Have a look at the below image.
A CryptoPunk NFT
How much would we be willing to pay to own this image? Well, a collector recently paid more than $700,000 for that right.
As many of us already know, this is an NFT. It’s part of a collection known as CryptoPunks. And it’s common for pieces in this collection to sell for hundreds of thousands of dollars.
For new readers, NFT stands for “non-fungible token.” Non-fungibility simply means that something cannot be easily exchanged or substituted. And really the most important word is “fungible.”
If something is “fungible,” it simply means it can be easily exchanged for something of equal value. Currency is fungible. An original piece of artwork is not.
I’m sure many of us have heard of NFTs. And I’m sure we’re aware that some NFTs are selling for exorbitant prices.
This might lead some of us to think that NFTs are a passing fad. But I’d encourage us to keep an open mind. Because non-fungible tokens are part of a larger – and very lucrative – technology trend.
The Future of Artwork
Historically, art collectors have been willing to shell out millions of dollars for individual pieces of physical art. It’s no different with NFTs. These are simply the modern versions of collectibles.
And these digital collectibles have several advantages over their physical counterparts. NFTs allow buyers to verify that they aren’t getting a forgery. That’s something that the physical collectibles market has always struggled with.
And in many ways, digital art would be more appealing to some collectors. If somebody buys an original Picasso, it’s difficult to show it off to your friends and colleagues. And you always run the risk that it could be damaged or destroyed.
But an NFT collectible? It goes with you everywhere. You can share it on social media or display it on your phone. It’s even becoming common for celebrities to use their NFTs as avatars on platforms like Twitter.
What I hope we can appreciate is that we are now in a world where purely digital assets are valued and sought after. Bitcoin, a purely digital currency, is a perfect example.
And we should remember that digital collectibles and artwork are just one application for this technology.
Digital Certificate of Ownership
At a high level, NFTs are digital certificates of ownership, authenticated and secured using blockchain technology. Right now, this technology is mostly applied to digital collectibles. But the implications go far beyond just that.
This is part of a larger technology trend known as “tokenization.” And the easiest way to think about tokenization is to compare it to the process of securitization.
When a company is securitized, the value of that company is represented as public shares. This is the entire basis of global equities markets.
It’s a similar idea to tokenization. It’s a process of substantiating a claim of ownership on an underlying asset. The first difference is that this process is accomplished by using blockchain technology. Also, virtually any asset in the world can be tokenized and traded.
Let’s imagine a piece of property like our house.
Typically, one person would be the sole owner of that asset. Maybe your spouse is also on the title, but that’s usually where it stops.
But if we were to tokenize that home, fractional ownership could be conferred to hundreds or even thousands of token holders. The value of the tokens would fluctuate just like any other security.
These types of tokenized assets are what I refer to as “digi-phizzy,” or “digital-to-physical.” It is a digital token that confers ownership of a physical asset.
Imagine tokenizing commercial property, rare cars, jewelry, or even racehorses. Anything of value can be tokenized and traded.
And there’s one more application we should consider…
NFTs: The Bridge to the Metaverse
A metaverse is a virtual world that allows us to do many of the things we would do in our normal lives. We can shop, meet our friends, entertain ourselves, own property, and even open businesses.
A big misconception I hear is that this is “just a video game.”
Metaverses have robust economies with their own economic incentives. It is possible to own, develop, and sell real estate in a metaverse. The big difference is that this real estate is represented as an NFT.
This is already common in one metaverse known as The Sandbox.
The Sandbox Metaverse
Source: The Sandbox
The Sandbox is backed by Softbank Group, which is the largest tech venture capital fund ever. They are using NFTs, which you can see above, to disrupt the virtual reality industry. Adidas just recently purchased a plot of virtual land in The Sandbox metaverse.
In late 2021, Sandbox raised $93 million in its Series B funding round. The company’s valuation was not disclosed, but it’s almost certainly north of $1 billion now. That would make it a unicorn.
The Sandbox is just one example of a metaverse leveraging NFTs. There are several more. And more metaverses will come online in the months and years ahead.
We’ll be able to attend conferences, go to meetings, see concerts, and catch up with our friends and families here. In fact, we could one day have a full-time job in a metaverse.
Only the Beginning
This is only the beginning for NFTs and tokenized assets.
In March of 2021, I was invited onto Glenn Beck’s radio show and made the case for NFTs there. At the time, I predicted that NFTs would become a multibillion dollar market. And that’s precisely what happened.
I predict the NFT market will be valued at $100 billion sometime by the end of 2022. And for investors, this represents an incredible investing trend.
And the best part is that we don’t have to buy these digital collectibles… There’s a much easier way to profit from NFTs…NFT coins.
There are several NFT projects that are already expanding the use of NFT beyond collectibles. And the beauty here is that we can invest in these projects just like we would invest in Bitcoin, Ethereum, or any other digital asset.
That’s why I just built an NFT model portfolio with my top three coins for this revolution.
I’ll give all the details on Wednesday, January 26, at 8 p.m. ET. I’ll also give away my first-ever line of NFTs to a number of attendees.
So if you’re interested in joining me, you can go right here to reserve your spot to a number of attendees.
I just ask that you hurry; I want to make sure none of my Bleeding Edge readers miss this event.
I hope to see you there.
Editor, The Bleeding Edge
Like what you’re reading? Send your thoughts to [email protected].