That’s what The New York Times is calling the recent surge in interest in non-fungible tokens (NFT). Fueled by the incredulous $69 Million US sale of a piece of art which was just a JPG File, NFTs are the talk of the investment and mainstream worlds.
Having a bit of FOMO right now? Before you acknowledge your fear of missing out, it’s best to survey the NFT landscape and find out where these tokens might fit in a portfolio.
NFTs have been around in the crypto world for a while. But unlike Bitcoin, stable coins and other altcoins, these tokens differ from other digital currencies as they represent tangible assets. From artwork, songs, videos, to tweets and trading cards, NFTs allow anyone to authenticate and sell their creations on the blockchain.
“Now, artists, musicians, influencers and sports franchises are using NFTs to monetize digital goods that have previously been cheap or free,” the New York Times explains. “The technology also responds to the art world’s need for authentication and provenance in an increasingly digital world, permanently linking a digital file to its creator.”
There are two sides to every NFT: the creator and the purchaser. Both can profit from NFTs but in different ways.
For example, William Shatner, the US actor known for his role as Captain Kirk in the television series Star Trek, created several digital trading card images — including one which was an X-ray of his teeth — and issued NFTs on the WAX blockchain.
“Within nine minutes, the entire run of 125,000 tokens sold out, for about $1 each,” the Los Angeles Times reported. The token holder receives a piece of authenticated art. And every time a token holder sells the NFT, Shatner earns a royalty.
NFTs are also popular in the sports world, especially in the basketball world, where people have reportedly spent more than $230 million in collectibles via the NBA’s Top Shot blockchain collectible system. A LeBron James highlight reel sold for more than $200,000, according to CNBC. Buyers are snatching up other digital assets as they bank on the players popularity to rise, along with the value of their asset.
So, if you’re into collectibles, which is estimated to be a $400 Billion market globally according to Nasdaq.com, NFTs give traders the opportunity to invest in an item that could rise — or fall — in value. By holding an authenticated piece of the pie, the value to the trader is also in knowing that while other people can still download a “copy” of the original, the NFT offers the real deal in trading value.
Gaming is another active category for NFTs. Here, like collectibles, value is driven by supply and demand.
“…gamers and collectors can become the immutable owners of in-game items and other unique assets as well as make money from them,” a CoinDesk contributor explains. “ In some cases, players have the ability to create and monetize structures like casinos and theme parks in virtual worlds, such as The Sandbox and Decentraland. They can also sell individual digitals items they accrue during gameplay such as costumes, avatars and in-game currency on a secondary market.”
And of course, you can’t talk about NFTs without talking about CryptoKitties, the Ethereum (ETH) based game in which kitties are bought, bred and sold, some of which have fetched hundreds of thousands of US dollars.
If you’re not into collectibles or gaming, there are NFT token projects that offer traders a piece of the pie. Axie Infinity (AXS), and Aavegotchi (GHST) are established projects which, along with newbies Chromia (CHR), Rarible (RARI) and Lukso (LYXE) are seeing increased interest and trading activity.
Whichever you choose — to be a creator, a collector of just an investor, NFTs are having a moment. No one can predict how long “NFT Mania” will last. But it’s worth exploring as the mainstream continues to find new value in the digital currency world.
Joyce Pavia Hanson
Originally published at https://www.stex.com on March 12, 2021.