The first NFT Collection by a US President: Four Lessons from Trump's NFT Launch
What did Trump's launch get right? What did he miss? How will NFTs revolutionize political fundraising?
You may not like it but this is what real NFT adoption looks like
Source: https://collecttrumpcards.com/
After my Reddit NFTs post, it’s time for a sequel!
Yes, I am talking about Trump’s foray into NFTs, aka “Digital Trading Cards”, making him the first US president to launch an NFT collection.
The launch has been a success across multiple measures:
Improved Trump’s finances - the collection sold out in less than a day, netting ~ 4.5mn USD in primary sales (45,000 NFTs at 99 USD each). He will also benefit from 10% royalty on secondary sales (resales)
Increased crypto adoption - the collection helped onboard new users to the Polygon blockchain, where the NFTs launched (Polygon is an Ethereum sidechain/layer two)
Trump NFTs buyers are in the green (so far) - initial buyers can still sell at profit, as the NFTs are trading at a floor (minimum buy price) of just over 2x their purchase price. The floor was as high as 5x at its peak, with the highest price paid for a Trump NFT being 44k USD.
So, given that most of us haven’t been US presidents, what can we learn from Trump’s launch? Are we likely to see more political NFT collections in the future? Let’s dig in!
Build an engaged audience
Lesson 1: Build a community of highly engaged supporters
Trump is controversial. But he has a highly engaged audience of supporters and a direct communication channel to them via his social media company Truth Social (twitter clone). He also has a highly engaged audience of detractors. But those too can be beneficial if they can be tricked into amplifying his message so it achieves a broader reach among his supporters.
Simply having broadly recognizable brand is not enough. Trump’s wife, Melania, is well known too. However, when she launched an auction for a “Head of State” NFT, the response was lukewarm. Blockchain sleuths discovered that the NFT was covertly bought by her team, perhaps to save face (ouch).
The crucial factor is to have a highly engaged audience of supporters, who are invested in your success and activities.
How do you build an audience? Provide entertaining and/or useful content and promote it to people who could find it relevant.
How do you make your community highly engaged? Trump’s approach seems to be to create and amplify drama, but there should be other, less exhausting, methods too. [then again, if you state your opinions on the internet, you can’t avoid facing some level of controversy]
For the rest of us, here is ChatGPT suggests:
Source: https://chat.openai.com/
Seems reasonable!
Lower barriers to entry
Lesson 2: Consider your community's tech skills. Make purchases as hassle-free as possible
It is safe to assume that large part of Trump’s audience was not familiar with blockchain technology. This is also true of many other politicians’ supporters, and US citizens overall [exposure to Dogecoin doesn’t count].
To make purchases easy for non-crypto native potential buyers, they were allowed to easily purchase the NFTs using their bank cards. This was in addition to the traditional NFT crypto payments option for more experienced followers.
Even now, weeks after their launch, almost half of the Trump NFTs are held in wallets with no MATIC (tokens used to transact on the Polygon network). They were probably purchased with a bank card, by people not previously familiar with crypto and blockchains.
If there wasn’t a card payment option, it is highly likely that many of Trump’s supporters wouldn’t have been able to complete their purchases.
Another way in which the collection lowered barriers to entry was to frame NFTs in a an accessible manner (Lesson 1 in my Reddit NFT piece). Trump called them “Digital Trading Cards”, invoking a concept his audience was more likely to be familiar with.
Provide clear utility
Source: https://collecttrumpcards.com/
Lesson 3: Be upfront about the benefits that NFT holders can expect to receive. It is fine to add more perks later on but have some base utility from the beginning
Some social media users were quick to label the NFTs as a cash grab. After all, they allowed Trump to earn just under 4.5 million USD in less than a day, how could such a “get rich quickly” scheme not be a scam?!
However, this is not quite true, as the NFTs provide clear utility which was listed up-front. In a lottery-like manner, once purchased, the cards revealed their type. Some included special benefits such as zoom calls, dinners, or golf sessions with the former President. Buyers could also purchase a large amount of cards (45) which guaranteed that they win a gala dinner with Trump. These benefits are likely be appealing to his fan base.
Of course, many card types did not “win” the lottery and came with no special benefits. These can only serve as digital mementos. But if collectors are careful with their seed phrases (passwords) [yes, that’s big “if”], these “digital trading cards” may well outlast a paper variant, which would inevitably decay in quality over time.
The approach that only works once: Bait and switch
So you have a an engaged community. And your NFTs provide clear benefits to holders. You still need to bring your community’s attention to the NFTs and their launch. What was Trump’s approach?
A classic bait and switch…. The day before he launched the collection he hinted of a major announcement on Truth Social. Some pundits proceeded to engage in wild speculation that he may pick a running mate for his presidential bid. And then… he announced an NFT collection instead.
This scheme got him more publicity than he would have received by announcing and NFT collection outright. Why? Because now the story was “We all thought he would do X, but he did Y”, and everyone who had reported on expecting X (a running mate announcement), had to announce that instead what happened was Y (an NFT collection announcement). Many reporters and social media personalities may have ignored Y if not for X.
So once again Trump managed to get people’s attention, but at what cost? Many will rightfully view his next “announcement” of a “major announcement” with suspicion and pay less attention. Trump is an expert at getting media attention so he may manage to limit the damage from this approach. But less media-savvy personalities should be advised to avoid the “bait and switch”.
However, Trump correctly identified an important goal:
Grab your audience’s attention
Lesson 4: People’s lives are full of distraction. Make sure to grab their attention so they realize you have a product on sale.
For those who do not wish to jeopardize their long-term and short-term brand value, the best NFT promotion approach is… to be honest [yes, really]. Truthfully hint at the type of announcement you would be making and why your audience should pay attention to it.
It is fine to be optimistic and speculate that your audience may have limited time to buy the NFTs and needs to purchase them before they all “sell out”. But don’t do the “bait and switch”. Your community is likely to be less devoted and forgiving of social transgressions that Trump’s.
The one mistake: ugly visuals
Remember Lesson 5 from my post on Reddit’s NFT launch?
People like beautiful things. Give them a product that they would feel proud to own and show off.
Trump’s NFT collection did not follow this rule. Just look at these visuals:
Of these, only one seems like a real photo of Trump, while the others are poorly photoshopped. All include CGI that looks cheap and (frankly) unprofessional. One could argue that they are humorous, or aiming for the “so bad they are good” appeal popularized by the infamous Kevin NFT.
But when you want people to give you 4.5 mn USD, you can afford to design better visuals. True, the NFT collection sold out, so it was a financial success for Trump and his team. However, he is also getting a 10% royalty on re-sales. To the extent that better visuals could have resulted in a broader appeal and more secondary market buyers, a higher prices, he left money to the table.
Not great for the man who wrote “The art of the deal” [yes, I know he probably used a ghostwriter].
The Future of Political NFTs: Supercharged utility
The money the Trump NFT raise is not going to his political campaign. Instead, whatever cut he negotiated with the issuers will be for his personal use [yes, it may well prove useful in funding defense lawyers]. Yet, his NFT launch has paved the way for the broader adoption of NFTs by politicians.
Political donations are a painful experience for many small donors. Their typical experience is that after donating to a politician, they have their contact details shared with pretty much everyone else in the politician’s party. Then they get spammed with donation requests on a regular basis, for the rest of their lives, and especially during election cycles. This is likely quite off-putting even for the most politically engaged people.
How can we make the experience better? Imagine if you received and NFT/digital badge for supporting your favorite politician. Then you get further NFT badges for helping them fundraise and canvass. You also receive Proof-of-Attendance NFTs for going to their events.
You now have a full supporter NFT “portfolio” and may work hard to collect their “the full set” of NFTs, just as children (and adults) collect Pokemon cards. Having a large number of a politician’s NFTs may entitle you to attending private events with them. It is the gamification of the political process and it is inevitable.
Even politician collaborations can become less painful and exploitative, centering at the donor experience. Instead of sharing mailing lists without explicit user permission, politicians may encourage their supporters to engage with other politicians in their party by promoting discounts for getting the NFTs of their colleagues. Example fundraising messages:
“For a limited time only, holders of X politician’s NFTs, can get Y politician’s NFTs for a discounted donation of 5 USD”
“If you have donated to both politician X & politician Y and have each of their NFTs you will receive their special limited edition joint NFT”
“If you attended events for three politicians in party X, you get a special super-supporter NFT”
And all these NFTs could come with access to special events and experiences which would be beneficial to the politicians too and enjoyable for their fans.
At this point you may be wondering if we actually need a blockchain for any of this?
I would argue that yes, we do. Blockchain tech excels at these types of collaborations. It is much easier to check if a public blockchain wallet contains certain NFTs, than to directly figure out if a person has donated to different politicians, or attended their events. The first is visible on the blockchain and trivial to check. The second is hidden in the separate private databases of multiple political campaign organizations.
Do you see why blockchains can be useful now? [forget about politicians, just think what variety of brand collaborations we are likely to see in the future]
But what about privacy? A person’s real name is not directly linked to a given blockchain address. But nothing is fool-proof and if they wish to preserve their anonymity they should be careful to use a “clean” crypto address, one not linked to their other crypto activities.
Conclusion: Implications for crypto
NFTs are the trojan horse of crypto. Many crypto skeptics intuitively understand their appeal and more will join their ranks as they continue to prove their utility. All major blockchains hosting NFTs are now Proof-of-Stake (as opposed to Proof-of-Work), eliminating environmentalists’ objections to their use. Trump himself has spoken out against Bitcoin before, saying he prefers the US dollar. But even he couldn’t resist the siren call of NFTs.
As crypto adoption accelerates, NFTs may revolutionize the way political campaigns are conducted, similar to the impact that social media has had. There will be a first-mover advantage for the party that first embraces them wholeheartedly. And the clock is already ticking.
So, who will be the next (ex-)President to launch an NFT collection?
P.S.
Great Dune dashboards tracking the Trump NFTs: