The History and Lessons of Non-Fungible Tokens (NFTs) and Viral Marketing

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Aug 07, 2023

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The History and Lessons of Non-Fungible Tokens (NFTs) and Viral Marketing

Non-Fungible Tokens (NFTs) have gained significant attention in recent years, revolutionizing the way we perceive and value digital assets. The concept of NFTs can be traced back to the launch of CryptoKitties in October 2017, a project by Axiom Zen. While ERC20 tokens served their purpose on the Ethereum blockchain, they were not designed to create unique tokens. To address this limitation, the ERC721 standard was introduced, allowing for the creation of non-fungible tokens.

One early example of NFTs can be found in the Colored Coins, which were bitcoins from the "Genesis transaction" that could be distinguished from regular bitcoin transactions. These unique tokens laid the groundwork for the development of NFTs. However, it was the introduction of CryptoPunks by John Watkinson and Matt Hall that truly showcased the potential of NFTs. These characters, generated on the Ethereum blockchain, were a combination of ERC721 and ERC20 tokens, bridging the gap between fungible and non-fungible assets.

The ERC721 standard was specifically designed to track the ownership and movements of individual tokens on the Ethereum blockchain, enabling the recognition of non-fungible assets. CryptoKitties, the first project to adopt this standard, saw immense success and led to the establishment of Dapper Labs, which secured $15 million in funding from top investors. This marked a turning point for NFTs, as their true power and potential became evident.

In parallel, the world of viral marketing has also undergone significant developments. Viral growth has become a coveted goal for entrepreneurs, as it can lead to rapid and exponential customer acquisition. However, achieving true viral growth requires careful consideration of various factors.

One crucial element in viral marketing is the viral coefficient, which measures the number of new customers that each existing customer successfully converts. For viral growth to occur, the viral coefficient must be greater than 1. Additionally, the viral cycle time plays a vital role in determining the speed of growth. Shortening the cycle time can have a dramatic effect on customer acquisition.

The most effective viral products are those that rely on sharing. They create a value proposition that compels customers to share the product with others. Leveraging viral platforms like Facebook, with built-in social features, can amplify the sharing potential. A/B testing can help identify the most effective approaches and creative presentations to maximize conversion rates.

It is crucial to integrate virality into the product from its inception, rather than relying solely on marketing strategies. The product designers and engineers should work together to ensure that the product's value proposition encourages sharing and drives viral growth.

Additionally, incentivizing customers to convert others can significantly boost virality. Offering rewards to both the existing customer and the new customer being referred creates a win-win situation and increases the likelihood of successful conversions.

While striving for viral growth, it is essential to consider the potential challenges that may arise, such as attrition in the customer base over time. In such cases, a hybrid viral model, combining viral strategies with other customer acquisition methods like paid search or SEO, can help sustain growth.

In conclusion, the history of NFTs and the lessons learned from viral marketing provide valuable insights for entrepreneurs and marketers alike. NFTs have transformed the way we perceive and value digital assets, opening up new possibilities for creators and collectors. Meanwhile, viral marketing offers a pathway to rapid customer acquisition, but it requires careful consideration of factors such as the viral coefficient and cycle time. By incorporating these lessons and taking actionable steps, entrepreneurs can harness the power of NFTs and viral marketing to drive growth and success.

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