by Jake Wengroff
Digital coins, like Bitcoin, are fungible, because you can replace one Bitcoin with another Bitcoin and it will have the same value. NFTs, or non-fungible tokens, are unique and represent a digital asset that cannot be replaced with something else. NFTs can really be anything digital; however, the current excitement is around using the tech to sell digital art. In March 2021, the artist Beeple famously sold an NFT of one of his artworks for $69 million through Christies’ auction house.
The majority of NFTs are created on the Ethereum blockchain, storing extra information that makes NFTs different from a standard digital coin. “NFTs are designed to give you something that can’t be copied: ownership of the work, though the artist can still retain the copyright and reproduction rights, just like with physical artwork,” explains Mitchell Clark in The Verge. “To put it in terms of physical art collecting: Anyone can buy a Monet print. But only one person can own the original.”
While crypto assets, including NFTs, can be both pricey and risky, another way to invest in the crypto market without directly buying the crypto assets themselves is to buy stock of the companies developing or providing services for crypto assets.
Enter NFT Stocks
Public companies operate under several layers of regulatory scrutiny and must meet liquidity requirements, providing peace of mind for investors seeking less risky asset classes. For example, cryptocurrency wallet and exchange Coinbase went public in April 2021 with a valuation of close to $100 billion, pointing to the overall market’s belief in the potential for crypto assets, even if buyers of the stock aren’t necessarily buyers of cryptocurrencies.
Similarly, those with a belief that NFTs have potential to grow in value, even if they are currently held by a relatively few number of speculators and enthusiasts, can consider purchasing shares of stocks of companies focused on developing NFTs or services that enable the NFT market to grow.
“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,” notes Nasdaq.
For example, two companies, Dolphin Entertainment and Hall of Fame Resort & Entertainment, witnessed their stocks nearly double after their partnership on an NFT project. Other companies in the NFT space include Takung Art, Funko and Liquid Media, according to Nasdaq.
NFTs vs NFT Stocks
So, which is the better investment opportunity — NFTs or NFT stocks? While there are pros and cons to each, think about your goals. While capital appreciation is the objective for both, if you’re an art and collectible lover, an NFT may have more appeal. However, if you’re more interested in the potential of the NFT market as a whole, but don’t consider yourself a collector, investing in NFT stocks may be better aligned with your goals.
Added Protection for Your NFTs
The world of NFTs continues to grow as buyer interest intensifies. There are several NFT marketplaces, in addition to the different wallets on which the NFTs are stored and retrieved. Accessing and transferring NFTs between wallets can be risky.
The industry needs market-driven solutions that can keep up with the ever-complex marketplace of crypto assets. TransitNet is creating the industry’s first third-party title registry that demonstrates proof of ownership of crypto assets, to add a layer of protection for investors in digital currencies, NFTs and other crypto assets.
Join the forefront of the new crypto infrastructure.
Request an exclusive registration for TransitNet’s title registry when it launches today.
Jake Wengroff writes about technology and financial services. A former technology reporter for CBS Radio, Jake covers such topics as security, mobility, e-commerce and the Internet of Things.
Sources
TheVerge – NFTs, Explained
TheVerge – Beeple sold an NFT for $69 million
Nasdaq – What are NFT Stocks? Your Guide to Non-Fungible Tokens
CNN – Coinbase goes public with a nearly $100 billion valuation