Today’s crypto investors will rule the booming NFT market
If you’re investing in cryptocurrencies today, you’ll be best-positioned to financially benefit from this decade’s hottest new asset class: Non-fungible tokens (NFTs).
NFTs started grabbing global attention when Beeple sold his ‘Everydays: The First 5000 Days’ digital-only artwork for $69 million at traditional art auctioneer Christies in April 2021.
Since then, an ever-growing number of celebrities and artists, and fashion – including Nike and Louis Vuitton – music, tech and sports brands – including Formula 1, Premier League clubs and the NBA – have been creating, buying and selling digital tokens.
The market for NFTs surged to $41 billion in 2021, according to the newest metric. To put this into perspective, sales in the traditional art market were around $50 billion in 2020.This new digital asset class has value due to the blistering pace of the digitalisation of our world. Millennials and Gen Z especially have digital lives and it’s natural to want to take digital representations of fashion brands, music, and art into these worlds – and now they can with NFTs.
Plus, they’re positively changing business models especially in the creative industries. Sports stars, artists and musicians – or any entity or person with a following – can provide enhanced virtual experiences for collectors and buyers, they can prove if their works are counterfeited, and they can include criteria to get royalties every time their works are re-sold in the future.
NFTs provide a tamper-proof indestructible certification of ownership along with provenance that will last forever.
Therefore, in the future every artwork, song, sports gif, or clothing range, amongst so many other things, will have an NFT attached to it.
With NFTs, we are experiencing the meeting of an internet of information with an internet of value.
In addition, this asset class can act as a major diversifier in investment portfolios. NFTs have a very low correlation to other assets, such as stocks and bonds, and can, therefore, lower your portfolio’s overall risk and volatility levels.
For all these reasons, this is set to be a breakout year for NFTs – and this is good news for crypto investors because these digital assets are brought using digital currencies.
Prices of major cryptocurrencies are likely to soar enormously in the next few years. Indeed, some experts predict a single Bitcoin to be worth $200,000 within five years.
As such, those buying crypto now, and taking advantage of the lower entry points, will likely be able to financially benefit from the booming market for NFTs, which I believe will become a standard feature of investment portfolios in a matter of years.
I am in no doubt that cryptocurrencies and NFTs are fundamentally shaking up the global financial architecture and they will continue to increase their dominance in the investment ecosystem.