NFTs and the Future of E-Commerce [5 Reading Tips]

NFT Bitcoin — Source: Unsplash/Joshua Fernandez

Everyone is talking about them at the moment: NFTs. The new trend on the Internet. They completely redefine digital ownership and are already being talked about as a revolution in the art world. But are these tokens really revolutionary or just a speculative bubble? And what role will they play in e-commerce? Today’s reading tips of the week provide answers to these questions.

You Read about NFTs Everywhere, But What Exactly Are They?

NFT is the abbreviation for non-fungible token. This type of token is a digitised form of a specific asset. It has a certain value or function. However, real assets such as real estate or music licences can also be tokenised by transferring the rights and obligations to an NFT. In short: ownership is mapped in the digital space, making it tradable.

But what is the difference to bitcoins? Bitcoins can be exchanged at will and do not change their value as a result. Just like when you exchange a €20 note for another €20 note. NFTs, by contrast, can be compared to art paintings. They have an individual value and when you exchange them, you do not get the same value back.

In other words: NFTs are digital and tradable goods within a metaverse. Theoretically, any asset can become an NFT: clothing for avatars, virtual baseball player trading cards, video clips, digital music albums of your favourite bands, a screenshot of a tweet, digital sneakers or a very old meme from the Internet. The only important thing is that NFTs contain certain information that proves their uniqueness.

Every NFT has a clearly identifiable owner. This is because of the crypto technology behind cryptocurrencies and NFTs: blockchain. In simple terms: if someone buys an NFT (or a cryptocurrency) today and sells it the next day, the transaction is stored on a blockchain and can be traced by everyone in the world for all time. Most NFTs are based on the Ethereum blockchain because unlike the Bitcoin blockchain, it is not exclusively limited to cryptocurrencies. That is why NFTs are mostly traded in the Ethereum currency Ether.

Prices of NFTs range from a few dollars to several million dollars. The most expensive NFT ever sold is the »The First 5000 Days« artwork by the American artist Beeple. It was bought by a long-time crypto investor who paid around 42,000 Ether for it, which is equivalent to about 69 million dollars.

NFTs and How They Can Be Used in E-Commerce

In e-commerce, NFT technology presents the opportunity to streamline digital sales and enable lifetime product data tracking, which has not been possible before. So does this mean more transparency in e-commerce?

NFTs could have the potential to replace SKUs (stock keeping units, i.e. a product variant that is in stock) with blockchain technologies and make it possible to create unique, individual products. The model could also support a fairer profit-sharing system, especially for emerging brands looking to establish themselves in e-commerce. In addition, NFTs could make it possible to track e-commerce data since users have lifetime access to every data point across a product’s life span. As you can see, it does mean more transparency in e-commerce.

According to a Forbes article published in April, NFTs have the potential to make it extremely easy for users to see the entire supply chain history of a product they have purchased – and to fully trace the entire transaction lifecycle of a product. This advancement is not only convenient for consumers, but can also be useful for brands when it comes to supporting their sustainability strategies.

NFT Marketplaces

There will certainly be more of those in the future. ClubRare is one such example. ClubRare is the world’s first NFT marketplace based on physical goods, offering rare items in hard-to-find categories as Redeemable NFTs. By making a purchase, successful bidders can get real items or hold them on the blockchain to increase their value. ClubRare auctions off self-prepared products as well as products from partners and then expands them into a verification-based global marketplace. Once launched, auctions are linked in real time to OpenSea and global marketing including NFTs.

The ClubRare marketplace features auctions of rare items based on NFTs and was launched in August 2021. ClubRare offers items from various categories that are normally difficult to find as Redeemable NFTs. A custodial service is provided so that the actual items can be received at any time and freely resold on ClubRare prior to being redeemed. This way, successful bidders can get as much value as possible. Items required for service, storage and delivery partners have been secured to provide fulfilment services.