Opinion: NFT markets continue to produce some fascinating and downright weird investment ideas

2021 is shaping up to be the year of the non-fungible token (or NFT to its friends). The promise of NFTs is that anything which can be digitised can be securely traded, with registered ownership recorded on a blockchain. An NFT might be art, music, video, or even a piece of code. Twitter boss Jack Dorsey even sold an NFT image of his first tweet for $2.9 million last month.

You might have heard about Beeple, the digital artist who sold an NFT digital artwork in March for a whopping $69 million? Not only was this the highest price ever paid for an NFT, it was also one of the highest prices ever paid for any work of art.

Beeple is just one of thousands of digital artists who have recently emerged to sell their art to an eager crypto-aware young public. Exchanges like OpenSea.io heave with everything from the bizarre to the great to the just plain awful. The average NFT artwork sold in 2020 for a little over $100 a piece, and now sells for an average of $7,500.

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From RTÉ 2fm's Dave Fanning Show, Simon Cocking from Irish Tech News with a beginner's guide to NFTs

The big problem with NFT art is that all art is a terrible investment. A 2009 American Economic Review journal study showed that art investment hugely underperforms the stockmarket. If all art is a bad investment, then why would we expect a digital version of art (which is arguably worse) to perform better?

From my own research on NFTs, the most interesting NFT markets are those not yet grabbing the headlines. There is a new generation of investments quickly emerging that we haven't really contemplated before outside of cult sci-fi novels. A central feature of these NFTs is that they don’t really seem like investments - on the surface at least.

These NFTs are the reason I’ve found myself on evenings recently wandering around strange virtual worlds (or metaverses, as these worlds are popularly known). In the largest metaverse Decentraland, I can log in and immediately land as a character in the main commercial district. I can walk around looking for evidence of life, people doing fun things and hints of a future world that people might happily inhabit.

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From BBC Stories, will Decentraland be an online utopia or a cyber slum?

Decentraland has about 45,000 private plots of land, with each plot registered as an NFT. Ownership gives you the right to build anything you want on your 16 metre by 16 metre virtual space. 'Build anything’ means literally that: a concert hall, a casino, a game, a space shuttle, a nightclub, a memorial to your childhood pet – whatever strikes your fancy. The business model here is buy land, build something interesting on it and get people to pay you to use that thing.

Those plots of land currently sell for about €5,000 each. A crazy amount of money if the world remains as empty as it currently is. But, who knows, maybe a bargain if people eventually start coming in and spending money? That possibility is maybe why Atari, the 1980s gaming company, recently announced that they are opening a retro-gaming themed casino in Decentraland. Having said that, there's quite a few different metaverses and most likely the eventual winning metaverse doesn’t even exist yet.

If virtual land ownership seems too extreme, what about Sorare, a fantasy football league where you permanently own NFTs of your preferred players? Ownership allows you to enter your players into contest, with victory based on player real-world performance. You get lifetime ownership so if you had bought an NFT of Cristiano Ronaldo when he was a 17-year-old starting out with Sporting Lisbon, you would still be benefiting from his moves today. Indeed, a unique Ronaldo card sold on Sorare last month for nearly $290,000.

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From Bloomberg News, interview with Sorare CEO Nicolas Julia

With Sorare, you have a game on the surface, but you also have long-term assets (individual players) and returns (rewards for winning contests), so you can also think of it as an investment. Global fantasy sports is a $20 billion industry and expected to reach $50 billion by the end of the decade so there’s a lot of growth potential there. Could we consider a future investment portfolio consisting, in part, of a selection of virtual sports players?

I’ve barely even touched the surface of what is available. What about Axie Infinity where you breed rare NFT characters called Axies, who then do battle with other Axies in a Pokemon-style contest? It clearly sounds childish, yet a bunch of Axies with particularly compelling characteristics sold for over $30,000 in January. Tech visionary Mark Cuban was recently talking about them as one of the reason he loves NFTs.

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From UpOnly, Mark Cuban talks all about crypto, including his love for Axies

There’s another NFT market that allows you to claim virtual versions of real-world buildings and assemble monopoly-style sets of buildings with certain attributes. At the more whimsical level, there are entire NFT markets consisting exclusively of cute cats, where cat cuteness is one of the valued investment characteristics.

I would treat any cent you put near NFTs as more-or-less gone, and only the most disposable of disposable money should be put near them right now. But it is a fascinating, and sometimes wonderful, set of emerging investment ideas. Maybe we could make investment fun again? Bonus: we could finally get to treat cute cats as an investment category.


The views expressed here are those of the author and do not represent or reflect the views of RTÉ