NFTs, or non-fungible tokens, are tokens similar to those used in cryptocurrencies and allow you to digitize various information, partly stored in a blockchain. Their non-fungible character allows for a multitude of uses in various sectors such as luxury, video games, real estate or even the world of art. NFTs were born on the Ethereum blockchain, following the implementation of a new token standard: ERC721. Therefore, the vast majority of NFTs are ERC721 tokens distributed on the Ethereum blockchain (65% of NFT exchanges at the end of the third quarter of 2022), such as ERC20 tokens, such as LINK or the USDT stablecoin. However, NFTs are now present on other blockchains such as Solana, Avalanche or Polygon. Regardless of the distribution blockchain, NFTs are traded on the markets, the best known of which is OpenSea.
The tamper-proof and unique nature of each NFT makes it a key element in the decentralized revolution and the shift from Web2 to Web3. The Web3, in fact, characterizes the new evolution of the web based on decentralization and blockchain. After Web2, characterized by social networks and which allows users to become “content creators”, Web3 promises them to regain control of their personal data by reducing as much as possible the centralization and, therefore, ultimately, the massive collection of data of the users by tech giants such as Meta or Google. In this new decentralized web, cryptocurrencies and tokens ensure the transfer of value, while NFTs facilitate the transfer of digital objects (digital art, avatar accessories, etc.) and property (virtual land or deeds of real-world objects. ). property). It should be noted that NFTs today have multiple applications across 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 of NFTs are diverse and varied and depend on the sector in which they are established. In the world of music, NFTs represent a new source of income for artists and allow musicians to regain control over all aspects of their music, from royalty rates to royalties, while stimulating fan engagement. In the art industry, NFTs are essentially sought after as a store of value and attract more and more collectors and artists. NFTs are also attracting some big names in the luxury watch industry, particularly to ensure authenticity and facilitate the resale of luxury watches on the secondary market. In this case, the tamper-proof and inviolability nature of the NFTs helps ensure traceability and authenticity. The world of culture 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 historic Cannes sites in the form of NFTs.
As we have seen from the various uses of non-fungible 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 which represents the first page of Wikipedia, sold at auction for more than 660,000 euros, or even a Web3 object in the form of an avatar accessory that evolves into a metaverse. However, an NFT can not only represent objects or places, but also act as an entrance ticket to an event or as a discount coupon in a store.
Why are more brands joining NFTs?
It is clear that many brands quickly realized that NFTs could be used as a formidable marketing tool with multiple benefits. Some sports brands such as Nike or Adidas, immediately distinguished themselves by offering accessories for metaverse avatars, at a time when virtual worlds were in the spotlight following the announcement of the strategic change of Meta, formerly Facebook, eager to make itself a dominant place in worlds decentralization, to bring his touch of centralization and maintain control of the personal data that is 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 the fashion week that takes place in the Decentraland metaverse. During this event we were able to find in particular 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, where each garment comes with an NFT, bringing an extra touch of exclusivity to the brand’s customers. The luxury brand is not new to Web3, having already collaborated with Adidas on an NFT community project.
Indeed, if luxury brands are launching into NFTs, it is also with the aim of developing a certain community around these non-fungible tokens, bringing a breath of fresh air by attracting the more sensitive X and Y generations to the assets. digital compared to previous generations. The Lacoste brand perfectly combines the marketing aspect with the community one, actively involving its community in the development of its Web3 projects. The crocodile brand recently allowed owners of its “Genesis” NFT to define some traits of its upcoming NFT collection.
This participatory approach implemented by luxury brands is unprecedented in a more conservative industry than other brands such as those focused on sports. But another practice aimed at building community loyalty completes this participatory aspect by rewarding community engagement through NFTs. This is the case of Yves Saint Laurent Beauté, who offered his first NFT to subscribers to his Twitter and Instagram accounts. NFT which will then act as a loyalty card and give access to many exclusive events.
The possibilities offered by NFTs are therefore numerous for brands, and few are those who still hesitate to take the plunge. Luxury brands seem to be the most advanced in this sector, giving birth to new companies specialized in supporting brands towards the Web3. Indeed, in the face of the economic slowdown in China and the expansion of online commerce, largely favored by repeated confinements, luxury brands are ready to do anything to win over the new generations, refreshing their brand image by adopting new management methods. of your community.
Why did France decide to support this market with public money?
Jean-Noël Barrot, Deputy Minister in charge of the digital transition, recently announced the government’s intention to support the NFT ecosystem with public money. The latter underlined the will of France to “take the place of Web3 which will profoundly change the Internet and its uses”. This announcement came just days after Bruno Lemaire, Minister of Economy, declared his desire for France to become a European hub for crypto-assets ”. This desire to position France as a major player in the NFT sector is not unjustified and is explained by France’s dominant position in certain sectors such as culture, video games or the luxury industry. . Jean-Noël Barrot also stressed the need to “build a regulatory framework for NFTs, objects that have not yet been identified, particularly in terms of legal certainty”. At a time when 2% of French people 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, establish a sovereign digital euro, exploring the potential of NFTs and decentralized finance (DeFi). These goals should facilitate the creation of a European metaverse, as mentioned by Emmanuel Macron, while accelerating the creation of a regulatory framework for NFTs.