Some cynics may say NFT is a fad, yet many have started to see startups invest in NFTs like no one’s business. All the hype begs the only question, should you jump on the crypto bandwagon, or just wait and test the water?
If you are reading this, there are good chances you have heard murmurs, albeit faintly, about NFT. From a picture of rock that sells for $1.3 million to the mega scam that is Squid Game Coins, one thing for sure, there is (a large sum of) money available for disposal in the crypto industry. And just like any other entrepreneur-minded individual, perhaps it is natural for you to gravitate yourself towards where a business opportunity lies.
Well, the brief answer to the question, “Should startups invest in NFTs?” is as simple as “yes and no”. The particulars differ from one to another, from an industry to others, but conclusively, the decision is on you. Before you think that this answer is not of much help, worry not, we are going to dive into the topic further so stay tuned for the in-depth discussion.
NFTs explained under 100 words
NFTs (or Non-Fungible Token) are digital assets that come with each of their own certification of ownership. They mainly operate within the Ethereum blockchain (Ethereum being the company that runs NFT’s code and network) where these digital assets are bought and sold online. By digital assets, we mean anything that could be brought into the digital world. It could be a digital graphic, a video, music or URLs to any other type of artwork.
NFT’s business potential
According to Aaron Tainter, the Senior Program Manager in AlphaLab, there are three ways in which NFTs industry disrupt the traditional business model.
“Customer engagement & feedback is woven into the culture of NFT communities”
Traditional businesses usually rely on surveys for feedback and suggestions. However, the NFT community promotes shared incentives around common interests. With the mission of being a blockchain-powered decentralized society, customers will actively work on the products together with the founders through platforms like Discord and Twitter.
Building a community around your MVP
According to Tainter, NFT-launched MVP can “focus on building community around a shared vision between a company and its customers”. What he means by that is that early customers will get a digital asset of things they are passionate about (the project) while the founders will acquire the capital by selling those early NFTs.
“Potential investors can see indicators of Product / Market Fit with NFTs with full transparency”
Before NFTs, investors should look for customer validation on crowdfunding platforms like Kickstarter. However, these platforms do not provide them with access to what goes into what the founders are making. With NFT’s, on the other hand, feedback loops are constant. Each community has the chance to shape the company’s product. Moreover, the sales are available on the public blockchain which can be accessed by anyone.
But carefully proceed, if you want…
Ultimately, there will be no one stopping you to start your venture in the crypto industry. However, you still need to uphold certain reservations towards the technology that supports NFT, a blockchain technology. Blockchain is a relatively new concept hence still has lots of rooms for improvement. Over its short-life, NFTs have gained the public’s attention for both the good and bad. At best, NFTs are still controversial in 2022 but that does mean its future is bound to doom. So, keep your eyes and mind open to the developments at all times!