When it comes to alternative investment options, NFTs (also known as non-fungible tokens) are one of the more unusual choices. An NFT is any digital asset that is part of the Ethereum blockchain. When you invest in an NFT, you can purchase a digital artwork, the rights to a tweet or logo, or even a character that you can use to play to win.

By investing in a digital whatever It may sound strange, NFTs are currently on a wild trajectory that seems to be heading “towards the moon,” as they often say. As an example, CNBC reported that an investor paid $ 1.3 million for a digital photo of a rock in August. Plus, big brands are coming into the game, with companies like Taco Bell, Pizza Hut, and Pringles offering their own NFTs. Same Visa bought an NFT for $ 150,000 this year, and Adidas paid an additional $ 156,000 for a digital artwork.

Why are all of these companies spending millions buying or conceptualizing digital “assets” that no one will touch or feel? We interviewed some of the top experts in this field, and here’s what they said.

Businesses are riding the wave

According to attorney Tal Lifshitz, partner and co-chair of the cryptocurrency, digital assets and blockchain group in Miami Kozyak Tropin & Throckmorton (KTT), it’s easy to see why big brands spend a lot of money on NFT.

“It’s trendy, it’s fun, and it’s cutting edge technology that has the potential to redefine the way these brands do business and interact with their consumers,” he says. “The most important question is why the big brands not spend a lot of money on NFT? “

The reality is that increased adoption tends to come to life, and DFTs are now becoming an important part of our lives.

“Increased adoption means exponentially increased value and utility,” Lifshitz said. “If you’re the only person with a cell phone, it’s pointless. If two people own cell phones, there is value. If billions of people have cell phones, you need a cell phone. This is the impact of increased adoption. This is the potential future of NFTs.

Businesses are looking for ways to increase their revenue

Lydia Hylton, investor at Redpoint Ventures, also points out that businesses are ultimately driven by earning potential, and NFTs are a new revenue stream and engagement tool for brands.

“Exclusive brands like Louis Vuitton thrive on scarcity and explore LV branded NFTs for the metaverse,” Hylton explains. “Brands are also constantly looking for ways to increase engagement with customers. “

Ultimately, NFTs can be used to reward and entice consumers through innovative giveaways, exclusive access, etc., says the investor.

Companies follow the trends

Dr Dustin York, who is associate professor of communication at University of Maryville, argues that companies embark on the adventure on the basis of the simple fact that people spend more of their lives in virtual worlds.

“When customers turned to malls, brands followed. When customers turned to e-commerce, brands followed, ”he says. “And when customers now turn to Web 3.0, digital native brands follow, giving NFTs even more legitimacy. “

That being said, York says consumers should prepare for an NFT hype cycle, and that we are currently in the rapidly growing hype phase. At some point, he says, there will be a dramatic drop in demand for standard NFT art.

“Critics will then call NFTs fashion, just as they called e-commerce fashion during the dot-com bubble,” he says. “The NFTs will then come back up and be part of our everyday life.”

The metaverse is the future

NFT investor Andrew Lokenauth says that, overall, big brands are spending money on NFTs because the digital world is the future.

We already have a large number of people spending several hours a day in virtual worlds, he says, and that number will continue to increase. This is ultimately why brands are seeing the benefits of marketing in the metaverse and already have.

Lokenauth points out that many popular artists have given concerts in the Metaverse before, such as Justin Bieber, Travis Scott, the Weeknd and Ariana Grande.

“Maybe the high fashion companies will be next and throw fashion shows in the metaverse,” he says. “The possibilities are endless and that’s why brands spend big.”

What consumers need to know about DFTs

As big brands spend millions on digital assets, there are plenty of reasons for new investors to approach NFTs with caution. For starters, the virtual aspect of NFTs means this industry is ripe for scams. For example, it is not uncommon for fake NFTs to be marketed to unsuspecting investors.

“You have to make sure that the person selling you the token actually owns the rights to the token they’re selling,” Lifshitz said. “The intellectual property issues associated with NFTs are being resolved, but they all boil down to this: A seller can’t sell you something they don’t own. ”

Justin Giudici, Product Manager at Telos Foundation, says that shouldn’t necessarily be a cause for alarm since every market has its share of scammers.

“Before you buy an NFT, research the asset and make sure that the person / brand isn’t ripping you off or selling assets that don’t belong to them,” Guidici explains. “With mainstream brands joining the fray, scammers have the opportunity to profit from the hype. “

He also adds that many platforms have yet to set up the best verification methods, so there is always a risk.

Akbar Hamid, Founder and CEO 5CRYPTO by 5th column, a unique practice in cryptocurrency, blockchain, and NFT, also states that consumers should educate themselves about the usefulness of NFTs and Crypto 101 before getting started. In addition to learning more about blockchain technology, potential investors should also learn how to open and use a wallet.

Hamid points out that there are countless NFT communities emerging and that it is important to immerse yourself in the discourse and ask questions. Ultimately, asking questions and talking to other investors is the best way to learn.