Over the past few years, non-fungible tokens (NFTs) have experienced a tremendous increase in awareness and trade as the digital art has sparked global intrigue and introduced the asset class into the mainstream. This technology leveraging blockchain presents a decentralized approach to ownership and opens up new possibilities for the commercialization of digital content and physical assets. Tokenizing tangible and intangible assets makes buying, selling and trading them more efficient and presents potentially vast and untapped opportunities for everyone from individuals to professional investors. As the influx of large corporations, high-profile endorsements and forward-thinking investors continue, there will likely be mainstream and institutional adoption.
Think about the last time you wrapped a gift. While the cost of wrapping paper was negligible, the gift inside was far more valuable. Now, consider NFTs the same way—far more than featuring digital art and collectibles, NFTs are digital “wrappers” that can encompass assets that haven’t historically been represented as such. In this case, the “gift” is a valuable asset “wrapped” in an NFT – a digital certificate of ownership for any asset that can be stored and transferred on the blockchain. Like wrapping paper, the NFT itself is only as valuable as the asset it is. They act like ETFs – as a structural cover that is flexible, adaptable and unique to the underlying asset.
NFTs present a new range of promising investment opportunities for investors, asset managers and creators. A Finder panel of fintech experts has predicted that the market capitalization of NFTs will reach $26 billion by the end of 2022 and increase to $146 billion by 2025. NFTs can be deployed to tokenize any asset, they can be a boon to the industry. Furthermore, fast-growing startups will need guidance as they navigate the nascent ecosystem; Agile asset managers will have a hand in nurturing the next generation of leaders.
Although the current narrative surrounding NFTs often focuses on art and collectibles, legacy institutions such as Christie’s and Sotheby’s have increasingly entered the space, energizing the market, giving confidence to the asset class, and increasing confidence in retail and institutional investors. inspired those who were watching with intrigue. edge. However, beyond a single buzz or trend, there is a wide ecosystem of non-fungible assets that hold value. Furthermore, NFTs are a flexible technology with diverse applications across industries. Although the full range of utility of the token is in its infancy, the adoption of NFTs is likely to impact all aspects of our economy.
Ultimately, NFTs may represent any asset, any right, any record; And it’s a value proposition that extends far beyond the JPEG that people associate with the acronym. As is often the case with historically significant innovations, the realization of potential is slowly unfolding while increasing rates of innovation and adoption indicate a profound cultural and financial shift. The ubiquity of NFTs is likely to widen as innovators continue to uncover unprecedented applications, use cases and value propositions. The investment landscape is broad and steadily growing, as NFTs fuel the creation and improvement of businesses. While NFTs may not currently be a suitable investment idea for everyone, it is certainly a technological development that all investors and advisors should be aware of.
Here are some examples to consider: