NFTs
Harvard Professor Scott Kominers on NFTs and Brands
In the 15th century, the Gutenberg press revolutionized the process of distributing written text. Today, we have non-fungible tokens (NFTs).
Just like the printed press, NFTs have the ability to fundamentally change the dissemination of information. However, although the press has created perfect duplicates, NFTs are items that cannot be replicated. These tokens are opposed to fungible currency such as paper money. A five-dollar bill has the same value everywhere, no matter how many times it is reprinted. An original painting by Georgia O’Keefe is unique: receiving a poster with the same image is not the same as the 1924 oil work.
NFTs protect the unique nature of an asset by giving its owners direct control over it. Artists and creators can directly monetize their work, thus also ensuring the protection of intellectual property. Brands, in turn, can create immutable digital tokens tied to their trademark or specific products. In Web3, the next generation of the Internet, NFTs will play a much bigger role – at least that’s what Scott Kominers, author of The Everything Token: How NFTs and Web3 Will Transform the Way We Buy, Sell, and Create (2024), says. suggests.
Kominers is a Sarofim-Rock professor of business administration in the Business School’s business management unit and in the economics department. He is also a research partner at Andreessen Horowitz Crypto and a columnist at Bloomberg Opinion. He argues that NFTs open up markets that never existed, revolutionizing brands across industries.
In September 2023, Walmart signed an agreement with the Pudgy Penguins NFT Collection to begin selling consumers charming penguin plushies with its own collectible NFTs, which substantially improved the collection’s visibility.
Pudgy Penguins is far from the only or most recognizable brand with a line of physical merchandise – Nike and Starbucks have been experimenting with mass-market NFTs since the tokens’ heyday, with the “.SWOOSH” domain emerging as a Web3-enabled platform which allows Nike members to learn, collect and create interactive digital objects, such as virtual shoes or t-shirts.
This trend is also happening in the fashion industry, where NFTs serve as proof of authenticity for luxury products such as watches and bags (Gucci, L’Oréal Group’s Yves Saint Laurent Beauté, Dolce & Gabanna) and in the music industry, where tokenizing music royalties as NFTs is becoming more common for artists (Snoop Dogg, Eminem, and Chainsmokers, to name a few).
Along the supply chain, NFTs can protect both ends of the production line – in the gemstone industry, for example, associating a rare diamond with an NFT ensures that a luxury item cannot be counterfeited as long as it remains associated. to your unique digital identifier, thus protecting miners and consumers alike.
Everledger, a UK blockchain startup, offers gemstone blockchain solutions to jewelers and retailers, allowing gemstones to be tracked from the point of sale through every step of the manufacturing process. Given that most mining takes place in small, rural countries, this full transparency can help ensure ethical and sustainable practices in a way that wasn’t possible before.
With everything from stuffed penguins to luxury handbags and ethically sourced emeralds, NFTs create new opportunities for brands to build authenticity, traceability and integration, and customer loyalty. In this interview, Professor Kominers discusses how NFTs will impact the future of branding for everything from small to large businesses, and consumer protection in the emerging technology space.