Metaverse. A word with which we could associate an infinity of definitions, an incalculable number of notions and various functionalities. However, we can try to explain what it was, what it is now and what we could envision for its future. When we talk about the Metaverse, we hear
video games, NFT, cryptocurrency, virtual reality,... We especially hear the word “complexity”, mostly because we don’t understand it. Sometimes we even fear it because it constitutes a significant change, a kind of fuzzy
digital revolution that seems to once again upset everything we thought we knew. Yet it is only a revolution if it is sudden and violent. The metaverse, on the other hand, has developed quite slowly, and a bit secretly.
The idea has been lingering in the minds of avant-gardist minds for decades. An
interlacing of virtual universes ? A copy of our world where we could create our
own universe with infinite possibilities ? An
escape from our so rational surroundings?
This subject therefore raises many questions, which we asked ourselves as we gradually discovered what this concept is on its own. It was then necessary to understand how our communication and advertising will adapt to a progressive switch in our link to the virtual. How are brands and agencies going to
adapt, how are they going to
innovate and use these tools and this access to bring
new creative opportunities.
Many questions arose during our research process and we’ve gathered them and their answers in a folder named
Breaking the codes of Metaverse. The following articles have been written by
Ana Alexandrescu,
Lena Baranzini,
Erin De Rouck and
Zoé Guyon. These four Master’s students in Advertising and Commercial Communication (IHECS) will guide you through their discovery journey surrounding the metaverse.
Avatars created with
Ready Player Me.
Before going through the complexity of NFTs, it is important to define the few different types that are directly addressed by in the following article. Hence,
what is an NFT? Standing for
Non-Fungible Token, it is defined as a “non-interchangeable digital asset such as a photograph, song or video whose ownership has been authenticated and stored on a database called a blockchain and which can be collected, sold, and traded on various online platforms” as defined by
Encyclopedia Britannica.
NFTs are bought with
cryptocurrency, and objectively do not have any value. Instead, their
price is directly related to the
value given to it by the community. As a result, they are mainly
subject to speculation.
As a sub-category it is important to mention the utility NFT, which gives to the buyer benefits as it comes with an added value. This added value could be a private access to VIP events of a brand for example, or percentages. These kinds of NFTs often turn out to be brand content or a paid substitute for a loyalty card.
On the other hand, a governance token is one that is bought as an investment in a brand or company. This kind of purchase then gives the possibility to participate and gain, at a (certain) degree depending on the invested amount, a decision power within this organization.
What is the benefit of having an NFT?
This is understandably a question that crosses one’s mind. Why
buy an immaterial pack of data translated in a video or a picture? Well, it is easy to see buying an NFT as an
investment. Indeed, buying an NFT today at a certain price doesn’t mean its value is not going to fluctuate over time. A purchased NFT can also be sold at any moment, following certain rules and restrictions linked to blockchains and crypto. This process therefore has a similar pattern and potential risk as investing in the stock market.
When acquiring an NFT, the
buyer and its
purchase are
protected. Indeed, The NFT is from then on registered as being his so its use by peers is limited.
Wallets are particularly designed to hold a specific type of crypto. Therefore, the NFTs and the cryptocurrency located inside this form of online secured storage must be compatible with the wallet holding them. A wallet can be public, meaning that it is findable online, or private, by putting the data on an USB key. Both have their pros and cons and it really depends on the person and the level of protection they wish and need to have. As per a public wallet, there is currently no homogenized blockchain, it is therefore important that the NFT is stored in a wallet compatible with the crypto used to buy it, which creates an additional constraint. As an investment, selling an NFT is fairly easy, even if having a wallet is necessary to do so. On paper, buying and selling an NFT is thus very simple and with little process, once the Wallet and cryptocurrency system has been understood.
As per the marketer's point of view, NFTs can be a
great opportunity for a brand to develop and commercialize. Some of them have in fact already taken advantage of the
hype that englobes the metaverse alongside NFTs and made their way to it. Each brand has their own ambition and final goal, yet usually selling NFTs is for them a way of
familiarizing current customers to the metaverse and pushing them to interact with it. This could be beneficial in the perspective of a brand planning to invest in projects related to and within the metaverse. Issuing an NFT that ends up being talked about is also a great way to achieve more
awareness, which is why some brands turn to these kinds of projects.
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Screengrap of some examples of
Baby Wirdos as displayed of
GCDS’ website.
From the perspective of brands, utility NFTs can work as a sort of
loyalty card. To mention an example, in an interview with Michel Pierret, Data and Tech Business Director at Azerion, it was mentioned that GCDS (an Italian fashion brand) has launched a
limited-edition NFT called Baby Wirdo.
Screenshot of the
advantages of owning a Baby Wirdo as stated on
GCDS page displaying the NFTs.
Those baby-alien-shaped NFTs were released at a fixed number of 4888, each one being unique. They are sold at a cost of 488 euros each. These Baby Wirdos can be considered as a
special membership card, their purchase giving access, among others, to
discounts and
additional categories on the website.
As a luxurious brand, selling a unique and therefore limited item, that is accessible only for the few, accentuates and
validates the image sent back by the luxury brands’ industry. The latter indeed matches this feeling of
specialness and
uniqueness.
In a similar way, let’s mention the well-known
collaboration between Adidas and Bored Ape Yacht Club that resulted in the
10 000 different Ape NFTs released in 2021. They also came with additional benefits for the buyer, like the possibility to create a Mutant Ape from an owed Bored Ape NFT. It also gives access to the
Yacht Club and other
members-only benefits like stated in the picture below.
Screengrap of some of the Bored Apes as displayed on
OpenSea.
Screenshot of the advantages and members-only access given by owning a Bored Ape as displayed on the BAYC (Bored Ape Yacht Club)
website.
Some of these NFTs now cost hundreds of thousands of dollars and are purchasable through OpenSea with Ethereum, a cryptocurrency.
Public figures like Eminem, Jimmy Fallon or Justin Bieber have bought a number of the Apes, accentuating the
popularity of the collection.
Both the Apes and the Baby Wirdos are part of collections that include a limited amount of NFTs. The
value of each element of the collection is also determined by the
amount of traits they share with the other NFTs that are a part of the lot. Each NFT’s page displays the percentage of times some traits are shared with the other NFTs, the Apes in this case. The
more unique the NFT is, the
more expensive it will be.
Nonetheless, it is relevant to note that other brands in very different sectors have also gained notoriety for launching their own NFTs. Quick, a Belgian fast-food chain, has released as an NFT an image of the sound wave designed when Kevin Derycke (Quick Belgium’s boss) sang the
recipe of their secret sauce; “Sauce Giant”. The picture above is the NFT in question and it has been sold for 7 Ethereum.
Image of the
NFT issued by Quick.
Mentioning Ethereums brings up one of the big problems of NFTs these days. Indeed, at present, purchasing one goes exclusively through crypto, mostly on OpenSea, a platform using Ethereums (which is a type of cryptocurrency like Bitcoin). Therefore, it can exclude a great number of potential customers that could be held back by its instability. Speaking with Damien D’Ostuni, Head of Innovation and Activation at Wavemaker Belgium, he mentioned to us a
project with Gin Hendrick, a Scottish gin brand. The company has tried a sort of
hybrid payment by selling NFTs that could be bought both
by using crypto and real money.
Screengrap of the
six NFTs issued by Gin Hendricks. In collaboration with Samy Slabings, a Belgian artist, those NFTs consisted of
six animated images issued three times each, which were then also sent in printed form to the buyer. This is a way to de-virtualize the purchase and include crypto-skeptical potential buyers.
NFTs can be bought through platforms like
OpenSea (the largest NFT marketplace) or
Binance NFT, which are both Ethereum based, for example. Every NFT is linked to a
specific blockchain, itself linked to a crypto and hence has to be stored in a wallet that supports it.
This shows in what way NFTs
can be issued by any brand, not only retailers or luxury brands, but also demonstrates how it is a new and still evolving concept. It is nonetheless very important to come up with something both beneficial for the brand and attractive to the customer, either in terms of additional features or in a form of certainty about the value.
The necessity of buying with crypto excludes a great number of customers, increasing the challenge for brands that tend to turn to NFTs for certain marketing campaigns. This forces them to either push the said customers upon
considering the metaverse with a less cold eye or ensure the
attractiveness of their products to convince the ones that already own cryptocurrency and could be potential immediate buyers. In a way, a
hybrid transaction like Gin Hendricks’ did could be a solution, but there are many factors to think about and it is up to each brand to evaluate what is best.
See how NFTs could
disrupt the way we engage with brands in this video by TEDxSansuSquare with Jeff Holmberg.
Not quite synonyms
As seen prior, it is quite impossible not to speak about cryptocurrency when speaking of the metaverse or NFTs, as they are mainly bought using crypto. The latter and the metaverse are therefore closely related. Oxford Languages provides the following definition : a cryptocurrency is “a digital currency in which transactions are
verified and records maintained by a
decentralized system using
cryptography, rather than by a centralized authority”. Their digital form can make them vulnerable to hacking, but they are
encrypted and
anonymous.
Cryptocurrencies are always linked to a blockchain. On the contrary, the other way around is not true. As a reminder, a blockchain means storing the information on a server. It can be public or private, but the ones linked with a cryptocurrency are public. Examples of cryptocurrencies can be Bitcoin or Ethereum.
It is not quite right to consider crypto as a currency, even if the name itself leads to that belief, because they are way
more subject to ups and downs than the physical money we know. It is as a result not stable enough and furthermore it cannot be used on a regular basis to buy random items (it being groceries for example).
According to this
Forbes article, crypto is an
asset based on speculation, which itself explains why it is not considered a proper currency. In a way, it is more an investment which can then be exchanged for another when wanted, like NFTs. The present situation is a great example of the
instability of cryptocurrencies, with the
geo-political and economic environments having resulted in a drop in their value.
Why this instability?
The main reason is that, like the variations in the stock market, the fluctuations in cryptocurrencies’ value are directly dependent on supply and demand. As examples of how quickly they can increase or decrease in value, an Ethereum today costs 1610,84$, its value having increased by 2,33% in the last 24 hours (as of late January 2023). On the other hand, one Bitcoin is worth 23543.20$ and gained 2,30% of value (at the same moment in time).
A cryptocurrency can be bought on different sites, from others’ wallets as well, but they are purchasable on the official websites of Ethereum and Bitcoin for those two examples. Like NFTs, when bought they must be stored in a wallet from where they can also be sold. A wallet is necessary for every transaction, whether it be to buy or sell NFTs or crypto.
The general assumption about crypto is somewhat divided, some being distrustful regarding it and some others thinking ahead of time and investing actively. It is not so new but the metaverse is now developing fast and gaining more interest and awareness. Only two cryptocurrencies were talked about in the lines above, but others exist and will appear. It is important to understand the value and concept of crypto, as for now they are essential to buy NFTs and it is useful to understand the concepts ruling the metaverse.
Written by Lena Baranzini,
Master's student in Advertising and Commercial Communication (IHECS)
To listen to the podcast it's here.
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