Nfts
Harvard Professor Scott Kominers on NFTs and Brands
In the 15th century, Gutenberg’s press revolutionized the process of disseminating written text. Today we have non-fungible tokens (NFTs).
Like printing, NFTs have the ability to fundamentally change the distribution of information. Yet while the printing press has created perfect duplicates, NFTs are items that cannot be replicated. These tokens are opposed to fungible money, 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, on the other hand, is singular: receiving a poster with the same image is not the same as the 1924 oil work.
NFTs protect the singular nature of an asset by providing their owners with direct control over it. Artists and creators can directly monetize their work, thus also ensuring intellectual property protection. Brands, in turn, can create immutable digital tokens tied to their brand or particular products. In Web3, the next generation of the Internet, NFTs will play a much bigger role – or so says Scott Kominers, author of The Everything Token: How NFTs and Web3 Will Transform the Way We Buy, Sell and let’s create (2024), suggests.
Kominers is the Sarofim-Rock Professor of Business Administration in the Business School’s Entrepreneurial Management Unit and the Department of Economics. He is also a research partner at Andreessen Horowitz Crypto and a Bloomberg Opinion columnist. He argues that NFTs are opening up markets that never existed, revolutionizing brands across industries.
In September 2023, Walmart signed a deal with the Pudgy Penguins NFT Collection to begin selling charming penguin plush toys to consumers with their own collectible NFTs, which significantly increased the visibility of the collection.
Pudgy Penguins is far from the only or most recognizable brand to offer a range of physical products: Nike and Starbucks have been experimenting with consumer NFTs since the tokens’ heyday, with the “.SWOOSH” domain emerging as a platform Web3 compatible which allows Nike members to discover, collect and create interactive digital objects such as virtual shoes or jerseys.
This trend is also evident in the fashion industry, where NFTs serve as proof of authenticity for luxury products such as watches and bags (Gucci, Yves Saint Laurent Beauté of the L’Oréal group, Dolce & Gabanna ) and in the music industry, where tokenizing song royalties, as NFTs, is becoming increasingly common for artists (Snoop Dogg, Eminem and the Chainsmokers, to name a few ).
Throughout the supply chain, NFTs can protect both ends of the production chain: in the gem industry, for example, pairing a rare diamond with an NFT ensures that a luxury item cannot not be counterfeited as long as it remains associated with its unique digital identifier, thus protecting minors as well as consumers.
Everledger, a UK blockchain startup, offers gemstone blockchain solutions to jewelers and retailers, tracking gemstones from point of sale through every step of the manufacturing process. Given that the bulk of mining takes place in small and rural countries, this full transparency can help ensure ethical and sustainable practices in a way that was not possible before.
Whether stuffed penguins, luxury bags or ethically sourced emeralds, NFTs create new opportunities for brands to develop authenticity, traceability, as well as onboarding and loyalty client. In this interview, Professor Kominers discusses how NFTs will impact the future of branding for all small and large businesses and consumer protection in emerging technologies.