A New Asset Class: NFTs Set to Take Off
Throughout the history of alternative assets, it has always followed a specific pattern. Someone comes up with something useful, and others realize that it can be invested. Take musicians' royalties, for example. Initially, they were a safeguard to ensure performers got their legal payments whenever their recorded song got played somewhere. Today, investment companies now purchase royalties streams for up to hundreds of millions of dollars. Commodity futures are another great example. They were initially intended as an avenue for farmers to make sure prices were fixed ahead of a harvest. Yet, 70 years on, the global derivatives trade is worth hundreds of trillions of dollars.
This pattern continues to replicate itself throughout history. Whether it is baseball card collection or sports betting, the dynamic remains the same. The latest in the long line of alternative assets are Non-Fungible Tokens (NFTs), and of course, the much broader GameFi space.
Related: Breaking: NFT Markets Skyrockets to 27 Billion Dollar$
There is something peculiar about the emergence of NFTs instead of previous alternative assets. The timing of the emergence of NFTs 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 of the economic disruption we've already witnessed. Energy prices are all over the place; ships are clogged up, resulting in a shortage of supplies. Workers are leaving their jobs with no one to take their places. Interest rates remain rock bottom, with inflation running amok.
What makes all these interesting is that it again reiterates the pattern of necessity forcing the adaptation of invention from what it was initially meant to be to a new asset class. This time, the innovation is accompanied by Blockchain-enabled gaming creation. This has seen a new play-to-earn model taking the place of the already existing pay-to-play model.
As it often is with any asset class, it only makes sense to own the supporting infrastructure and not just the asset. Together, they form the bedrock of a new asset class that's about to leave the runway and soar into the digital ecosystem. There's just no stopping NFTs.