An NFT is an asset that has its own unique identity and cannot be replicated or cloned. They are often used for trading card games, video games, and collectibles. Essentially, they are the cryptocurrency equivalent of baseball cards.
As we all know, NFTs are becoming more and more mainstream. The idea of owning a digital asset that cannot be destroyed or counterfeited is very appealing to people who value their privacy and security. Visa has just helped propel the mainstreaming of NFTs by buying a CryptoPunk – an early NFT series – for $165,000.
The Context: One Purchase of Many
While Visa spent 50 ETH on a Cryptopunk, this is just one NFT purchase of thousands, amounting to sales in the billions of dollars this year alone.
Visa’s purchase was part of a much larger trend this year where companies began buying into non-fungible tokens as a way to better understand and analyze new asset classes that were previously unavailable to them.
Large firms and retail investors alike have all shown interest in purchasing non-fungible assets as a means of gaining insights into new market opportunities that are not currently reflected in traditional financial data sets or indices. This is reflected in the fact that NFT sales have surged from just a few million last year to several billion dollars this year.
The purchase by Visa also highlights another important point about digital collectibles: they’re not just for early adopters anymore! Many mainstream investors are now looking at these kinds of assets as potential investment opportunities due to their scarcity value and unique characteristics compared to more traditional financial assets like stocks or bonds.
The Changing Tides
This represents a shift in the way institutions see NFTs. NFTs used to be seen as scams or as limited to the domain of cyberpunk Internet niches. In recent months, we’ve seen a number of mainstream financial institutions and even some well-known celebrities invest in non-fungible tokens.
This shift in investor sentiment is due to many factors, but primarily because digital collectibles are now being recognized as legitimate investment opportunities by more traditional investors. Now, with the growing interest from mainstream investors, this could mark the beginning of a new wave of adoption for NFTs as an asset class.
Investors are realizing that NFTs represent unique opportunities to invest in assets that may not be available through other means due to their limitations on availability (such as physical sports cards).
The Metaverse Implications
The rise of NFTs also means that more investors than ever before are now looking at NFT-powered metaverses like Next Earth as a potentially valuable investment opportunity. Indeed, Next Earth has sold over $1.1 million in virtual real estate since their ITO, or Initial Tile Offering.
Non-fungible tokens are used for a number of different purposes within the metaverse. For example, some projects may use them for in-game items or digital collectibles. Others may use them to represent ownership rights or access rights over real-world assets such as real estate or sports cards.
NFT property trading will allow users to trade ownership rights over virtual land parcels using non-fungible tokens rather than traditional fungible assets like ETH. This is just one application where NFTs can be used on the metaverse via the Next Earth platform — there are many others where they could be implemented going forward.
How Visa’s Purchase Will Fuel the Business Metaverse
Businesses are always looking for new marketing channels and ways to grab consumer attention. The metaverse is no different. The Next Earth metaverse is a great way for businesses to connect with consumers, and now they have another option to consider: buying virtual land parcels with non-fungible tokens on the Next Earth marketplace.
Visa’s purchase represents a huge validation for NFTs as an asset class, and it also showcases how mainstream investors are starting to recognize their value as investment opportunities. It’s likely that more purchases like this will follow in the future as more people become aware of their existence. We’re excited about what this means for all involved: consumers, businesses, and developers alike.