In the context of web3, “tokenization” can mean a few different things, but for our purposes, we’ll define it as the process of converting something into a digital asset represented by a token. That “something” could be almost anything: high-end sneakers, backstage concert passes, digital artwork, even meet-and-greets with fan-favorite celebrities. These tokens, called NFTs (non-fungible tokens), are stored on the blockchain, meaning customers who buy tokenized offerings will always have proof of ownership and a record of the transactions that came before.
This is a massive opportunity for businesses that want to monetize their products further by taking parts of the business that exist in the physical world and using web3 technology to digitize them in the form of tokens. Not only do these businesses get outright sales from any NFT drops, but they can also use smart contracts to collect royalties every time the NFT changes hands – hence the need for a secure ledger to record these transactions.
On top of the straightforward sales potential, going “physical to digital” positions your brand as one that’s embracing the future, which can expose your products to new audiences. For example, Nike’s shoes have long been a favorite of sneakerheads, but the footwear brand’s moves in the web3 space mean that the younger, more tech-savvy crowd is also paying attention. In 2021, Nike acquired RTFKT, a leading creator of digital assets; their first post-acquisition collaboration, Nike Cryptokicks iRL, had fans clamoring for a limited-edition pair of sneakers, with some charging six figures on secondary markets in the aftermath of their 2022 launch. The combination of rarity, design, and technology is bringing together consumers of all stripes, creating fresh revenue opportunities for Nike along the way.
While tokenization and NFTs provide direct revenue streams, don’t count out decentralization’s impact on your budget. Because the blockchain was designed with security, accuracy, and transparency in mind, you can make transactions without the need for third parties that previously served those purposes. This reduces third-party expenses while giving those on both sides of the transaction peace of mind.
And that’s just the beginning; enterprising blockchain users are continually finding new ways to streamline operations and drive revenue using web3 technology. Decentralized crowdfunding, for example, allows companies to rely less on traditional investors, and generally speaking, obtaining funds on the blockchain is faster and less expensive than traditional fundraising. Payments made in cryptocurrency also typically incur lower penalties while providing the same level of security you would expect from a major financial institution.
When it comes to the potential blockchain has to boost your bottom line, we’re just starting to explore the possibilities. One thing is clear, though – those who write off web3 as just another tech fad are going to be left behind. Failure to adapt is a death knell for any industry that wants a steady stream of new customers, so don’t wait until it’s too late to start planning your web3 business strategy.