The world of digital marketing is changing faster than ever and blockchain technology is fueling the fire.
But don’t let this rapid evolution scare you! For marketers, this means new opportunities to engage your audience and build loyalty are popping up through the use of innovative digital assets like NFTs (non-fungible tokens) and SFTs (semi-fungible tokens).
We’re going to go out on a limb here and say that you probably know what NFTs are, but what about SFTs?
These emerging digital tokens are shaking up the game by offering even more flexibility and utility than their NFT cousins!
So, if this is the first time you’re hearing about SFTs, then we’ve got you covered.
Today’s blog is breaking down the differences between NFTs and SFTs, exploring how they work, and why it’s important for you to understand why they matter for a marketer in today’s world!
Let’s dive in now!
What is an NFT?
In case you’re not quite sure what an NFT is, we’ll break that down now:
An NFT, or non-fungible token, is a unique digital asset that is recorded on a blockchain, which is a decentralized and secure digital ledger.
Unlike traditional cryptocurrencies like Bitcoin or Ethereum, NFTs are non-fungible, which means that each one is a unique token and cannot be exchanged on a one-to-one basis.
Key Features of NFTs
- Uniqueness — Every NFT has distinct metadata that sets it apart, meaning it represents ownership of a one-of-a-kind item, whether it’s digital art and collectibles, a game asset, trading card, music, or even virtual real estate.
- Proof of Ownership — NFTs act as digital certificates that prove you own a specific physical or digital item. This proof is stored permanently on the blockchain, making it secure, transparent, and easy to verify.
- Scarcity — NFTs can be designed to be rare or limited-edition, which increases their value for collectors and fans.
- Interoperability — NFTs can be traded or transferred across different marketplaces and platforms as long as they share the same blockchain standard (like the Ethereum blockchain's ERC-721).
*If you’d like to go more in-depth about what an NFT is and how digital assets work, check out that link for a recent blog dedicated to that subject.
What is an SFT?
An SFT, or semi-fungible token, is a type of blockchain asset that combines elements of both fungible and non-fungible tokens.
By doing this, SFTs offer more flexibility by starting as a fungible token and later transforming into a non-fungible token under specific conditions.
This hybrid makes SFTs ideal for scenarios where assets need to be both tradeable and unique at different stages of their lifecycle.
… What?
We were confused too.
Here is a real-world example of an SFT to help you better grasp how these hybrid digital assets work.
Let’s say your favorite singer or performer is selling digital concert tickets through the blockchain and you buy one. Now, initially, this ticket is fungible because it is equal in value to all of the other tickets being sold — as in one general admission ticket can be swapped for another because they have the same value, the same way one dollar bill can be swapped for any other dollar bill and still retain the same value.
However, when the concert organizer assigns unique identifiers to each ticket — let’s say your ticket is assigned to a specific seat number and then chosen for VIP access perks.
Now, your ticket becomes non-fungible because it is now unlike any other ticket.
It’s this transformation from fungible to non-fungible that makes an SFT unique. During its fungible stage, it can be freely traded and swapped. But once it becomes personalized, it becomes unique and one-of-a-kind!
Key Features of SFTs:
- From Fungible to Non-Fungible — SFTs can start as identical and interchangeable when traded or used in bulk. However, they become unique once they’re claimed, redeemed, or used.
- Simpler Transactions — SFTs group multiple tokens into one contract, making blockchain transactions easier and reducing costs.
- Flexible Uses — SFTs are perfect for things that need both interchangeable and unique qualities, like event tickets, gaming items, or rewards programs.
4 Key Differences Between NFTs and SFTs
Let’s go over 4 differences between NFTs and SFTs to help you decide which kind of digital token might best suit your project or overall marketing strategy.
1. Fungibility
As mentioned previously, the biggest difference between NFTs and SFTs is their fungibility.
NFTs are entirely unique and non-fungible, meaning each and every one, no matter what it is, is one-of-a-kind.
SFTs provide a blend of fungibility and non-fungibility. They begin as fungible tokens, identical to any other when traded in bulk, but become unique once redeemed or claimed.
2. Use Cases
NFTs are ideal for digital art, music, collectibles, exclusive memberships, and other virtual assets in the metaverse. Their non-fungibility makes them perfect for projects where individuality and scarcity can really drive value.
SFTs, on the other hand, are used for scenarios where digital assets need to be both interchangeable and unique.
These are ideal for ticketing systems (event tickets that can later reflect attendance), gaming items (bulk loot that can transform into specific in-game assets), and rewards programs where items can start out the same for everyone but later become personalized or unique based on how they’re used.
3. Complexity
Managing NFTs is relatively straightforward since each token is unique from creation. They do, however, require some planning in their design phase to make sure that they are appealing to buyers and collectors and meet blockchain standards.
SFTs are a bit more complex since they operate in two states (fungible and non-fungible). Because of that, they require more planning for transitions and only work in specific cases, making them more intricate to work with.
4. Value Prop
The biggest value of NFTs is their uniqueness and the ownership they represent. Buyers value NFTs for their exclusivity and connection to their creator or brand, which makes them perfect for projects that are centered around rarity.
SFTs’ biggest value comes from their flexibility. They combine the efficiency of bulk transactions with the ability to offer unique experiences later down the line. This makes them ideal for use cases that need to blend scalability (bulk purchases) with personalization.
Why Marketers Should Care About the NFT vs. SFT Debate
For marketers, being able to understand the differences between NFTs and SFTs isn't just about keeping up with the latest tech trends. It’s also about discovering how these tools can boost your customer engagement, loyalty, and monetization strategies.
Let’s explore why both of these strategies can work for your brand and benefit your marketing campaigns:
- Flexibility in Customer Engagement — NFTs create exclusivity and scarcity, making them great for premium experiences. SFTs, on the other hand, start as general tokens and can later transform into personalized assets, which offers a scalable way to engage your customers. Example: A clothing brand could use SFTs to sell “season pass” tokens that unlock VIP perks later, encouraging customers to keep engaging with the brand.
- Loyalty Programs — NFTs let brands reward customers with unique, one-of-a-kind digital assets, making loyalty programs feel special. SFTs allow brands to distribute rewards that start the same but can later be turned into personalized experiences.
- Cost Efficiency and Scalability — NFTs are better suited for smaller, premium campaigns since they can be expensive to create and manage. SFTs are more cost-effective, letting brands distribute tokens on a larger scale while still offering customization options for individual customers down the line.
- Evolving Monetization Models — NFTs let brands earn money through direct sales or royalties whenever the tokens are resold. SFTs help brands scale their initial offerings and later monetize by adding upgrades, features, or perks over time.
- Improved Audience Targeting — NFTs work best for premium audiences who value uniqueness. SFTs are perfect for larger campaigns since they can start simple and later add tiered or personalized features.
How to Get Started with NFT and SFT Design
Thinking about launching an NFT or SFT for your brand?
Great idea! Here’s a quick guide to get you started:
- Define Your Goals — Figure out what you want your project to achieve. Are you creating collectibles, membership passes, event tickets, or loyalty rewards? Decide if you need a one-of-a-kind NFT or the flexible scalability of SFTs.
- Understand Your Audience — Who are you targeting? What are their interests? Are they familiar with blockchain technology or newbies? Make sure the complexity of your project is aligned with your audience’s experience so you don’t scare them off or overwhelm them.
- Pick the Right Blockchain — Choose a blockchain that supports NFTs and SFTs, like Ethereum or Solana. Look at things like speed, environmental impact, gas fees, and transaction costs.
- Design Eye-Catching Visuals — If you don’t have a creative team, it’s best to hire professional designers to create assets that both look great and match your brand. Tools like Adobe Illustrator (for 2D) or Blender (for 3D) can help.
- Add Features and Utility — Decide what you want your digital token to do. Will it grant access to something exclusive, provide perks, or change over time? For SFTs, plan how and when they’ll switch from interchangeable to unique.
- Work with a Blockchain Developer — Team up with developers who have plenty of experience with blockchain technology. They’ll handle coding, creating smart contracts, and making sure your tokens function correctly.
- Plan Your Launch — Decide how you’ll sell your tokens. Will it be on an NFT marketplace like OpenSea or directly through your website? Build excitement with marketing campaigns before the launch.
- Educate and Excite Your Audience — Create and share content that explains the value of your NFTs or SFTs to your audience (you’ll probably want to tailor your content to match different levels of familiarity and experience with blockchain technology). Use social media, webinars, or sneak peeks to get people interested.
- Track and Improve — After the launch, monitor sales, engagement, and feedback. Use what you learn to improve your strategy and keep your audience happy.
- Get Professional Help — Partner with a design agency that specializes in NFTs and SFTs. They can help you create tokens that look amazing and fit your brand’s goals, as well as help you market your NFTS and SFTs to your audience.
Choosing the Right Partner for Your Digital Asset Creation
As you might have gathered from this article, creating NFTs or SFTs requires specific know-how as well as creative talent.
This is why it’s best left to a professional NFT development service to make sure that you’re saving time and resources and getting polished results.
But how do you choose the right partner for your digital asset creation and how do you even know where to start your search? No worries, marketer. Here’s what to look for in a digital asset creation partner
1. Expertise and Creativity
You’ll want to start your search by checking out blockchain development agencies, creative agencies, or even specialized freelancers if you have the bandwidth for it.
Wherever you’re searching, make sure to look for a partner who is experienced in blockchain technology, smart contract development, and digital asset creation. Review their portfolio to make sure and check out any reviews they have on their site or any industry forums.
And if they do have NFTs or SFTs in their portfolio, take a good look to assess their design skills and make sure their style vibes with yours. You want to know that you’re working with a team or freelancer that has the skills you need plus the kind of style that fits your brand.
3. Strategy and Customization
A great digital asset partner does more than just create — they strategize too.
Your ideal partner should understand your target audience and be able to guide you in creating the kind of assets that resonate with them. Make sure that they are prepared to offer you tailored solutions to reflect your brand identity, not just cookie-cutter designs.
4. Transparency and Support
Choose a partner who can communicate with you about timelines, processes, and costs.
Check their online reviews and see what other customers have said. This is extremely important because transparency builds trust and good communication makes for smoother collaboration.
You’ll also want to make sure that they can provide ongoing technical support and guidance, since blockchain and digital asset creation can be complex to work with. If you plan to expand your digital asset offerings in the future, it’s also a good idea to make sure they can scale their offerings to meet your growing needs, so you won’t find yourself starting over with a new partner down the line.
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Ready to Start Creating Digital Assets That Make an Impact?
Whether you’re looking to launch an exciting NFT collection or a scalable SFT project, we cannot stress the importance of partnering with the right expert.
And if you’re ready to start your search today, allow us to leave you with one more piece of advice before you get started:
Why not partner with Designity?
Designity is a future-ready, tech-enabled Creative as a Service platform that is made up of the top 3% of all of the talented creatives who apply each year, meaning our creative team represents the best of the best in fields like NFT design, graphic design, coding, blockchain technology, NFT marketing, and more.
Add in the experience and guidance of a designated Creative Director to manage your account and you’ll find yourself surrounded by all of the expertise and creativity you need to bring your digital asset projects to life!
Check out our NFT design and marketing service page and portfolio to see how Designity’s digital asset pros have been able to make all the difference for brands just like yours.
If you like what you see, go ahead and book your demo call today. It only takes a few minutes and, when you’re done, we can get you started with a two-week, no-obligation trial so you can see firsthand why Designity is the last digital asset partner you’ll ever have to hire.
Is your brand ready to make an impact?
