Did you know that what we refer to as the Internet is entering its third iteration called Web 3.0? In this latest version, NFTs as such came to life. So in order to provide a more comprehensive picture of the notion of NFTs and their use cases, let’s first start with a simple explanation of the differences between Web 1.0, 2.0 and 3.0.

Web 1.0 was the first version of the Internet. It looked like a magazine – just pictures and text without interaction with the content. There were very few creators, and most users were consumers.

Web 2.0 is the one we use today. It’s an enhanced interactive version of Web 1.0. It has given rise to social media and user generated content. However, content and user data are mainly monetized by a handful of Internet giants.

Web 3.0 is based on the blockchain technology. It focuses on decentralization and gives users back the control over and ownership of their content and personal information. Users are able to monetize their own content and data.

The main difference between Web2 and Web3 is decentralization. Web3 operates on a decentralized technology that not a single entity or a group of organizations can control. In Web2, we have a few large corporations that keep the gates to the Internet and make profit off of users and content whereas users only pay with money, attention (i.e. their time) or free content. Those who are able to monetize their content receive a small portion of the revenue. The rest goes to companies like Google, Facebook, Amazon, Spotify, etc.

If you are a seller on Amazon, you pay fees between 6% and 45% of the selling price with the average seller paying about 15%. In general, creators are vastly underpaid both in Web2 and the physical world. For example, artists selling in galleries receive 50% of the price, the typical royalty of a published author is just 10 to 15% of the retail price of a book, and 25% of an e-book sale. The percentage that musicians receive for each album sold typically falls anywhere between 10% and 20%, with 10% being the most common.

Blockchain and crypto are not just alternative money. It is an alternative to the current Internet, economy and monetary system. It is a new Internet that provides value for those who are building it, namely users, creators, sellers.

The browser extension of Cirus Foundation, for example, lets you control your data and earn crypto while browsing. A new blockchain social media platform distributes revenue to the users. That’s right, you get paid for your posts. NFT marketplaces sell creators’ works at a commission as low as 2.5%. Play-to-earn (P2E) blockchain give players the opportunity to earn money.

What do NFTs have to do with Web 3.0?

If you have a digital image, a picture you have created or a photo, in Web 1.0 you could not do anything with it.

In Web 2.0, you can upload it to social media or your website. However, you will not get paid if it is viewed thousands of times on Google. Even if your image has been viewed 100,000 times in search engines, you will not receive a single dime. You can sell it on your own website or through an intermediary that would take a 15% to 40% commission. However, you or your buyer cannot prove ownership of the image.

In Web 3.0, if you mint your image, i.e. create a new block and record your image on the blockchain, you create an NFT. It stands for non-fungible token. NFTs are tokens that represent a unique class of assets either in digital format or in the real world. What is special about them is that they function as a verifiable proof of authenticity and ownership due to the nature of the blockchain. Furthermore, they are non-interchangeable which in turn allows for the introduction of uniqueness and provable scarcity in digital economies.

Most people wonder what makes NTFs so expensive. First, we need to consider that though there are many copies of an artwork, there is only one original, and NFTs provide proof of ownership. You can have a copy of Mona Lisa but you are not the owner of the original painting. Different factors also come into play including buyer’s goals and perception, author’s popularity, hence underlying value including historical or future value, exclusivity, status, liquidity and other types of profit, or various types of utility.

Social media giants are also joining this booming industry. Twitter have announced that people can use NFTs as their profile pictures. The co-founder of Twitch is building an NFT marketplace.

Many projects have being experimenting with NFTs in a variety of different ways and new use cases.

Art

The first known NFT Quantum was created in 2014 and consisted of a video clip of a pulsating octagon filled with different shapes. It was sold for $4 on the Namecoin blockchain, a fork of Bitcoin software. In 2021, it was resold by Soteby’s for $1.4 million.

NFTs started rapidly gaining popularity in 2021 when various famous artists sold their pieces for millions of dollars. Mike Winkelmann, a.k.a. Beeple, auctioned his NFT Everydays – The First 5000 Days for $69.3 million, Pak’s collection The Merge was sold out to 28,983 collectors for a total of $91.8 million. The CryptoPunk collection, a set of 10,000 NFTs, have a price tag between $350,000 and $500,000. The most expensive CryptoPunk #5822, one of the nine aliens in the collection, was sold for record-breaking $23.7 million in February 2022. The famous Bored Ape Yacht Club collection was launched in April 2021 for 0.08 ETH (about $190) per NFT. Half a year later, the minimum cost for entry is 93 ETH (over $200,000).

Music

Whitney Hustons’s unreleased album was auctioned for $999,999 in December 2021. The world-renowned musician and producer Justin Blau, a.k.a 3LAU, is at the forefront of introducing NFTs to the music industry. Last year alone, he sold NFTs for a combined value of over $11 million.

Being an owner of an album is great but receiving a percentage of the royalties is even more lucrative. In January 2022, the American rapper Nas sold out NFTs for his single Ultra Black that give partial ownership to song’s streaming royalties. In February 2022, Snoop Dogg’s released his new album BODR (Bacc on Death Row) on the blockchain store Gala Music. It consisted of stash boxes, each one of which included 1 out of 17 songs. In addition, owners of the NFTs receive exclusive surprise drops like comics, films or images, concert attendance opportunities plus earning potentials on the Gala network. Those who have collected all songs get real-life digital awards.

Gaming

The traditional gaming industry generated a revenue of 1.8 billion in 2021 alone but never gave back to their players. Even the in-game assets bought by players are not owned by them.

NFTs have been widely adopted by blockchain games and have turned into an amazing business model creating new economies. NFTs provide a better funding model for blockchain games as well as a better model to give back to players who not only own the in-game assets but can also profit off of them by playing, selling or renting them. Some people in the Philippines even make a living playing the P2E game Axie Infinity, according to CoinDesk.

Real Estate

The virtual real estate market in the metaverse is booming. Companies are buying land plots in Decentraland and Sanbox and the prices range between $11K and $4.3 million. Some buy them for purely speculative reasons while others intend to use them as part of their strategy to offer new digital experiences to their customers or build another storefront in the digital world.

Physical real estate properties are also being sold as NFTs. The first apartment bought as an NFT in 2017 was sold in 2021 by Propy, a blockchain real estate transaction platform.

Other utility

Some projects offer exclusive membership to NFT platforms, clubs or even restaurants like Gary Vaynerchuk’s first NFT restaurant. The VeeFriends collection provides various utilities such as gifts, a three-year access pass to a conference, 3 two-hour mentoring meetings and some other surprise perks. The premium beer brand Bud Light launched an NFT collection to promote its zero-carb beer and gives away physical glasses to its NFT holders.

Although NFTs are very often associated with art, they are not only art. Each NFT represents a different digital asset and may offer utility. An NFT can be anything – your personal data, a concert ticket, a club membership, etc. They can also be connected to physical goods and services.

DappRadar reports that NFT sales surpassed $22 billion in 2021. In comparison, in 2020 the sales volume was merely $100 million.

How can NFTs be utilized by businesses?

NFTs are powered by smart contracts which are self-executing contracts containing the terms and conditions of the agreement between buyers and sellers in the form of code. This means that they eliminate intermediaries and time loss. They can also be used to incentivize users and customers by unlocking rewards after certain milestones are met by them.

Furthermore, brands have issues with reaching younger generations like Millennials and Gen Z and retaining their loyalty. Our suggestion is to meet them in Web 3.0.

Businesses are now able to offer limitless incentives to customers by adding utility to NFTs. Any NFT strategy should be aligned with your sales and marketing strategies. Ask yourself how you can enhance customer experience, gain new customers and retain the old ones.

Keep in mind that with NFTs you do not sell only images. You can also sell products and services. 4K platform, the first marketplace that allows users to mint NFTs representing physical goods, launched in September 2021.

Think of the NFT as your advertisement. Add a nice image and description to your product or service and sell them. In addition, your customers will also receive the image in their wallet so that they will always be reminded of your company.

NFTs are a versatile and robust tool that has enormous potential. They can be used as both gamification and marketing tools that attract the younger generation. They can become part of your loyalty or discount program bonuses as well.

For example, if you sell washing machines, create a GIF of the washing machine with a rotating drum or a rotating image of the product and add a promo code or a QR code. The code can be added as unlockable content to your NFT and only the buyer will be able to access it.

Another example of an NFT is to create VIP club membership cards or an NFT restaurant menu that would be special to the person that bought it.

There are endless options of developing new NFT products. One important aspect to consider is that most NFT projects owe their success to the community they have built. Constant communication with community members turns them into the most zealous evangelists.

How are NFTs created?

First, you need a clear idea of what your NFT will be and the utility it will have. Then work on your marketing strategy which should either involve building a new community or educating your current customers on what NFTs are and how they can buy them.

Next, carefully select a marketplace considering three main factors: expenses, target audience, your marketing strategy. If your target audience consists of customers who have little or no knowledge of crypto, then you have to take into account usability as well. There are marketplaces that offer credit and/or debit card payments.

Second, to list an NFT for sale on a market place, you have to buy some crypto on a crypto exchange and transfer it to your wallet to pay gas fees which may vary from a couple of cents to over a hundred dollars for a profile or a listing depending on the blockchain the marketplace uses. For Ethereum-based marketplaces, use a Metamask, WalletConnect or Coinbase wallet. For Solana NFT marketplaces, you will need a Phantom wallet. All those wallets are browser extensions which are very easy to set up. However, it is of utmost importance to write down your seed phrase and never share it with anyone else. This is the key to your wallet.

Third, register a profile on the marketplace and connect your wallet. Depending on the marketplace, you can list a collection and/or a single NFT. You will need an image or a video file, a description, a logo and in some cases a collection banner.

Lastly, chose if you will sell at a fixed price or on an action, add a price and approve the transaction fee if any.

NFTs are not just JPEG images people buy for insane amounts of money. There is so much depth to the NFT technology which will be used in Web 3.0 primarily to create new business.

Join the {r}evolution now.