Over 75% of Non-fungible Tokens (NFTs) never sell for more than 15 dollars. According to NonFungible, the average NFT price last year went from $128 to nearly $4,000. What accounts for the run of brands to launch their own NFT in the metaverse? How do you price an NFT? We clarify some answers with Praphul Chandra, the founder of Koinearth.
Take time to consider what you've purchased when you buy a painting, an artwork, a photograph, or a poster. We've become used to believing, "I purchased this actual item that I can hold in my hand." The concept of spending money for something you can hold in your hands is incredibly appealing to the human mentality.
However, this is not always true. Consider in-app purchases. "We pay for some features, we pay for certain kinds of premium spaces in games, we also pay to buy virtual items inside the game" he adds. What if users could make different types of purchases across mobile apps, just as they do in-app transactions.
The social media behemoths are waking up to the new reality. As Twitter began to allow NFTs, or non-fungible tokens, hundreds of users' profile images changed from circular to hexagonal. Facebook and Instagram are also developing features that would allow users to add NFTs to their accounts.
“Virtually, the collections on your social media profiles will become your living room or bedroom wall where you can display the causes you support, the icons you are a fan of and the brands you love” Praphul says.
The battle between real and fake
Many NFT platforms are public, allowing anyone to publish content and begin issuing NFTs. How can a buyer tell if an asset is genuine?
“The difficulty is that many platforms aren't focusing on the interaction between the physical and virtual worlds. As a result, it's like the Wild West, where ‘Buyers Beware’ is a phrase,” Praphul explains.
Another significant problem in the NFT sector is ensuring that the platform is responsible for entity verification. There should be a legal declaration stating that the content creator is the copyright holder so that the buyer may then purchase with confidence.
Another concern is that a lot of the price NFT is today driven by speculation, and much of that speculation is backed by the crypto market's extraordinarily high liquidity. “There is simply too much cryptocurrency liquidity out there with no investment opportunities. Unless regulations come in to clean this up, the extraordinarily high liquidity will keep driving up the prices of NFTs, regardless of whether they are genuine or have some value,” Praphul adds.
The most common mistake is for chief marketing officers and brand owners to view NFTs as a revenue strategy. At the very least, they must consider it as a marketing plan first. Yes, there may be some financial gain, but that cannot be the primary objective. To continue to promote their brand, Praphul believes the brand should leverage the platform to deliver experiences to their fan group.
“What social media did a decade ago for digital marketing, NFTs will do for marketing in the coming decade. It's a much more cost-effective tool than internet marketing,” Praphul concludes.