Experienced NFT Team
Do you need assistance creating an NFT? Are you confused about the NFT project? Are you considering creating an NFT for your business but are unsure how this may impact your business from a legal, regulatory, and compliance perspective? If so, then it is time to contact a law firm experienced in NFTs.
NFTs offer businesses many incredible opportunities such as product differentiation, fundraising, and project development like never before seen.
That said, the use of NFTs has attracted the federal government’s attention. This is true because the use of NFTs operate in an uncertain regulatory environment. Congress has yet to adopt a piece of consistent legislation attempting to shed light on how and when NFTs should be regulated.
Businesses that use NFTs are at an increased risk of a federal investigation because of this uncertainty.
At Oberheiden, P.C., we remove this uncertainty from our clients´ NFT projects. Our team of blockchain and cryptocurrency attorneys regularly assesses NFT projects for possible compliance issues. We can do the same for you.
Do you want to know how a potential NFT project will impact your business or how it fits within your business model? Give us a call today!
Put Oberheiden, P.C. on your side today to get the clarity you need for your business´ NFT project!
What are NFTs?
A non-fungible token (“NFT”) is a digital asset that typically represents a physical asset. An NFT is unique because there are no duplicates.
What are examples of NFTs? NFTs can be digital representations of anything—art, photos, videos, collectibles, celebrities, memorable moments, music, and so on.
NFTs cannot be substituted for anything else, nor can any fake copies be created. The reason for this is that NFTs are stored on the blockchain—the public, distributed ledger that stores an immutable copy of every NFT purchase.
This is beneficial because the blockchain records the original creator and owner. It cannot be altered or tampered with. Therefore, the most important benefits include digital permanence, verifiable proof of ownership, and inability to be counterfeited.
Most NFT projects operate on the Ethereum blockchain, which allows users to create, sell, and buy various NFTs.
None of us can forget the sale of the digital piece of artwork by the artist, Beeple, for $69 million at an auction. This was an NFT!
If you need advice about creating an NFT for your business, give our team of blockchain attorneys a call today.
The NFT Process in Brief
The NFT process begins with the “minting” process. The business would first need to use an online marketplace platform for NFT creation such as OpenSea.
The business then identifies an asset or piece of work that they want to transform into an NFT. Let´s assume your business wants to transform a unique business photo into an NFT. This photo, or image, is uploaded to the self-service website. The image is turned into an NFT.
After the business has “minted” the image, the next step involves arranging the circumstances for selling the NFT in an online marketplace. Businesses oftentimes use the same service to sell their NFT as they did to mint it.
For instance, OpenSea allows individuals and businesses to first mint their NFT and then to place it on the market for buying and selling.
When listing your NFT on one of these marketplaces, you would need to pay a “gas” fee to use the network. Once this is paid and you approve the NFT to start trading, you must then set your listing price for the sale.
Then, the selling stage begins. The goal is to return a profit from your sale. Where the NFT involved an original piece of artwork or picture, the NFT may be coded to provide royalties to the original artist when it is sold and resold.
NFT Project? 5 Initial Points to Consider
Before launching an NFT project, consider the following five points:
The main reason for the exponential increase in popularity and value of NFTs is its speculative nature.
NFTs are by design a speculative investment. They are created and sold based on the assumption that people like to own something unique and genuine—and be the only one in the world who in fact owns that particular NFT.
NFTs are specifically programmed to be scarce and, therefore, their scarcity creates a sense of uniqueness in each NFT—and signal to individuals that they are owning a one-of-a-kind collectible.
This scarcity increases the demand for the NFT and, therefore, its price. The increase in price can sometimes be substantial. And when there are so many NFT projects being created each month, the NFT market capitalization increases and has increased like before seen.
All that said, people desire to make a profit on the sales and resales of NFTs. Once an NFT is minted and sold, that buyer will quickly try to sell the NFT to another buyer for a higher price and then the resale process occurs again—creating a very speculative market.
For instance, an NFT of LeBron James´s slam dunk was initially sold in September 2020 at $3,750 only to be later resold and resold again in February 20201 at over $200,000.
You will need to consider and create a strong communication and advertising approach
An NFT project is only as good as the business´ ability to market it. This includes creating a strong communication policy and advertising approach.
When the business begins to launch its NFT project, it needs to create a sense of urgency and excitement to the public. This, in turn, drives up price.
During this stage, businesses will need to brainstorm their selling strategy by asking themselves why their NFT is special and why people should buy it; how it is different than the NFT projects of other businesses; the degree of exclusivity the NFT offers; and the extent of value—including speculative value—that individuals are willing to attach to it.
The better defined the above qualities are, the easier it is for businesses to assess the public interest in their NFT and the profit potential.
NFTs have become one of the primary ways for small businesses to gain early access to capital for growth and expansion.
NFTs are excellent vehicles for businesses to use during their capital formation stage. It is an effective fundraising opportunity for various business projects. Not only do NFT projects help businesses grow in novel ways, but it also serves to create a means to retain customers.
In addition to start-ups, this is also especially beneficial for businesses that are seeking to open a business location in another location or to another market sector.
NFTs are an inexpensive means of attracting capital to accomplish this goal. Think of them as a business´ personalized crowdfunding campaign.
If you need advice about how an NFT project can help your business´ expansion plans, give us a call today.
NFTs offer businesses the opportunity to create their unique selling position and define their market differentiation strategy.
Successful businesses have clearly defined selling positions that are unique and differentiate them from their main competitors. After all, if customers are getting a unique experience, memory, or other asset—one that they cannot get from another, similar business—that business´ worth increases.
The fact that there can be only one owner for each NFT increases the value of that NFT project for businesses. Scarcity is value.
Businesses are increasingly using NFTs to create their unique selling positions.. The key is to relate that NFT to your business in a way that distinguishes it right away from other businesses and creates an immediate association with your business.
NFT projects rely on blockchain technology and may therefore require considerations such as digital wallet and cryptocurrency purchases.
Businesses that decide to take advantage of NFT projects as a part of their business differentiation strategy or for capital raising purposes, need to understand digital wallets.
additional points of consideration include digital wallet and the use of cryptocurrencies.
The business will need to create an online digital wallet to store their NFTs and cryptocurrency. Oftentimes, the online marketplaces will only accept cryptocurrencies for buying and selling NFTs listed on their platforms.
This means that businesses and individuals will have to first convert fiat currency into cryptocurrency in order to participate in NFT trading.
Need Advice with NFTs for Your Business?
NFTs are growing in popularity. Businesses are increasingly relying on NFTs for various purposes such as investment opportunities, means to raise capital for business expansion, and strategies for product differentiation.
Understand the NFT process and how it may impact your business are the challenging questions. Further, determining how the federal government will react is also a key hurdle to launching any project.
If you need advice on a potential NFT project or would like compliance advice on your existing NFT project, it is time to contact an experienced NFT attorney.
At Oberheiden, P.C., we have the team and knowledge needed to advise your business on NFTs; what you need to know; how it may affect your business; and how to be prepared.
Do not wait. Call or contact us today for a free consultation. Let´s discuss your ideas for an NFT project for your business.