Are NFTs a fleeting fad or a serious investment for the long term?

As more large investors enter the space, many experts are convinced that this is a viable asset class

Are NFTs a fleeting fad or a serious investment for the long term?
Steve Randall

The growth of non-fungible tokens, or NFTs as they are more commonly known, is baffling to many.

How can a digital creation, a computer file, be worth thousands, millions, and in some cases, billions of dollars?

While this may be a conundrum for the digital age, many experts are increasingly convinced that NFTs are not only have value but have longevity as an asset class.

Among them is Nigel Green, CEO of global advisory firm deVere, who says that the NFT market is set for a massive increase in the next 12 months.

This view comes amid increased interest in the market from large investors such as Visa, which recently bought a “CryptoPunk,” one of thousands of NFT-based digital avatars, for nearly $150,000 in ethereum; and as Marvel Entertainment begins unveiling its first official NFTs in the form of Spider-Man ‘digital statues.’

“The market for NFTs hit new highs in the second quarter, with $2.5 billion in sales so far this year. This is almost 20-times more than the $13.7 million in the first half of 2020,” said Green. “As the big hitters pile in, their capital, expertise and reputational pulling power will attract a growing number of other investors – both retail and institutional looking to get into the market.”

Greater visibility

As with any product or service, being easily found is key.

NFTs are getting greater visibility thanks to a growing number of marketplaces dedicated to the assets. A large number of celebrities, brands, and sporting organizations are also fuelling awareness.

Green believes that 2022 will be a “breakout year” for NFTs and while some see them as a novelty currently, younger investors have a different view.

“Millennials, and Gen Z especially, have digital lives and it’s natural to want to take digital representations of luxury brands, sport, music and art into these worlds - and now they can,” he explained.

The great transfer of wealth is another factor in the bullish outlook for NFTs and other digital assets.

But Green says that investors should, as always, be cautious with an asset class as a relatively early stage.

“The market remains young and highly speculative and caution should be exercised,” he said. “It can be expected that some of the NFTs on the market now will have little value in a few years. But some will be worth a fortune. It’s a similar situation to websites in the early days of the internet.”