NFTs, or non-fungible tokens, are tokens similar to those used in cryptocurrencies, and make it possible to digitize various information, partly stored in a blockchain. Their non-fungible nature allows for a multitude of uses in different sectors such as luxury, video games, real estate or even the art world. NFTs were born on the Ethereum blockchain, after the implementation of a new token standard: ERC721. Thus, the vast majority of NFTs are ERC721 tokens staked on the Ethereum blockchain (65% of NFT exchanges at the end of Q3 2022), such as ERC20 tokens, such as LINK or the stablecoin USDT. However, NFTs are now present on other blockchains such as Solana, Avalanche or Polygon. Regardless of the blockchain implementation, NFTs are traded on marketplaces, the best known of which is OpenSea.
The tamper-resistant and unique nature of each NFT makes it a key element in the decentralized revolution and the transition from Web2 to Web3. Indeed, the Web3 characterizes the new evolution of the web based on decentralization and blockchains. After Web2, which is characterized by social networks and allows users to become “content creators”, Web3 promises them to regain control of their personal data by reducing centralization as much as possible, and thus ultimately the massive collection of user data by tech giants. like Meta or Google. In this new decentralized web, cryptocurrencies and tokens provide the transfer of value, while NFTs allow the transfer of digital objects (digital art, avatar accessories, etc.). It should be noted that NFTs today have multiple uses in many industries and are becoming an essential tool for brands to manage communities and reach out to new generations.
What are the challenges of this opening?
The challenges faced by NFTs are diverse and varied, depending on the industry in which they are located. In the music world, NFTs represent a new source of income for artists and enable musicians to regain control of all aspects of their music, from royalties to copyrights, while driving fan engagement. In the art sector, NFTs are particularly popular as a store of value and attract more and more collectors and artists. NFTs also attract some big names in the luxury watch sector, especially to ensure authenticity and facilitate the resale of luxury watches in the secondary market. In this case, the tamper-resistant and inviolable nature of NFTs makes it possible to guarantee traceability and authenticity. The cultural world is also opening up to this technology and some cities do not hesitate to use it to promote their heritage. This is particularly the case with the city of Cannes, which recently auctioned ten Cannes heritage sites in the form of NFTs.
As we’ve seen from the various uses of non-exchangeable tokens, they can represent a real-world object or place, a full-fledged digital artwork, or a fraction of a traditional artwork. NFTs can also represent an intangible element of Web2, such as the NFT that represents the first page of Wikipedia, sold at auction for more than $660,000, or even a Web3 item in the form of an avatar accessory that develops into a metaverse . However, an NFT can not only represent objects or places, but also serve as a ticket to an event or as a discount coupon in a store.
Why are more and more brands getting into NFTs?
Clearly, many brands quickly understood that NFTs can be used as a formidable marketing tool with multiple benefits. Some sports brands, such as Nike or Adidas, quickly stood out by offering accessories for metaverse avatars, at a time when virtual worlds were in the spotlight after the announcement of the strategic change of Meta, formerly Facebook, which was eager to take a dominant place. conquering in decentralized worlds, to bring his touch of centralization and keep control over the personal data so dear to him. Luxury brands have also been able to seize the business opportunities hidden behind the link between metaverse, NFT and real-world products, as evidenced by fashion week taking place in the Decentraland metaverse. During this event we could notably find DKNY, Tommy Hilfiger, Paco Rabanne, Dolce & Gabbana or even Etro. Major luxury brands use NFTs to give their collections an atypical touch. This is particularly the case with Prada, which is launching Timecapsule collections in limited quantities for 24 hours, with each item coming with an NFT, bringing an extra touch of exclusivity to the brand’s customers. The luxury brand is not new to Web3, as it has already partnered with Adidas on an NFT community project.
If luxury brands make their debut on NFTs, it’s with the goal of developing a particular community around these non-fungible tokens, while bringing a breath of fresh air by attracting the more sensitive generations X and Y to digital assets than before. generations. The Lacoste brand perfectly combines the marketing aspect with the community aspect by actively involving its community in the development of its web3-based projects. The crocodile brand recently allowed holders of its “Genesis” NFT to define some of the features of its forthcoming collection of NFTs.
This participative approach to luxury brands is unprecedented in an industry that is more conservative than other brands, such as brands focusing on sports. But another practice aimed at building community loyalty completes this participatory aspect by rewarding community involvement through NFTs. This is the case of Yves Saint Laurent Beauté, who offered his very first NFT to subscribers of his Twitter and Instagram accounts. NFTs that will therefore act as a loyalty card and give access to many exclusive events.
The opportunities offered by NFTs are therefore numerous for brands, and few are hesitant to take the plunge. Luxury brands seem to be the most advanced in this area, creating new companies specializing in supporting brands towards Web3. Faced with the economic slowdown in China and the expansion of online commerce, fueled largely by repeated incarceration, luxury brands are poised to do whatever it takes to win over new generations as they refresh their brand image by adopting new methods to enhance their communities. to manage.
Why did France decide to support this market with public money?
Jean-Noël Barrot, Delegate Minister in charge of the digital transition, recently announced the government’s intention to support the NFT ecosystem with public money. The latter underlined France’s desire to “take turns in Web3, which will radically change the Internet and its use”. This announcement came a few days after Economy Minister Bruno Lemaire expressed his wish for France to become a European hub for crypto assets.” This desire to position France as a major player in the NFT industry is not unjustified and is explained by France’s dominant position in certain areas such as culture, video games or the luxury industry. Jean-Noël Barrot also pointed to the need to “build a regulatory framework for NFTs, objects that have not yet been identified, especially in terms of legal certainty”. At a time when 2% of the French have already invested in NFTs (according to a study conducted by KPMG for the Association for the Development of Digital Assets), the government’s priorities are to attract global players and mobilize private funds, establishing a sovereign digital euro, while exploring the potential of NFTs and decentralized finance (DeFi). These objectives should facilitate the creation of a European metaverse, as mentioned by Emmanuel Macron, while accelerating the creation of a regulatory framework for NFTs.