In Chapter 1 of this series What do NFTs mean for the future we explained the beginning of Blockchain, what an NFT is and the use cases that are emerging around this tech revolution.
Just as we were writing this blog article, cryptocurrency prices dropped significantly, and in consequence the NFT market took an important hit, but this correlation is being questioned by analytics company Nansen. Crypto and NFTs may not coexist the way we thought, as the NFT market evolved in 2022. For more info, read this NFTNow article.
We are just at the beggining of what the Metaverse will be and what the NFTs can do.
In this chapter, we will focus on some tips for entrepreneurial success and the key legal aspects entrepreneurs should take in account when entering Web 3.0 and the world of NFTs, pointed out by Cedric Ming, PwC Switzerland Senior Associate at the F10 Lunch and Learn “What about those NFTs”.
There's been a change in the demographic of crypto consumers. Previously strongly male dominated, a growing number of women, especially millennials around the age of 18 to 34, now own NFTs. If you want to create NFTs or a business around them, ensure you are building a product that is inclusive.
Regarding Income, things get interesting. Those earning less than 25.000 a year are equaly investing in NFTs than those earning 150.000 annualy.
NFT buyer persona: Young male and female, tech-savy with monetary income.
An overall industry research should be done before making any important decision regarding NFT product development: What is my product? Will be a project or a brand? Having clear this key aspect will help you to be consistent for the long run. Either way, the art quality is important. Learn from the success of other projects and make the difference.
The NFT industry is under construction, so creativity is key. Based on the nature of this industry, some segments may be saturated while others are emerging, a great opportunity to position yourself. Don't forget to focus and go step by step.
The first step: Ask yourself what products and services your customers need and want as, for example, metaverse users. Test and start out small with an minimum viable product (MVP) and grow from there. If your business plan needs a big investment, consider that the metaverse is a data analysis friendly environment, where you can run simulations using real data scenarios before making important decisions.
This business is no different than others. Community is key. Start from following the example of those who succeeded selling and building a community and then differentiate yourself. You should build a community base first and interact with them in social media, specially Twitter and Discord. Build a roadmap and a white paper and be transparent and consistant. Involve the community in the decisions. The community is the one who makes and NFT project successful., they should feel valued.
Whether you create your own platform or use an existing one, ask yourself: How will I find customers, or how will customers find me? Create a clear strategy and think about the next three years.
How will you get funding to grow? How will you make money? How will your project gain long-term sustainability?
To achieve this you will need to have the answer for two key questions:
Why would any user buy your NFT? How will you add value to your NFT and therefor, interest for the secondary market?
Have a roadmap ready not only for the early stage, but also for the growth stages of the startup. Ask yourself where you want to be in the next three years and build a roadmap based on that vision.
You need to not only have the right team that you have a good relationship with, and you can count on, but also different skill sets:
Artist: The keyplayer for the kick off. Find a good artist.
Content creators: They will create the storytelling around the project and the foundations for the project to be found by the right people.
Blockchain developers: Find someone who really knows the technology behind blockchain.
Protocol or smart contract authors: Find someone who may be able to create new protocols and define the smart contracts for your project purposes.
Legal advisers: There are a lot of legal considerations regarding NFTs (see below). Find someone or an entity for your project protection and sustainability.
Community managers: As we said before, no community, no project. You should interact with the community daily, so find someone who can do this in a pro way, interacting and nurturing.
...and others that are required for each unique use case and project.
There are several legal considerations around NFTs you will need to take into account. Regarding IP (Intellectual Property), you need to know what you own and what rights are attached to your NFT. You should know what rights are licensed on different platforms.
Regarding financial markets, you should familiarize yourself with the legal classification of tokens. There is a regulation linked to the qualification of a token, so you need to know what your obligations are for a specific token (utility token, payment token, security token, etc.).
Protect your investors from insider trading. Know in which jurisdiction or authority your tokens are regulated and clarify if you need any license for your business idea. You may need to perform anti-money laundering surveillance and have KYC files on your clients.
Regarding cybersecurity, you need to think about where you are storing your digital assets and how you are protected against hacking and fraud. Regarding blockchain security, an important aspect would be to conduct regular smart contract security audits and have an appropriate risk management framework in place.
Finally, incorporation and understanding your tax liabilities are important to protect your business and profits.
If you want to learn more about what is happening in the digital asset space and meet the most exciting emerging startups, join the F10 innovation ecosystem today.
Want to learn more about NFTs and their use cases? Watch our latest F10 Lunch & Learn: “What about those NFTs” with Cedric Ming and Marc Hauser.