What are NFTs and why are some being sold for millions?
NFTs, also known as non-fungible tokens, is a digital token that is one of its kind. It’s a digital asset and holds no tangible form, but can exist as digital artwork, meme, music, video, and more. They are compared to the likes of collectibles.
Just in mid-March, Mike Winkelmann — the digital artist known as Beeple — sold his NFT artwork “Everydays: The First 5000 Days” for an eye popping $69 million. It was later discovered that the art buyer was Singapore’s Vignesh Sundaresan, who is also known as MetaKovan in the virtual world.
We’ve asked a diverse set of thought leaders in our Oasis community to give their own personal take on the exploding interest in NFTs across Asia.
The pandemic and accelerated pace of financial innovation are two important catalysts for companies all over the world to explore alternative means to raise capital quickly and cheaply, and to overcome capital market inefficiencies such as high investment thresholds, low access to deals, and friction from liquidating illiquid investments easily.
With the latest tokenization technology, almost any asset can be fractionalized, from property to fine art. A few pioneering players in this space have been operating in Hong Kong to promote the use of tokenization to reshape the investment landscape, particularly for property.
While there have been concerns on investors’ exposure to risk in regard to digital assets from crypto-currencies to security tokens, it is necessary to clarify that it is not the technologies themselves that pose this risk, rather the trading platforms that need to adhere to a robust regulatory framework, one that ensures investors and asset owners receive financial protections they have come to expect from traditional financial markets.
Hong Kong is a leader in terms of digital assets regulation and many private sector players are currently looking for further guidance resulting from the consultation paper initiated by the Hong Kong Financial Services. Investor protection is certainly a top priority for the regulator. But a new regulatory framework will also provide more clarity and set a benchmark for the world to follow in many other ways we have yet to see.
The rise of NFTs shows we live in an age that considers the digital world to be ‘just as real’. To trust a bank with their deposits, people used to need to walk into a physical branch to see that the bank exists in brick and mortar. Today, the most important branch is your phone. The same evolution happened with wealth – more investors are now adopting online investing tools that often provide wider choice. Digital is real, and digital is better.
Since its inception in 2017, the NFT landscape has garnered a lot of interest and has come a long way. However what we have seen in the non-fungible digital item space is still extremely nascent and the real impact of NFTs will only be felt over years to come. Still, even now people and projects have spent a lot of time and effort to build enough infrastructure that has led to the current frenzy.
The NFT space is still in its early days. Currently, whatever is happening is primarily driven by speculators rather than artists. The concept has proven itself, the next phase is to make it prosper. There is a lot of effort going on in this space. As we see more mainstream artists, enterprises, and even stock exchanges are experimenting with NFTs.
Undoubtedly, the space will take its time to mature and that is when we can actually see artists use these concepts to create micro-economies for themselves and more such real-world applications of NFTs.