Â© Reuters. A new asset class: NFTs ready to take off
Throughout the history of alternative assets, it has always followed a specific pattern. Someone comes up with something useful, and others find that it can be invested. Take musicians’ royalties, for example. Initially, they were a guarantee to ensure that performers received their legal payments whenever their recorded song was played somewhere. Today, investment firms are now buying royalty streams in the hundreds of millions of dollars. Another prime example is commodity futures. They were originally designed as a way for farmers to ensure that prices were set before a harvest. Yet 70 years later, the global trade in derivatives is worth hundreds of billions of dollars.
This pattern continues to reproduce itself throughout history. Whether it’s baseball card collecting or sports betting, the dynamics remain the same. The latest in the long line of alternative assets are non-fungible tokens (NFTs), and of course, the much larger GameFi space.
Related: Breakout: NFT Markets Soar To $ 27 Billion
There is something special about the emergence of NFTs instead of old alternative assets. The timing of the emergence of NDTs makes all the difference. The world is currently in a state of uncertainty, with the fourth wave of Covid-19 spreading across the world and bringing with it more economic disruption that we have already witnessed. Energy prices are everywhere; ships are clogged, resulting in a shortage of supplies. Workers leave their jobs with no one to replace them. Interest rates remain at their lowest, with soaring inflation.
What makes it all interesting is that it once again reiterates the necessity model forcing the invention to adapt from what it was originally meant to be to a new asset class. This time, the innovation is accompanied by the creation of Blockchain compatible games. This saw a new play-to-earn model replacing the already existing pay-to-play model.
As is often the case with any asset class, it makes sense to own the supporting infrastructure and not just the asset. Together, they form the bedrock of a new asset class that is about to leave the track and soar into the digital ecosystem. There is simply no stopping NFTs.
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