Nonfungible tokens (NFTs) are blockchain-based certificates of authenticity for digital assets that can be exchanged and traced endlessly.
Collectors, investors, and speculators are increasingly interested in NFTs as a way to trade digital art, assets, and more. NFT-based trading volume surged 704% to $10.67 billion in Q3 2021. Moreover, many brands are experimenting with the use of NFTs in marketing, as headlines driven by NFT deals have increased recently.
Companies that have already launched NFT-based marketing initiatives include, Pizza Hut, Taco Bell, and more. NFTs, are often purchased using cryptocurrencies, which consume a lot of energy and emit carbon, to authenticate and transact. This has led to many people questioning the environmental impact of NFTs, which is at contrast with many brands' sustainability goals.
Mike Proulx, research director at Forrester Research Inc., notes that businesses looking to enter the NFT industry face challenges like “legal ambiguity” over whether NFTs offer "ownership" of the actual digital asset or only a token to be connected with it. However, supporters believe that NFTs will be critical for future virtual platforms, while brands use NFTs to attract media attention and customers.
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