NFTs - 'Da Vinci: "not a fan"'

As re-living my crypto misadventure was so much fun last week, I thought I could cheer myself up by talking about something i'm glad I didn't venture into: NFTs. Now, I'm not suggesting that you shouldn't invest but I'm also not suggesting you should. The reason I didn't get into it is because I just didn't get it. I understand what they are and how they work but the notion of investing in more crypto just to get a jpg image that will most likely laugh at you as it depreciates didn't appeal. Furthermore, the whole image thing just confused me, why does the image matter I could screenshot the same image and technically "own" that. Baffling.

So let's chat about NFTs

NFT, short for non-fungible token, refers to a digital asset that is unique and cannot be replaced, in contrast to fungible assets like physical money and cryptocurrencies which can be exchanged for each other. Another reason crypto trading appeals more. Each NFT is identified by a digital signature, making it distinct from others. NFTs encompass a wide range of digital formats such as photos, videos, and audio files, and examples include artwork, comic books, sports collectibles, trading cards, and games.

These "cryptographic assets" reside on a blockchain, which is a decentralised public ledger that records transactions. They also possess a unique identification code for easy transfer and verification of ownership between owners. NFTs derive their value from the market and can be bought and sold like physical assets. They can also represent tangible items such as artwork and real estate in a digital format. Remember that: Digital. You. Do. Not. Own. It. Physically.

NFTs are pitched as the digital solution to collectables/collections, much in the way that cryptocurrencies are pitched as the digital solution to currency. But, if I was offered an A1 T206 Honus Wagner card or a digital version of the same thing I know what I'd choose. Does that make me weird? Probably.

So what are the good things NFTs offer?

Well, for digital artists this is a god send. There are no longer drawn out sales processes as the whole sale is streamlined. There are no "supply chain issues" nor are there any middlemen. Instead the artists can communicate directly with the buyer. Moreover, these sales can be split meaning that multiple people can own a piece of the same thing. This is only made possible through the use of blockchain. Oh and it would be difficult to cut the Mona Lisa into a few pieces. Not sure Leo would love that.

Finally, it's time to say the buzz word that all investors love:

Yes. That word. Obviously, if you're chiefly investing in real estate, why not diversify and own a digital copy of a photograph of a key to a house that you don't own. That's some cutting edge diversification right there.

Moreover, the recognition of NFTs as a legitimate form of property may have been bolstered by a recent ruling in the UK High Court. In March of this year, two NFTs from the Boss Beauties collection were reportedly removed from Lavinia Osbourne's online wallet during an investigation, as noted by 'Women in Blockchain Talks'. The court agreed with Osbourne's claim and set a new precedent by acknowledging NFTs as a form of property. Won't stop me from taking a screenshot.

Game developers have shown a great deal of interest in NFTs, as they offer several advantages to players. In typical online games, players can purchase items for their characters, but that is usually the extent of their usefulness. However, NFTs provide the opportunity to sell these items and recoup the initial investment once they are no longer needed. Watch this space...

The huge success stories that you hear in the NFT arena are mainly of celebrities or big brands selling a collection of NFTs. Grimes, for example, sold 10 NFTs of one of her music videos. She earned $5.8 million. Jack Dorsey, ex-CEO of Twitter, sold a photo of the first tweet ever for $3 million. The link? Elon Musk.

No matter what you think about NFTs people are investing and are seemingly making money to boot. If there wasn't so much risk attached it seems like a fun way to own a bit of digital history, in the case of the first tweet. Or even just to have a piece of collectable that doesn't exist anymore. NFTs are a quirky way to start investing, the art created and sold by digital creators is fantastic and deserves to be funded. If I hadn't been so deeply scarred by the crypto crash I am now far too wary of things that don't have an obvious value. So have fun out there and *DIVERSIFY*.