THE SIP BLOG
NFTs have entered the spirit world, and they’re demonstrating huge potential for small-batch producers, auction houses, and rare collections. A recent $2.3 million sale of a rare whiskey cask using the specialty NFT Metacask marketplace underscores the idea that technology is the future (and apparently, the present) of specialty alcohol sales.
Here’s why this recent transaction is worthy of headlines beyond its multi-million dollar price tag.
Let’s start with the basics: the non-fungible token. NFTs are trading formats that are completely original and unique. Let’s say you have a dollar, or a work of fine art, or a piece of candy, and you give that something to someone else. That item remains the same no matter who owns it.
That’s not the case for non-fungible token. If you trade an NFT to someone else, it becomes something completely different. Every NFT is 100% unique, which is why it’s becoming a preferred format for transactions to establish true ownership, eliminate theft, and protect the purchase.
NFTs live on the Ethereum blockchain, a ledger that documents transactions and movements of assets from person to person.
When you purchase a rare item, such as the $2.3 million rare cask of whiskey at an auction, you are usually presented with some form of a certificate of authenticity. NFTs are kind of the same thing. Because they are one of a kind and cannot be falsely forged or stolen, they offer greater validity.
In this recent transaction, a user on the Metacask marketplace outbid two other bidders to win the cask. To be clear, the buyer purchased the NFT, NOT the cask of whiskey. The NFT served as a digital title of ownership, and was then recorded on the Ethereum blockchain. The rights to that cask were digitally transferred to the top bidder.
Before NFTs and the blockchain, such a transaction would have taken place in person at an auction house. But this technology is proving that buyers no longer have to go to a physical auction to access, bid on, and acquire valuable, tangible assets. By eliminating physical barriers, NFT transactions are proving to be game-changing already and may turn the spirits world on its head (in a good way).
The potential for NFTs, both in the spirits industry and for retail and auctions at large, is seemingly infinite. So far this year, sales volume through NFT transactions have soared $2.5 billion through June 2021. They certainly provide a more efficient way of conducting business, helping to overcome border challenges and other barriers. For spirits producers, eyes should be on creating unique and valuable assets that buyers are eager to get their hands on and can easily do so. Getting your brand in front of more people will be the easy part: convincing them to buy is a challenge for another conversation.