers if he had tokenised some of his best-performing articles before The Subtle Art of Not Giving a F*ck became a bestseller. If Stan Lee and his co-writers had created NFTs of all their Marvel characters, they probably would have been the richest group of people on this earth.
All this is now possible with NFTs and will be much easier in future as the technology matures. Best selling author and serial entrepreneur Gary Vaynerchuk has already done something similar with the launch of his new NFT project called VeeFriends in May. The NFTs are centred around characters that have traits he truly believes in. Each NFT comes with a three-year admission token to VeeCon, an annual super-conference. Some of the proud VeeFriends owners have already seen their token (NFT) value increased to 5x within a month.