Harvard Professor Scott Kominers on NFTs and Brands

The coming digital revolution and how NFTs will transform ownership, brands, and how we create

Gucci is one of the leading luxury brands working in NFTs, including rewarding holders with physical products  | photo by kristina karyugina on unsplash

 

 

In the fifteenth century, Gutenberg’s press revolutionized the process of distributing written text. Today, we have non-fungible tokens (NFTs).

Like the printing press, NFTs have the ability to fundamentally change the spread of information. Yet, while the printing press created perfect duplicates, NFTs are items that cannot be replicated. These tokens stand in opposition to fungible currency, like paper currency. 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 isn’t the same as the 1924 work in oil.

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 protection of intellectual property. Brands, in turn, can create immutable digital tokens tied to their trademark or to particular products. In Web3, the next generation of the internet, NFTs will have a far greater role—at least this is what Scott Kominers, author of The Everything Token: How NFTs and Web3 Will Transform the Way We Buy, Sell, and Create (2024), suggests.

Kominers is the Sarofim-Rock professor of business administration in the entrepreneurial management unit at the Business School and the department of economics. He is also a research partner at Andreessen Horowitz Crypto, and a Bloomberg Opinion columnist. He argues that NFTs open markets that have never existed, revolutionizing brands across industries.

In September of 2023, Walmart signed a deal with the NFT collection Pudgy Penguins to begin selling consumers charming penguin plushies with their very own collectible NFTs, which substantially improved the collection’s visibility.

Pudgy Penguins is far from the only or most recognizable brand with a physical merchandise range—Nike and Starbucks have been experimenting with mass-market NFTs since the tokens’ heyday, with the domain “.SWOOSH” emerging as a Web3-enabled platform that allows Nike members to learn about, collect, and create interactive digital objects such as virtual shoes or jerseys.

 

This trend is also playing out in the fashion industry, where NFTs serve as proof of authenticity for luxury goods such as watches and bags (Gucci, L’Oréal Group’s Yves Saint Laurent Beauté, Dolce & Gabanna) and in the music industry, where tokenizing song royalties as NFTs is becoming more common for artists (Snoop Dogg, Eminem, and the Chainsmokers, to name a few).

Down 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 with its unique digital identifier, thus protecting miners as well as consumers.

Everledger, a blockchain startup in the U.K., offers gemstone blockchain solutions to jewelers and retailers, allowing the gems to be tracked from the point of sale back through every step in the manufacturing process. Given that the bulk of mining occurs in small and 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 bags and ethically sourced emeralds, NFTs create new opportunities for brands to develop authenticity, traceability, and customer integration and loyalty. In this interview, Professor Kominers discusses how NFTs will impact the future of branding for everything from small to large companies and consumer protection in the emerging technologies space.

Read more articles by Olivia Farrar

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