Next, on Cigar World's Financial September slate, we're diving into the world of digital tokens! NFTs, or Non-Fungible Tokens, have appeared in nearly every industry since they first gained prevalence in 2017. And the cigar industry is no exception! Indeed, several brands have dabbled with NFTs over the past few years –– with some cigar NFTs fetching bids in the $90,000 region. Given all that, we’ll take a step back today and explain both NFTs and what they mean for cigar lovers.
What is an NFT?
As mentioned above, an NFT is a Non-Fungible Token. In layman’s terms, an NFT is a distinct digital asset (like a video, image, or GIF) with unique identification codes and metadata. Or, to put it another way, an NFT is a unique digital token. Though NFTs are “tokens” like cryptocurrencies, they are not fungible (interchangeable) like crypto coins are.
Think of it like this: If you go to the bank with a $1 bill, you can exchange that $1 bill for another $1 bill. Money –– like cryptocurrency –– is fungible.
If, on the other hand, you went to an art gallery with the Mona Lisa, you could not exchange your Mona Lisa for another one. Like art, NFTs are unique and non-fungible. So even if identical copies exist, the real thing is one-of-a-kind.
You can transfer ownership of an NFT, just as you can trade or sell a valuable piece of art.
In addition to images, NFTs can take the form of membership to organizations, domain names, music, trading cards, and even digital property in virtual spaces.
What is the Value of an NFT?
An NFT is worth whatever someone is willing to pay for it. It’s difficult to speculate on the value of an NFT because it has no intrinsic value.
Rather, the value is determined by the market the NFT exists in. That’s not to say NFTs can’t be expensive –– they definitely can be. Some NFTs have sold for tens of millions of dollars. An NFT’s value depends on the NFT's content and the subjective value a buyer or buyers place on it.
Cigar brands La Flor Dominicana and Tatuaje recently launched their own NFT projects. In 2022, La Flor Dominicana created NFTs to support their cigar, Andalusian Bull – The Golden. By purchasing one of the seven NFTs La Flor Dominicana released for auction, consumers would receive a (real-life) Golden Humidor and hold the exclusive right to buy up to 70 Andalusian Bull – The Goldens monthly.
Similarly, Tatuaje has released 7 NFTs in their Anarchy series for auction that grant the owner access to a special-edition humidor, a framed print of the NFT, other cigar paraphernalia, and the right to purchase Tatuaje Anarchy NFT cigars.
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*Not financial advice. For informational purposes only.