Are NFT’s just a scam, a craze, and yet another Ponzi-scheme ready to soak up all the spare cash in the system, or is there something more to it?
2021 saw NFT’s become a multi-billion-dollar industry, with $23 billion in sales. By contrast, the year before, sales volume was just $14 million!
I myself have been watching with interest – I’m not fully into pixelated art to be honest as seen with Beeple and the Bored Ape Yacht Club ,but I’m extremely interested in where this new blockchain-based technology will lead us.
What are NFT’s?
Non-fungible means one thing isn’t the same as another. Our dollars are a great example of a fungible token, because your $1 is exactly the same as mine. Children on the other hand, well, not so much – you can keep your bratty little kid and I’ll keep mine thanks very much!
Token simple means representation. A carnival ticket gives you permission to ride etc.
NFT’s can be created to represent anything – from a painting to a contract that can state anything. Still think it sounds kind of gimmicky? Imagine an insurance contract that exists in your very own wallet, providing an instant payout to the holder of the token should a negative event occur. This is just one example of how NFT’s will change everything in the area of financial products and services we consume.
I covered how in debt-markets (think bonds and fixed interest), securitised loans can be bundled together to ‘mint’ NFT’s which can then be used to develop a new market for retail investors – you can check out the episode I did on this here.
NFT’s are stored on a blockchain, the same technology that powers digital currencies such as Bitcoin. And like Bitcoin, NFTs can be bought and sold to anyone – they can’t be altered, deleted or counterfeited.
Why would you want to own an NFT?
Unlike works of art, whose origin can be forged, NFTs cannot be: you can see where it came from, how many owners it’s had, and what they paid for it. You could buy a copy (or right click and save) – but that’s like going to the Louvre and taking a digital photo of the Mona Lisa. While the copy isn’t worth anything, the original can have immense value due to scarcity.
Is this just for enthusiasts?
In this recent video I did with Craig McColl from Venture Venture, we talk about how you can own your very own NBA ‘top shots’. You can now buy digital versions of clothing and other products or services which gives the community members access to special events, and real clothing an other items (in the ‘real world’). This is a $50 billion market!
Property: Imagine creating an NFT that represents your home – this is super exciting to me as it’s a ‘nut’ I’ve been trying to crack for almost 5 years now, trying to build something new with old tools. Now, perhaps soon, you’ll potentially be able to solve the age-old problem of being asset rich but cash poor. Imagine selling off fractions of your home in retirement to fund living costs (or transitioning ownership of your home to family)?!
Advisers, musicians, artists – you name it, NFT’s opens some amazing doors to a source of wealth that’s truly infinite.
So, now you know what NFT’s are – what do you think? Nothing to see here?