A new fever has risen in the global market. Everyone has been talking about the non-fungible token (in short NFT) ever since the recent digital art named as ‘5,000 Days’ was sold for US$69 million through Christie’s auction.
In simple terms, a NFT is a digital token created on decentralised blockchain, and each token carries a unique characteristic to it. The smart written contract carries an authentic signatory of the artist and positioned as a fixed sector of an item.
Hence, the contents cannot be exchanged or altered.
For instance, there are 10,000 tokens that represents the digital art, implying that there could be a maximum of 10,000 owners that co-own this piece of art.
Of course, each owner can hold any number of token that entitles the person to claim ownership to that particular sub-part that is crafted in the token.
In February, a digital art called “Nyan cat meme” was sold for US$590,000, erupting the NFT crypto fever. The following month, another art piece called ‘Everyday – 5,000 Days’ was auctioned for a whopping US$69 million, creating the highest score in the history of crypto art.
You may ask who are the super-rich people who purchased these items? You may even ask if the buyers actually know what they are buying?
Apparently, the buyers are mostly youngsters who have made their wealth in the crypto world.
All the cryptos like bitcoin and ethereum are better off being used to purchase some supposed pricy collectibles sold through world-class auctioneers or such professionals, rather than going out to the real world while trying to buy some house groceries (it’s still not a common economy to accept cryptos for merchandising now).
In addition, it is always very remote and unlikely to understand the mindset of the new-generation people wo are classified as the ‘Cryptos Tycoon’ when their mega wealth really manifest from thin air.
Most of the time, these people are either extremely broke before, or do not know exactly how risk management works in the real world of business.
People who have made their mega wealth in cryptos are simple fanatics and faithful believers of what they are doing. In fact, they are not interested to know how the real world manages the risk versus reward in business and daily living.
In our opinion, NFT will continue to be a roller-coaster and will go through an imminent boom-bust cycle over the next 12 months.
In short, the NFT is a new derivative instrument from blockchain. Very soon, we will see many more items from trash to valuables – all earmarked by using NFT.
However, there is a truth that we can agree to the principle of NFT: Whenever a new fresh record is made in a NFT item measured by monetary value, ethereum will definitely surge in market value.
For crypto players, you have a new market to participate now. Perhaps, a new way to increase your wealth.
Dar Wong is a professional in financial industry since 1989. The expressions are solely his own. He can be reached at [email protected].
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