Everybody has that filing cabinet in their house. You know the one, full of life’s minutiae: insurance paperwork, tax filings, birth certificates. Nobody finds this filing cabinet fun — and certainly no one considers it a hotbed of investment opportunity. But what if you could put these important documents on the blockchain, eliminating the need for the cabinet and making its contents instantly accessible from anywhere in the world? It turns out this technology already exists, and it’s taking the world by storm, starting with the art market.
That technology is in non-fungible tokens (NFTs).
NFTs are bridging the virtual and real worlds in previously unimaginable ways. They represent a technology vast in scope, and many experts believe them to be an increasingly permanent fixture in the human experience. Shark Tank star Kevin O’Leary is one celebrity investor who is intent on pushing the limits of NFTs, because he believes that they will play a crucial role in digitizing physical assets.
There are plenty of investors who stand with O’Leary. Moving physical assets to a secure online ledger seems like a natural step to bridge the human experience with the online world. However, barriers to entry are high within this new space. NFTs are prolific and prosperous, but they are also, more often than not, perplexing for new investors.
Feeling Bamboozled by Bored Ape NFTs?
Perhaps this is because many investors most closely associate NFTs with the Bored Ape Yacht Club or EtherRocks, collectible projects that see individual assets sell for thousands or millions of dollars. Unlike the tangible things we collect — like baseball cards, crystals or stamps — you can’t display an EtherRock in your house.
But O’Leary says investors may be missing the point. Think, instead, of an NFT as you would a physical painting — you can buy a print or copy of a painting, but there’s only one person in the world who owns the real thing. An NFT is that original; everything else is an imitation.
In this way, blockchain technology fills the role of the auction house. A digital original is secured and authenticated on the ledger, creating a record of ownership. This also cuts out the old school names like Sotheby’s, giving creators and buyers more independence in the market.
What if we took things a step further? What if we were to move on from digital art and video game items and start tokenizing real-world goods? The possibilities are endless, pointing toward a world that’s totally paperless. That filing cabinet in your house is filled with things to be tokenized and made undoubtedly verifiable on the digital ledger.
This is a grandiose future for an asset class that’s still in its infancy. And this transition can’t happen overnight. Rather, we as investors get to bear witness to the evolution of NFTs as they transform from something considered more of a novelty to a technology that we use in our everyday lives.
So, what are NFTs going to look like in the next year? What about in the next three years?
Take a Trip Into the Future of NFTs With the ‘Berkshire of Blockchain’
Kevin O’Leary is personally trying to create the future of NFTs that he wants through his investment firm, O’Leary Ventures. In fact, he told InvestorPlace about where he thinks NFTs are headed in an exclusive interview.
“[The NFT sector] is nascent,” he says. “You really want to try and find visionaries that you think have staying power. The space is not [built for] day trading; you have to have a long-term view.”
That’s why he took up an investment in Immutable Holdings, which trades on Canada’s NEO Exchange. The company, which just celebrated its public debut, is the product of Jordan Fried, a crypto influencer and one of the founding members of the Hedera Hashgraph (CCC:HBAR-USD) network. Fried’s company, heralded as the “Berkshire of blockchain,” is a particularly attractive investment thanks to its diverse crypto holdings that touch, among other applications, NFTs.
O’Leary thinks Immutable’s destiny is to push NFTs toward mainstream adoption thanks to its ownership of the NFT.com domain. The company and O’Leary both believe that the immediate next step is in social interaction. Through the website, Immutable will be able to leverage this coming trend. It will not only offer users a way to buy NFTs, but a way to interact with others.
“We’ve created a concept of using an NFT as a sign-on authentication to a profile,” says Fried. “If you’re a collector, you can display all the NFTs that you’ve come into possession of and proudly display that you own them.”
The product intends to be a sort of social feed, like an Instagram account, for example. Users can display their NFTs for peers to see. Fried also says he wants to make the platform cross-compatible, allowing users to aggregate their NFTs in one place.
O’Leary says this idea is already catching on with future customers. Although NFT.com has not had a public launch yet, O’Leary has received calls from individuals seeking out how to set up accounts. This comes as NFTs continue to generate consumer interest.
But on the longer-term road to mainstream adoption of asset tokenization, what role does NFT.com actually play?
Cryptopunks, Meet Car Insurance Paperwork
If the blockchain-based filing cabinet is the end goal, NFT.com is the blockchain-based trophy case. It’s a way for investors to act as collectors, promoting their status via NFTs they own.
Considering the market this way, O’Leary hopes that the virtual trophy cases will expand to include more than just rare Cryptopunks or Bored Apes. Specifically, he is hoping to see blockchain trophy cases begin to feature tangible collectors’ items.
“[For example], watches are now being treated like art,” O’Leary says. “The appreciation in the secondary market over the last four or five years has been extraordinary.”
To O’Leary, this creates a business case for collectors to tokenize certificates of authenticity for everything from luxury watches to original physical artwork and antique jewelry. They could even move records for things like houses and yachts to a public ledger.
“If I go and buy a [17-year-old] World Time Patek, I can’t buy that watch new,” O’Leary says. “Because the watch is so valuable and [has] appreciated so much, there’s a huge knockoff market.”
The prevalence of counterfeit goods, beyond being frustrating for buyers, also adds unwanted fees into the equation.
“If I look at a [watch] in Hong Kong, I have to get it flown to New York [to have it authenticated],” he says. “[The authenticator] takes it apart, looks at it, it costs thousands of dollars. If there were an NFT that had been created of that watch to authenticate it, I wouldn’t have to do all that.”
The Future of NFTs Could Be Here in the Blink of an Eye
Herein lies the intersection between the trophy case and the filing cabinet. Not only does O’Leary want a platform to show off his tokenized watch, he wants a way to authenticate and secure it. And although not everyone is a collector of luxury watches or jewelry, this speaks to that longer-term evolution in the NFT world.
“The same thing [goes] for physical assets like car insurance,” O’Leary says. “It’s so much faster and easier to [verify this type of information] on the chain than it is to store papers in a vault somewhere.”
Although the shift to a truly paperless form of record-keeping will take the rest of our lives, O’Leary and Fried think some of their ideas could manifest “over the next 36 months.” O’Leary is certain that his investment in Immutable will be crucial to this revolution as well.
O’Leary’s ideas provide valuable insight into the future of NFTs, and investors should be very excited. A blockchain-based filing cabinet may not sound glamorous, but it stands to disrupt how we approach so many elements of digital life.
On the date of publication, Brenden Rearick did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.