NFT Speculation Is Taking The Stock Market By Storm This Week
Unless you’ve been living under a rock, chances are you have heard about non-fungible tokens (NFTs) making a scene in the stock market today. But before we dive straight into finding the best NFT stocks to buy, let’s consider if they are actually worth the hype after all. If you are those investors who are fascinated by the potential of this technology and believe that NFTs could go mainstream in the future, read on.
What Are NFTs?
When we say something is fungible, it means each unit is interchangeable. For example, a unit of a currency is fungible. Exchange a dollar for another dollar, and you essentially still have the same thing. A unique piece of artwork, however, is non-fungible. An NFT can be a digital artwork, a video clip, a gif, a tweet, or even a digital trading card. Basically, anything digital, but a lot of the current excitement is around using the tech to sell digital art.
Why is it so hot right now? We saw digital artist Beeple who ended up selling a piece of artwork for $69 million and Jack Dorsey’s tweet which sold for $2.9 million. These are some of the reasons why NFTs are hot right now.
How Do They Work?
The types of art available as NFTs are virtually limitless. After Dorsey’s tweet, it doesn’t just stop there. An NFT Artwork by Sophia the Robot sold for nearly $700,000. Crypto tokens from the New York Times column sold for $560,000. The beauty of NFTs is that once it is created, it gets uploaded to an NFT marketplace.
Its unique identity and ownership are then verified on a proof-of-work blockchain. This is the same technology that powers cryptocurrencies like Bitcoin, Ethereum, and other top cryptocurrencies in the market. Most NFTs make use of the Ethereum platform, but there are also increasing interests in utilizing Cardano and Polkadot’s platform instead. This helps to explain why Cardano and Polkadot are making big moves in the crypto space as of late.
NFT Craze Sent These Stocks Flying This Week
If a company has some involvement in blockchain technology, entertainment, or online retail of digital assets, there’s a great chance traders are speculating on it right now. Dolphin Entertainment (NASDAQ: DLPN) and Hall of Fame Resort & Entertainment’s (NASDAQ: HOFV) partnership saw their stocks nearly double after their partnership on NFT. Interestingly, DLPN stock and HOFV stock are not the only companies cashing in on the NFT craze.
“The significant progress we have made on our strategic initiatives since going public in July 2020 has allowed us to be in a position where we can offer individuals the opportunity to own NFTs associated with original content centered on professional football. This partnership will provide us with another opportunity to unlock additional value from the one-of-a-kind media projects we have in development.”- Michael Crawford, president, and CEO of HOFV.
This week we saw massive stock price movements in companies that are being perceived as NFT plays. Several others are joining in on the NFT action and that’s no surprise with investors hungry for more stocks entering the space. Amongst them are Takung Art (NYSE: TKAT), Funko (NASDAQ: FNKO) and Liquid Media (NASDAQ: YVR).
The Opportunities With NFTs
NFTs become a compelling investment opportunity when you consider the art’s resale value. It’s similar to buying physical pieces of fine art. Having possession over the art itself isn’t going to bring you any returns if you are only planning to hold on to it. Of course, staring at that piece of art might give you some sense of satisfaction. But it’s selling that piece of art to the highest bidder that brings in the big gains. Put it this way, if you’re able to purchase a unique NFT and then potentially sell it for more than what you paid for, you could make a handsome profit.
The beauty of blockchain is that no fraud and theft are possible. There will be codes and authentication to prove and verify that piece of art you have. Sure, others can still make copies of an original piece of digital art, but there’s still only one original. That person who owns the NFT for that piece of art owns the original.
Are NFT Stocks The Right Investment For You?
If someone asked you what NFT stocks were in January, you would probably look at him or her blankly. Needless to say, the excitement has fueled rallies in countless tech stocks on Wall Street this week. Like I said earlier, some of these have no relation to the NFT niche. But investors presume these companies might gain exposure to NFTs based on speculation.
It’s really hard to say at this stage whether NFT stocks will take off for good. Look at cryptocurrencies in 2017-2019. There’s a good chance that the hype over NFT stocks will soon dissipate if history provides good guidance. With all the hype going around, it’s easy to dismiss it simply as science fiction that will never materialize. However, if we look closely, you would know that something is brewing behind the scene. And why might I say that? Well, according to data from Nonfungible.com, the total value of NFT transactions jumped to $250 million last year. In the past month alone, NFT transactions exceeded $220 million. It seems like we could be witnessing something growing at an exponential pace.
Will NFTs Be The Future Of Modern Art?
Traditionally, any digital art that is posted online can easily be shared, saved, and downloaded. That said, there isn’t a strong sense of ownership because everyone can use it easily. Imagine you’re an artist, a good one actually. And you create some of the most beautiful paintings. But what about capitalizing on your creativity? You seem to have no luck with it so far, at least with most of the people. However, with NFTs, there is a way to give digital art a sense of uniqueness. And it actually creates an incentive for good artists to keep producing creative arts.
There is a lot of potential for NFTs in the art industry. But first things first, the market needs to be regulated. Currently, there is no rule deciding who can create NFTs and who cannot. Until then, I wouldn’t jump straight into NFT stocks before the dust settles. Don’t get me wrong though, I appreciate art. I truly believe that this could redefine the way art plays a role in our society. Maybe it is just me, but I would like to see more concrete developments here before considering NFT stocks. However, this is just my opinion and the decision is yours. Make sure to do your due diligence and research.