Remember a few years when everybody was, “TikTok is that silly stuff for teens”? Well, TikTok is now the most visited website in the world, ahead of Google. 🤯 🤯 🤯
Crypto and NFTs are at the same stage TikTok was five years back, and if anything, they are entering the mainstream even faster.
I guarantee you that these things will not go away, and it’s a good idea to have at least a passing understanding of what they are and how they work, even if it’s just so that you can make an informed decision not to engage with them for now.
The basics of crypto and web 3.0
For all its outward complexity, the basic idea behind crypto is simple – it moves the source of trust from one centralized organization like a government, a bank, or a brand, to a decentralized entity called a blockchain.
A blockchain is software that runs on a network of connected computers that all record, encrypt, and make publicly available, a history of all transactions recorded on the blockchain they maintain.
For a transaction to be deemed valid, a majority of the computers involved need to agree on its nature and value, using what’s called a consensus algorythm. Every time a user adds a transaction to the chain this information is publicly recorded and shared with all users.
This decentralized way to create consensus protects the information on the chain from being tampered with. Once on the chain, a transaction record cannot be edited or deleted because millions of identical copies exist.
So instead of one single company, government or a database holding and controlling access to information, now it is spread across the entire network. This is called “decentralized data,” the mantra of crypto.
What does “NFT” mean?
You will probably have seen a few brands launch NFTs, from Nike to Liquid Death Water. Some CPG brands out there have embraced web 3.0 even more fully, launching their products from a distributed platform utilizing NFTs as the tool to secure membership.
But what the heck is an NFT, and why on earth should you care?
Let’s dive into the language first. NTF stands for Non Funglibe Token.
Fungible means: freely exchangeable for another of like kind.
- Examples of fungible things are dollar bills, Post-it notes, and sheets of paper. Anything that can be swapped with no difference in value.
- Examples of non-fungible things are snowflakes, people, original art. Anything that is unique in value or use.
An NFT is a digital file, most often a video, an image or audio, that has been recorded on the blockchain. The act of recording, or minting, makes it uniquely identifiable, turning it into an NFT, a Non Funglible Token.
What this allows us to do is to take the concept of “this is the original” from the physical to the digital world, together with the associated value.
What do food and drink brands (typically) use NFTs for?
More and more brands utilize a custom created coin or NFTs for a wide variety of reasons. Check out these brands on the forefront of this movement:
The Leisure Project – adaptogenic drinks
Bored Breakfast Club – coffee subscription
All of the above brands maintain communities on Discord, a messaging app, where you can freely ask questions and learn more about the community aspect of their enterprise. If you’re interested at all in this space, that’s a good place to start learning.
When a brand creates, or mints, NFTs, these can be used for a multitude of use cases. They can be given to consumers, allocated to staff and even donated to a good cause.
Reasons to give NFTs to consumers include
- making purchases, loyalty
- leaving reviews, sharing user experiences
- creating content, creating social proof
But they can also be used as a kind of digital membership card that gives people
- access to discounts
- access to merchandize
- access to real life events
Even more use cases include
- fund rasing – instead of loans or investment from a single entity, raise funds by selling NFTs
- ownership sharing – allocate a percentage of the company’s value to be shared amongst NFT owners
- decision sharing – allow NFT owners to offer input on flavours, products, etc
Do people actually care about this stuff?
While it’s still early in this space, the number of Canadians familiar with crypto and web 3.0 technology is growing by the day.
According to research by Caddle, 30% of Canadians are already familiar with cryptocurrency. Most are younger men, belonging to Gen Z, a demographic that many brands want to connect with.
It will be interesting to see what the next few years will bring in this space, but don’t be surprised if someday soon you find yourself open a store in the metaverse, paid for by tokens you keep in your electronic wallet.