The already booming NFT (non-fungible token) market will experience a massive increase in volume over the next 12 months as more major investors begin to pile in.
The prediction from Nigel Green, chief executive and founder of deVere Group, follows the announcement by Visa that it bought a “CryptoPunk,” one of thousands of NFT-based digital avatars, for nearly $150 000 in ethereum; and as Marvel Entertainment begins unveiling its first official NFTs in the form of Spider-Man “digital statues”.
An NFT is a unique digital asset designed to represent ownership of a virtual item, such as artwork, music, a video clip, or tokenised tweet, amongst other representations.
Green explains: “The market for NFTs hit new highs in the second quarter, with $2,5-billion in sales so far this year. This is almost 20-times more than the $13,7-million in the first half of 2020.
“With soaring interest from major investors like payments giant Visa, who understand and value that the future of almost everything is geared towards digital, demand is set to explode.
“As the big hitters pile in, their capital, expertise and reputational pulling power will attract a growing number of other investors – both retail and institutional looking to get into the market.
“Demand will also be fuelled by a growing number of NFT marketplaces where you can make purchases, as well as there being more and more artists, musicians, sports, fashion, entertainment, gaming and retail brands producing digital assets to engage with consumers, clients and fans,” he adds.
“This is a market which is just getting started. There’s been a surge of interest this year but I believe 2022 will be the breakout for NFTs.
“We expect there to be a massive increase in volume in the market over the next 12 months.”
NFTs may be something of a novelty currently, but Green believes it “makes sense” that, with the accelerating pace of the digitalisation of our world, digital assets will become increasingly valuable.
“Demographics are on the side of NFTs too. Millennials, and Gen Z especially, have digital lives and it’s natural to want to take digital representations of luxury brands, sport, music and art into these worlds – and now they can.”
He adds that NFTs are “positively changing business models”, especially in the creative industries. For example, artists and musicians 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.
Green concludes: “With NFTs, we are experiencing the meeting of an internet of information with an internet of value, which is drawing in large investments coming from multinationals, funds, and VC firms, among others, into the market.
“However, the market remains young and highly speculative and caution should be exercised. It can be expected that some of the NFTs on the market now will have little value in a few years. But some will be worth a fortune. It’s a similar situation to websites in the early days of the internet.
“As with any kind of investment, the key is being able to pick the winners and avoid the losers in what is a volatile market driven by fast-changing trends and tastes.”