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Why Are Big Brands ‘All In’ On NFTs? Experts Weigh-in on NFTs

It didn’t take long for NFTs to surge in popularity to the point where prediction about its trajectory has become a hot topic. Experts give their take on the subject.

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Photo by liufuyu / Envato / Blockwatch

When it comes to the notion and topic of NFTs, there’s one thing we all know for certain. They’re on a surge that some people have claimed to be heading “to the moon.”

That might well be true, but there is an important question to ask at the crux of it all, and that’s “what exactly is the deal with NFTs?” Why is it that they’re so popular, what’s with the surge they’re gaining?

For all intents and purposes, NFTs are nonfungible tokens, which serve as a digital asset of some kind, and are part of the Ethereum blockchain. Upon investing in an NFT, the item you’re purchasing can be anything ranging from a piece of art, the ownership rights to a logo, a tweet, or now even a character in games that are play-to-earn.

CNBC reported that an investor paid $1.3 million for a digital picture of the Rock back in August. Big brands like Adidas, Pepsi, Taco Bell, Pizza Hut, and even White Castle are all in on NFTs. Even Visa bought one for $150,000 this year.

Some of the experts subversive to the space were questioned about these exact no. of things, and this is what they had to say.

When it comes to companies and business, it’s all about riding that wave. That’s what Tal Lifshitz, an attorney, and a partner and co-chair of the cryptocurrency, digital asset, and blockchain group at Miami-based Kozyak Tropin & Throckmorton (KIT) insinuated.

“It’s trendy, it’s fun, and it’s cutting edge technology that actually has the potential to redefine the way these brands do business and engage with their consumers,” he stated. “The more important question is, why are big brands not spending big money on NFTs?”

Increased adoption takes on a life of its own, so to speak. NFTs are in the really early stages of becoming a huge part of our lives on that front. “Increased adoption means exponentially increased value and utility,” stated Lifshitz. “If you’re the only person who owns a cell phone, it’s useless. If two people own cell phones, there’s some value. If billions of people have cell phones, you need a cell phone. That’s the impact of increased adoption. That’s the potential future of NFTs.”

Then there’s also the boost of earnings. Companies are always on the lookout for that, and that’s what Lydia Hylton, an investor at Redpoint Ventures, talked about and pointed out. she said that ultimately, companies are driven by the potential for earnings. NFTs just happen to be a new form of revenue stream, as well as an engagement tool for brands, too.

“Exclusive brands like Louis Vuitton thrive on scarcity and are exploring LV-branded NFTs for the metaverse,” she had to say, on the matter. She continued “Brands are also constantly looking for ways to increase engagement with customers.”

NFTs ultimately end up serving as a reward and do provide incentives to consumers via innovative gifts, exclusive access to things, and much, much more according to the investor.

Businesses tend to follow trends, as that mantra is what helps them stay on top of things. Dr. Dustin York, an associate professor of communication at Maryville University opined that companies are on board simply because of the fact that people are spending way more of their lives in a virtual world.

“When customers gravitated toward malls, brands followed. When customers gravitated toward e-commerce, brands followed,” he said.

“And when customers are now gravitating toward Web 3.0, digitally native brands are following, giving even more legitimacy to NFTs.”

York stated consumers should prepare for an NFT hype cycle, considering he also thinks we’re in a fast hype stage. At a certain point he thinks there shall be a dramatic drop in the NFT art demand.

“Critics will then call NFTs a fad, just like they called e-commerce a fad during the dot-com bubble,” York said, continuing “NFTs will then rise back up and be part of our everyday lives.”

Andrew Lokenauth, an NFT investor himself, says that the reason for all of this NFT hype is indeed the fact that the Metaverse is the future, and companies see that. A huge amount of people already exist that spend hours in virtual worlds every single day. That’s the reason why brands that see the benefits of the metaverse have already decided they’re all in on it.

“Perhaps high fashion companies will be next, and hold fashion shows in the metaverse,” Lokenauth says upon pointing out how celebrities like Justin Bieber, Travis Scott, the Weeknd and Ariana Grande tend to perform in the metaverse.

 “The possibilities are endless and this is why brands are spending big.”

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