The NFT industry is one of the quickest-growing eCommerce industries, and it has enormous potential to continue growing even further. Imagine an online eCommerce site where all items are bought and sold like in-game items. Imagine that you can buy and sell rare digital items that can be used in a game or traded with other users to make a profit on any online store.
This will be the future of NFT in the online e-commerce industry as we know it today due to the advent of Non-Fungible Tokens. This article will look at what NFTs are, why they’re important, which e-commerce sectors can benefit from NFT and the future of NFT in the online e-commerce business.
What Are Non-Fungible Tokens?
Understanding what a non-fungible token is will equally help you know what a fungible token is! Let’s define an NFT first; well, NFT is based on ERC721 tokens! An ERC721 token is like any other cryptocurrency asset; it exists on top of Ethereum as part of its decentralized platform.
However, unlike many other tokens on Ethereum, an ERC721 token does not have fungibility. What does that mean? Each token represents something unique from every other token; it’s non-fungible! Fungibility refers to how interchangeable one unit of an asset or commodity is with another identical unit; for example, how easy it would be to swap out a one-dollar bill for another.
In that context, all U.S. dollar bills are completely fungible because they’re worth the same amount. That’s not true of collectibles like baseball cards, which have different values based on their rarity and age. Because each card has its unique attributes, you can’t exchange them as quickly as you could two $1 bills. non-fungible tokens take these concepts further: Each token represents something unique (like a single digital collectible) that has a specific value associated with it, not just within your platform but also in the outside world.
Why Use Non-Fungible Tokens for eCommerce?
Non-fungible tokens (NFTs) have recently gotten a lot of attention. According to Statista, Beeple’s crypto art “First 5000 Days” became the world’s most valuable NFT in March 2021, fetching 69 million dollars. You’ve probably heard that Ethereum is all about turning unique objects into unique crypto assets. This is cool, but it’s only a tiny piece of what NFTs can do for online commerce.
The future of NFT in online e-commerce platforms will be far more interesting than its past. But how can you get started with them? To help inform your thinking about utilizing blockchain technology and cryptocurrencies best, here are three reasons why non-fungible tokens (NFTs) could be helpful for online commerce platforms:
1. They allow users to own their data
2. They support digital scarcity
3. They let users create their own valuable assets.
How Does NFT Work In eCommerce?
Although non-fungible tokens are currently being used mostly for gaming, the future of NFT in online e-commerce sites extends beyond online shopping. For example, shoppers could use their unique token to buy a limited edition T-shirt (of which only 100 were made) or an album with its very own music streaming license. That is just scratching the surface as far as possible uses go; these kinds of digital goods are virtually limitless.
We could see exclusive pieces sold at stores like Sotheby’s with its built-in certificate of authenticity and verification system, or gifts given directly to friends via a private message that arrives at their doorsteps with everything they need to redeem it. The future of NFT in the online e-commerce industry will undoubtedly be interesting! Here are some ways in which NFTs can be used in e-commerce:
1. Proof of Ownership- This is one of the most prominent applications. A physical good in real life can have a digital counterpart attached to it through blockchain technology. This means you can prove ownership over something without showing it off or worrying about theft physically.
2. Digital Collectibles- Many people love collecting things. Still, sometimes it isn’t easy to do so digitally because there’s no way to verify your items are authentic if you’re buying them from someone who doesn’t have any reputation behind them on eBay or Amazon.
3. Authentication- One major problem plaguing online retailers today is that counterfeit products are becoming more common. This has led to many customers not trusting companies anymore and going back to brick-and-mortar shops. If NFTs become mainstream, customers would have a better idea of whether or not they’re purchasing an original product.
4. Tokens as Gifts- If you give someone a gift card for an online store, it’s pretty much guaranteed that they’ll end up using it themselves instead of giving it away as intended. With NFTs, however, users can send another person their personal token for whatever item they want.
What Type of eCommerce Websites Can Benefit from NFTs?
You might be wondering, what type of eCommerce websites can benefit from a non-fungible token? While many online business models would fit nicely into an ecosystem using non-fungible tokens, businesses that create digital assets (like games) and have users purchase those assets may see some of the most significant benefits. Players who earn their in-game loot could use it to buy new accessories or trade them with other players for other valuable items.
The game developer could then implement their own marketplace for those digital goods so that players can easily convert between different types of virtual currency. This system can help reduce barriers and friction between players on different platforms and increase player engagement by allowing participants to take part in multiple gaming ecosystems at once.
Here are some categories of businesses that can use NFTs effectively and help establish the future of NFT in the online e-commerce industry–
1. Home Decor- If you’re looking to sell home decor online, your customers will likely appreciate being able to customize their orders in unique ways. For example, if you sell custom pillows or rugs through your website, buyers will appreciate being able to select from various designs and colors when they place their order. Non-fungible tokens can help make these purchases more meaningful by providing each piece of art with its own unique identifier.
2. Digital Collectibles- If you’re selling digital collectibles like crypto kitties or rare sneakers through your website, non-fungible tokens will allow your buyers to track all of their purchases over time—even if they move between wallets and exchanges!
3. Multi-Sided Platforms- Businesses that facilitate interactions between multiple parties, such as marketplaces, crowdfunding sites, and social networks, will also see benefits from incorporating non-fungible tokens. These platforms rely on trust among community members to function correctly; however, trust is difficult to build in anonymous environments where it’s easy for scammers to get away with illegal activity. By assigning every user a unique ID number (based on their blockchain address), you can help protect against fraudulent behavior while also ensuring transparency across your platform.
4. Insurance- Insurance companies often deal with very sensitive information about individuals and property owners; unfortunately, centralized databases can be vulnerable to hacks because they contain large amounts of personal data about people across a wide range of industries.
Words Of Wisdom!
As more companies look to create online marketplaces, we should expect to see a significant uptick in Non-Fungible Tokens being used for virtual items. As people get more familiar with them and understand how they can be used, that may cause an influx of NFTs beyond collectibles and into mainstream commerce. We could also see different protocols (e.g., ERC721) be adopted over time as well, depending on their implementation and use cases. That will likely continue to spark innovation within blockchain technology and lead to new use cases for different types of tokens. The future of NFT in the online e-commerce industry is indeed very bright!