Tuesday, January 25, 2022

Why should you invest in NFTs

Of course, it will probably always be best known as the microblogging site where people can talk smack to each other… And occasionally share useful information. But this year, CEO Jack Dorsey testing the NFT waters and sold his first tweet as an NFT for a ridiculous $2.9 million. And that seemingly set the wheels in motion. Not long after that, Twitter announced it would be in the NFT-making business. The announcement, naturally, came via a tweet:

5 NFT Stocks to Capitalize Off the Digital Craze

When non-fungible token (NFT) sales cracked $2 billion in the first quester of 2021, the running consensus was the bubble was about to burst. Then sales continued to rise. And growth isn’t slowing down just yet. That being said, NFT marketplaces can be difficult to navigate. And even harder to spot a good deal. However, you don’t have to be an art aficionado to make money from NFTs. In fact, you don’t even need to invest in actual NFTs. That’s what these NFT stocks are for.

Investor holding the possibilities of NFT stocks in his hands.

First off, let’s start with the basics. NFTs can cover a wide range of digital assets. Among the most notable are of course the digital collage by Beeple, which sold for $69 million at a Christie’s auction. But they can just as easily be video clips, music, sports collectibles or even video games. The key point here is that the NFT data is stored on a digital ledger. And that ledger certifies that the NFT in question is indeed unique. That’s the key here. Some folks are willing to shell out big bucks for the authenticated version. But the screenshot or audio-ripped copy, not so much.

Now onto the companies poised to make a big splash in the NFT space…

If you happen to find the next big NFT artist, good for you. But figuring out which 12-year-old coder is making a splash before the news gets out is a needle-in-a-haystack mission. But now that Wall Street has seen that there’s money to be made in NFTs, it’s a lot easier to figure out what NFT stocks are in the best position. Especially since there are much fewer of them.

However, even though there are dozens of companies making a play in the NFT space, some are in a better position than others.

Asides from the general acceptance, NFTs are popular because they are limited and if you understand the principles of demand and supply you’ll come to understand why you should buy NFTs. If you are interested in collecting unique or limited collectibles then you should consider entering the NFT market.

Is it safe to buy NFT in 2022?

Just like cryptocurrencies, it’s safe to buy and own NFTs but that doesn’t mean that it doesn’t come with risks. What are these risks? Well, you won’t need to worry about losing your NFT because the technology behind does not allow NFTs to be stolen or changed but if you do not carry out enough research when purchasing an NFT item of your choice then it might get devalued in the coming years which means that you may not be able to recover the money used in purchasing. Asides from that, if you purchase a popular and limited edition of an NFT then you wouldn’t have to worry about it depreciating over time.

Are NFTs Worth Investing In?

NFTs and why should you invest in Digital Art

Funny Dino NFT

New and revolutionary use cases for cryptocurrencies have begun to emerge as the world of cryptocurrency continues to grow into new domains. Non-fungible tokens have revolutionized blockchain technology, which was formerly only utilized for crypto trading.

Non-fungible tokens' concept and purpose can be a little unclear. This article will provide a summary of NFTs, including what they are and why they are worthy investments.

What Are Non-Fungible Tokens?

Non-fungible tokens (NFTs) are a unique form of token that can be traded because of their unique properties. Simply defined, non-fungible tokens have distinct characteristics and can be bought and sold.

NFTs allow you to use the blockchain to buy and sell ownership of unique digital goods, as well as keep track of who owns them, and it can hold anything digital, such as artwork, animated GIFs, sounds, or video game essentials. The blockchain keeps track of who owns each unique file, whether it's one-of-a-kind, like a real-life painting, or one copy of many, like print editions. An NFT, in effect, establishes that the digital artwork you purchased is one-of-a-kind or limited-edition; it establishes scarcity.

An NFT, however, is about possessing a one-of-a-kind version of something that the majority already like.

Are NFTs Worth Investing In?

For art collectors, NFTs are an exciting option because you're buying and investing in both a new revolution and the art. NFTs will reshape the art system in the same way that Bitcoin and Ethereum have changed the financial landscape.

You can purchase and sell NFTs on a number of markets, all of which have strong liquidity. NFTs are a game changer for both artists and collectors since they provide fresh liquidity for artists as well as a tamper-proof storage medium with automatic incentives on future sales.

The fact that the video clip by digital artist Beeple sold for such a high amount has caused a frenzy and more interest in investing in digital art. Another noteworthy NFT sale is Nyan Cat. The meme was auctioned for nearly $600,000 in February. As mentioned above, visual art is not the only asset that can be traded via an NFT. Basically, any type of content can be sold via a token. Twitter founder, Jack Dorsey, is currently auctioning off his first tweet, and rock band Kings Of Leon are selling special editions of their new album via NFT.

Why everyone is talking about NFTs

Have you ever thought about investing in art? Well, here’s a new way to do it, and it involves blockchain technology: They’re called NFTs and have been widely discussed in recent weeks due to some pricey transactions. So what are NFTs and why is everyone talking about them?

Due to the features explained above, NFTs have become increasingly popular for trading digital art pieces in recent months. The blockchain-based tokens allow the copyright owner to be identified and verified on a public record. NFTs are unique, cannot be swapped for other tokens and can’t be manipulated. So in short, NFTs are a new way of proving copyright and trading ownership.

But what is the hype about? NFTs have been around for more than two years and have been gaining lots of traction. That is because one art collector sold his NFT of a ten second long video clip for $6.6 million. He only bought it in October 2020 for $67,000.

The #1/1 from beeple's first NG drop has just resold on the secondary market for $6.6 million.

History has just been made.

Congrats to beeple and of course to @pablorfraile for the sale. pic.twitter.com/mTYG4VABSw

— Nifty Gateway (@niftygateway) February 25, 2021

Why would anyone pay that much money for a piece of art that can be looked at for free online? Well, the same applies to physical art that you can see in museums but which you don’t own and have no right to reproduce. Thus, NFTs are all about the ownership and copyright of a piece. Plus, stealing copyrighted content has always been an issue on the internet and NFTs are a way to make things more transparent.

The fact that the video clip by digital artist Beeple sold for such a high amount has caused a frenzy and more interest in investing in digital art. Another noteworthy NFT sale is Nyan Cat. The meme was auctioned for nearly $600,000 in February. As mentioned above, visual art is not the only asset that can be traded via an NFT. Basically, any type of content can be sold via a token. Twitter founder, Jack Dorsey, is currently auctioning off his first tweet, and rock band Kings Of Leon are selling special editions of their new album via NFT.

But fear not, you don’t need millions or hundreds of dollars to get into NFT trading. NFTs are commonly sold on marketplaces like Super Rare, Nifty Gateway or, if you are looking for digital basketball memorabilia, NBA Top Shot. Typically, transactions are made via the Ether currency.

Even if you are not sold on trading digital assets like these, it shows how versatile NFTs can be. For now, lots of new artists sell via NFTs to spread the word and lots of traders are trying to make big returns by reselling their tokens. The technology is here to stay though, so NFTs are definitely a space to watch.

The Company is not affiliated with, nor does it receive compensation from, any specific security.

I can’t believe what I just saw. Morgan Stanley says Elon Musk is going to be the world’s first.

Nothing on this website should be considered personalized financial advice. Any investments recommended here in should be made only after consulting with your personal investment advisor and only after performing your own research and due diligence, including reviewing the prospectus or financial statements of the issuer of any security.

Breakthrough Investor, its managers, its employees, affiliates and assigns (collectively "The Company") do not make any guarantee or warranty about the advice provided on this website or what is otherwise advertised above.

The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation.

The Company is not affiliated with, nor does it receive compensation from, any specific security.

To the maximum extent permitted by law, the Company disclaims any and all liability in the event any information, commentary, analysis, opinions, advice and/or recommendations provided herein prove to be inaccurate, incomplete or unreliable, or result in any investment or other losses.

Lobus is a platform looking to give digital artists more control over their work. In the traditional art world, an artist sells their work for a single, upfront price — whether that’s through an auction house or to a private buyer. Lobus changes this by offering fractional ownership, allowing the original owner or artist to receive a percentage of sale prices down the line through NFTs.

Traditional art sellers are now looking at the possibility of artists and owners retaining part of a piece they sell, and benefiting from future transactions too. We look at exactly what NFTs are, as well as Lobus, the platform behind this shift, and how technology provider Alchemy powers it.

NFTs explained

Never heard of a NFT? Don’t worry, you’re not alone.

To explain non-fungible tokens, let’s first look at a fungible token. One bitcoin can be traded for another bitcoin, in the same way that a penny in the real world can be replaced with another penny, making both of these fungible tokens. By contrast, if something’s non-fungible, it’s unique and can’t be easily replaced, a one-off, like an original piece of art.

At a high level, NFTs are part of the ethereum blockchain but, unlike an ETH coin, extra information is stored that makes the token unique. There’s also a feature that allows artists to be paid a percentage every time the work is sold, which Lobus is taking advantage of. Buyers get some basic usage rights, along with bragging rights, while artists and owners get a cut as the work, hopefully, accrues value over time.

The advantage of using ethereum is that it allows for computer programs known as smart contracts to be available on a distributed network. On a platform like Opensea, these smart contracts are used to directly connect an artist and buyer.

NFTs and a $1bn market

Lobus is a platform looking to give digital artists more control over their work. In the traditional art world, an artist sells their work for a single, upfront price — whether that’s through an auction house or to a private buyer. Lobus changes this by offering fractional ownership, allowing the original owner or artist to receive a percentage of sale prices down the line through NFTs.

Run by ex-Christie's and Sotheby’s staff, Lobus recently raised $6m in a funding round, with investors including Upside Capital, 8VC and Franklin Templeton.

Lobus combines tools to manage collections, pricing history and analytics to help artists better manage their digital art. According to TechCrunch, Lobus has 45,000 art objects in its database, with physical and digital assets valued at $5.4bn.

“We’re really on a mission of making artists into owners. We are really leveraging the best of what NFTs are putting out there about ownership and asking the questions of how to help create different ownership structures and interrupt this asset class,” Lobus co-CEO Sarah Wendell Sherrill told TechCrunch.

"We are . asking the questions of how to help create different ownership structures and interrupt this asset class" - Sarah Wendell Sherril, Lobus co-CEO

Powering all this behind the scenes is tech company Alchemy, whose technology enables all NFT platforms to connect to cryptocurrency ethereum. Alchemy has seen transactions grow 54-fold to $25bn worth of ethereum projects, according to Bloomberg. According to Alchemy co-founder Nikil Viswanathan, the NFT market could be worth as much as $1bn.

Alchemy’s first customer was Matt Hall who, along with John Watkinson, created CryptoPunks — pixelated 8-bit characters that have traded hands on NFT platforms. The most expensive of these was CryptoPunk 3100, a bluish alien creature, which sold for $7.6m in March — it had initially sold for $2,139.76 in 2017, so you can see how Lobus’s fractional ownership model could appeal to artists looking to benefit from future transactions.

Why investors should care about NFTs

NFTs can be anything unique and digital, but it’s their use in the art world that has caught investor attention. A 50-second video by Grimes sold for $390,000, while Christie’s sold digital artist Beeple’s Everyday: The First 5000 Days at auction for an eye-watering $69.3m.

Investors might be interested for a couple of reasons. Perhaps they want to buy an NFT in the same way they might want to purchase a piece of art, although at some of the prices discussed, this could turn into the playground of the mega-rich — much like the physical art world. The other is that platforms like Lobus and technology like Alchemy are starting to attract funding. Should they become the de facto auction houses of the future, investors would be wise to keep tabs on them.

Disclaimer Past performance is not a reliable indicator of future results.

CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.

CMC Markets does not endorse or offer opinion on the trading strategies used by the author. Their trading strategies do not guarantee any return and CMC Markets shall not be held responsible for any loss that you may incur, either directly or indirectly, arising from any investment based on any information contained herein.

*Tax treatment depends on individual circumstances and can change or may differ in a jurisdiction other than the UK.

In other words, NFTs cannot be mutually exchanged with other NFTs or digital assets; hence, the term, “non-fungible” which depicts that they are irreplaceable, and cannot be duplicated or replicated.

What are NFTs and how do they work?

Simply put, NFTs are digital assets that are non-fungible, meaning they cannot be altered or interchanged. These assets can be anything from original artwork, trading cards, music, photography, video clip, among other collectibles.

In other words, NFTs cannot be mutually exchanged with other NFTs or digital assets; hence, the term, “non-fungible” which depicts that they are irreplaceable, and cannot be duplicated or replicated.

Since each NFT holds its own value, they cannot be exchanged for one another like normal cryptocurrencies. Consequently, NFTs act more as a form of authentication than a form of exchange. Given that NFTs cannot be copied or altered, they are especially suited for tracking ownership of property that cannot be replicated, like the rights to a property for example.

So how do NFTs really work? NFTs exist on a blockchain which is a distributed public ledger that records transactions in a secure and decentralized manner. Specifically, NFTs are usually held on the Ethereum blockchain, albeit other blockchains support them as well.

Coming out of a COVID-19 shutdown, many museums have found themselves in their own financial depression trying to recover from a prolonged absence of ticket sales. And with news stories of Christie’s selling an NFT for $69M and the NBA making hundreds of millions in NFT sales, it makes sense that museums would look to NFTs as a potential source for new revenue. But how museums choose to use NFTs could significantly impact their digital transformation and have unforeseen implications that could potentially haunt them long into the future. I would encourage museums to follow Walt Disney’s advice and “not sign away anything they don’t know about.”

In 1936, in the middle of the Great Depression, a young Walt Disney turned down a deal with United Artists because they wanted to own the rights to his cartoons in a new medium that few had even heard of… television. “I don’t know what television is, and I am not going to sign away anything I don’t know about,” Disney reportedly said at the time. It was a bold decision during uncertain economic times that showed great foresight on Disney’s part. By 1966, it was estimated that an astronomical 100 million people were tuning in to watch Disney television shows.

Coming out of a COVID-19 shutdown, many museums have found themselves in their own financial depression trying to recover from a prolonged absence of ticket sales. And with news stories of Christie’s selling an NFT for $69M and the NBA making hundreds of millions in NFT sales, it makes sense that museums would look to NFTs as a potential source for new revenue. But how museums choose to use NFTs could significantly impact their digital transformation and have unforeseen implications that could potentially haunt them long into the future. I would encourage museums to follow Walt Disney’s advice and “not sign away anything they don’t know about.”

But first, what are NFTs? NFTs (non-fungible tokens) are rare collectible digital assets that are registered on the blockchain. NFTs have taken off primarily as a way to monetize natively digital goods like digital art, video game assets, and property/land in the metaverse. Because these goods have no physical component, they were historically difficult to buy and sell. By making digital assets ownable and giving them proven scarcity, NFTs have unlocked a new market for digital goods that exceeded $2.5B in the first half of 2021 alone.

In addition to selling natively digital goods as NFTs, many people have explored the process of minting or “tokenizing” physical objects into digital NFTs. The idea behind tokenizing a physical object, such as a painting, is that you could then own/buy/sell/lend that NFT as a digital proxy for the physical object.

While I have found that older generations often struggle with understanding why an NFT would have any value at all, this concept is rather intuitive for younger folks who grew up buying and selling video game assets, spending time with virtual reality, and hanging out in the metaverse.

So where does this leave museums? Museums own, protect, and share the world's most important cultural treasures. The obvious NFT play for museums desperate to raise money fast would be to tokenize the physical objects in their collections and sell off the official digital copies as NFTs to the highest bidders. The problem with this approach is that it requires museums to mortgage their digital future in the long run for a small payout in the short run.

Doni Tondo, Michelangelo - 1505–’06

In May, the Uffizi Gallery minted and sold a single edition NFT of Michelangelo’s Doni Tondo (1505–’06) for $170,000. The museum reportedly earned $65,000, splitting the profits 50/50 from the sale with technology partners Cinello for leveraging their patented DAW® (Digital Art Works) technology.

According to Cinello’s website , “All revenues from DAW® and from exhibitions are shared equally with our partners to ensure a new revenue stream without introducing any restrictions on ownership or current rights.” However, this statement shows a fundamental misunderstanding of the emerging NFT/metaverse culture.

Cinello are correct that the Uffizi is likely not legally signing away any digital rights, especially given that works like the Doni Tondo are technically in the public domain. The value of the NFT comes from the public perception that since the museum owns the physical work, it therefore would be the most respected authority to mint and sell the official NFT. But having sold this as a single edition, the Uffizi no longer has ownership over the NFT for the foreseeable future. Why does this matter? Because NFTs have become the standard format for owning digital goods, particularly in the metaverse.

Perhaps you are thinking, “Jason, you are a huge nerd. Nobody cares about your dorky NFTs and the metaverse.” But what you may be missing is that this combination of buying digital goods in NFT format for use in the metaverse is quickly becoming mainstream.

Shopify, the second-largest e-commerce solution behind only Amazon, just announced support for their 1,700,000 users across 175 countries to sell NFTs directly from their online stores. Last month, Facebook, with its 2.7B users, shared that it is betting its entire future on the metaverse. Zuckerberg defined the company’s “overarching goal” as “helping to bring the metaverse to life.”

Just as physical assets (drawings, paintings, sculptures, etc.) draw the public to physical museums, NFTs of their iconic masterworks will become the draw to museum’s digital properties in the metaverse long into the future.

What if instead of selling an exact replica of Doni Tondo, the Uffizi commissioned a digital artist to make an NFT inspired by the Doni Tondo? This would be a win/win in that the partnership would elevate the contemporary artist by associating them with the prestigious museum while allowing the museum to avoid digitally deaccessioning important artworks from their collection.

For example, the Italian CryptoArt duo Hackatao recently sold a series of NFTs inspired by Leonardo da Vinci’s drawing Head of a Bear, referred to as Hack of a Bear. By comparison, the combined sales from the Hack of a Bear NFTs significantly outearned the Doni Tondo NFT. The Hackatao work was done in partnership with Christie’s, who was auctioning off the actual da Vinci drawing. It is not hard to imagine how artists like Hackatao could also form similar partnerships with prestigious museums like the Uffizi for similar initiatives.

The Metaverse is still emerging, but many key components have started to take shape and are revolutionizing everything from e-commerce to media & entertainment, and even real estate. Our Grayscale Decentraland Report and Decentraland Tour make this concept more tangible by introducing one of the leading blockchain-based virtual worlds— Decentraland .

Crypto Investing Tips | eCommerce Marketing Guide| Dropshipping

Since non-fungible tokens are unique and on the blockchain, the industries that will adopt them the quickest will be those that trade on their brand's value.

Unique Sneakers, Louis Vuitton bags, or other pieces of clothing are the first items I would point to, especially since some of the luxurious brands are fighting counterfeit goods. NFTs can prove ownership and most importantly authenticity of such a good.

Crypto investment giant Grayscale has published a bullish report on metaverses, estimating that the “market opportunity” for bringing the metaverse to the mainstream may be worth over $1 trillion in the next few years.

The Metaverse

Crypto cloud economies are the next emerging market investment frontier and the Metaverse is at the forefront of this Web 3.0 internet evolution. The Metaverse is a set of interconnected, experiential, 3D virtual worlds where people located anywhere can socialize in real-time to form a persistent, user-owned, internet economy spanning the digital and physical worlds.

Illustrative Evolution of Web Communities

Web 1.0 - Netscape connected us online

Web 2.0 - Facebook connected us into online communities

Web 3.0 - Decentraland connected us into a community-owned virtual world

The Metaverse is still emerging, but many key components have started to take shape and are revolutionizing everything from e-commerce to media & entertainment, and even real estate. Our Grayscale Decentraland Report and Decentraland Tour make this concept more tangible by introducing one of the leading blockchain-based virtual worlds— Decentraland .

Projects like Decentraland are creating an open-world metaverse where users can log in to play games, earn MANA (the native token of Decentraland, with which users can purchase NFTs, including LAND or collectibles, and vote on economy governance), or create NFTs, giving them real world interoperability for the value of their time spent in-game.

The potential of this internet evolution has started to attract Web 2.0 companies like Facebook, which is shifting to a Metaverse company and is changing its name to “Meta”. At this inflection point, other leading Web 2.0 tech companies will likely need to start exploring the Metaverse to stay competitive, and the spotlight has prompted a new wave of investment in this emerging crypto category.

Play to Earn

Crypto-based play-to-earn games like Axie Infinity (AXS) are paving the way for unbanked people in some countries in South East Asia to bypass dealing with banks altogether, and instead rely on their play-to-earn accounts, panelists at a discussion about blockchain gaming in South East Asia said.

Top Play to Earn tokens by Market Capitalization

Blockchain Games

Commissioned by blockchain platform Stratis and undertaken by insight agency Opinion, the new research surveyed 197 video game developers in the United States and the United Kingdom.

The results showed that 58% of developers are beginning to use blockchain technology , and almost half of the respondents (47%) started incorporating nonfungible tokens (NFT).

How to Invest in NFTs?

Please read my previous article here: Invest in The Sandbox SAND.

One of the first internet marketplaces, eBay, also wants a piece of the new NFT market. The company sells some NFTs on their traditional online platform, but it might not stop there. If they allow cryptocurrencies and other digital assets, they’ll have a real chance at taking the market. EBay’s approach to NFTs differs from that of its major competitors. They want to focus on sales in USDs, rather than crypto, for now. It might seem like a more sensible option because it’s available to the masses.

PLBY was established in 1953. It has a market capitalization of more than $1 billion. Playboy, the firm’s lifestyle brand, announced on July 9th that it would collaborate with the Miami Beach Art Collection to exhibit NFT art. PLBY’s stock price increased by more than 2% following the announcement.

  • Facebook

About The Author

Allen Lee

Allen Lee is a Toronto-based freelance writer who studied business in school but has since turned to other pursuits. He spends more time than is perhaps wise with his eyes fixed on a screen either reading history books, keeping up with international news, or playing the latest releases on the Steam platform, which serve as the subject matter for much of his writing output. Currently, Lee is practicing the smidgen of Chinese that he picked up while visiting the Chinese mainland in hopes of someday being able to read certain historical texts in their original language.

Related Posts

Five Solar Stocks You Should do Some More Research On

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.