Cryptocurrency prices are soaring, and we are seeing unique concepts emerging in their shadow. Non-fungible tokens, or NFTs, are cryptographic assets on the blockchain.
They have individual identification codes and metadata that separate them from each other. They are a bit different from regular cryptocurrencies since they cannot be traded or exchanged at equivalency. Try to think of it as a movie ticket. When you purchase it, you buy a specific movie seat at a specific time and a specific place. No one has the right to that seat but you.
In contrast, Bitcoin (CCC:BTC-USD) and Ethereum (CCC:ETH-USD) work differently since you can buy, sell and hold their digital coins without any equivalency issues. NFTs are an excellent vehicle that can be used to represent physical assets like real estate and artwork digitally.
Additionally, NFTs remove any intermediaries and connect the producer directly with the consumer. For artists, especially, there is nothing better than this new trend. Just as an example, Kings of Leon has become the first band to release a new album as a non-fungible token.
This is not a flash in the pan by any stretch. In 2020, we saw $250 million of NFT volume, and this is before non-fungible tokens took the world by storm. NFTs can be pretty much anything that you want. And digitally savvy creators are capitalizing on this new trend. However, it also has benefits for a lot of other businesses and investors.
How NFTs Are Changing the Way We Do Business: Advertising
Brands need to keep up with the newest trends, and NFTs are no different. In that regard, you have to tip your hat to the NBA. Perhaps the most popular NFT market at the moment is NBA Top Shot. It’s basically a modern version of collecting baseball cards. However, in this case, you have the opportunity to collect non-fungible-tokenized NBA moments in a digital card form.
If you believe that is absurd, you shouldn’t. These NFTs have led to the rise of unlikely millionaires, who see this as the future for collecting.
Mark Cuban, the owner of the Mavericks, believes there is a future for digital assets in the NBA since anything digital can be an NFT. It’s just a matter of identifying the market, and NBA Top Shot did that in spades. Other major sports brands can do the same, leading to a new revolution in the advertising world.
Virtual Real Estate
You really know the internet has taken over everything when you hear about virtual real estate. Decentraland is developing Genesis City, a plot of virtual land approximately the size of Washington, D.C., which is open for you to buy. Promises of a VR (virtual reality) future are fueling this new speculative market.
According to one report, the global augmented and virtual reality market is projected to reach $571.42 billion by 2025, growing at a compound annual growth rate (CAGR) of 63.3% from 2018 to 2025. Hence, the concept of “virtual real estate,” will not seem foreign in a few years.
Just like you buy space in a nice community, you can pretty much do the same in Genesis City. The project developers have massive expansion plans for the (virtual) metropolis, including gaming districts, hotels, resorts, casinos and concert halls.
If this seems alien, then you should know that Facebook (NASDAQ:FB) is investing massive amounts of money in “supercharging remote work and productivity,” according to Andrew “Boz” Bosworth. Due to the pandemic, this trend accelerated.
Decentraland developers are now working to allow users to import NFTs from other blockchains. So if you bought a costly piece of digital art and want to enjoy it within the virtual city, then you have the chance to do so. This brings us to the next business that will see a boost due to non-fungible tokens.
Although NFTs have a wide range of uses, the creative art industries will benefit from this new trend. Argentinian designer Andrés Reisinger recently sold 10 virtual furniture items on Nifty Gateway, with the most expensive piece going for approximately $70,000.
Meanwhile, José Delbo, an artist who worked on the Wonder Woman comic book during the late 1970s, sold non-fungible tokens depicting the classic DC Comics heroine for $1.85 million.
Collectively, collectors spent over $60 million in February for gifs, jpegs and other digital collectibles. For many struggling artists, this is the way to realize their dreams and make a nice living at the same time. Even established art houses with a lot of history behind them are hip to the trend now and are using NFTs to make sure they remain ahead of the curve.
On the date of publication, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. Faizan has several years of experience in analyzing the stock market and was a former data journalist at S&P Global Market Intelligence. His passion is to help the average investor make more informed decisions regarding their portfolio. Faizan does not directly own the securities mentioned above.