Recently I was contacted by a business creation team from UCLA’s MBA school of management. They had come up with the idea of using clips of films created to sell NFTs. Their business model had a noble mission; to close the gap between commercially funded and independently funded films. As I learned more about the business, I thought it was brilliant. In fact, according to the team, Sylvester Stallone’s daughter used NFTs to produce one of her films. Now I know not all of us have Stallone’s daughter’s clout. However, we all have a story and a community. This is just one example of the future of NFTs.
Innovation usually happens amid hard times. During the great recession in 2008, Blockchain was introduced with Bitcoin. The purpose of this new currency was to decentralize monetary systems to champion transparency and efficiency. NFTs (Non-Fungible Tokens) are assets, such as art or digital assets with a smart contract connected to them. Smart contracts are pockets of code connected to a digital asset that confirms the asset as digitally unique, traceable, and verifiable. Thus, NFTs are simple goods you can obtain in exchange for cryptocurrency, typically Ethereum. So, new money is crypto, and NFTs are digital goods you can buy with cryptocurrency.
Investors can purchase NFTs through specialized marketplaces where the artist connects directly to the consumer. According to Forbes. com contributor David Rodeck, the top 3 marketplaces for 2022 are OpenSea, Rarible, and NBA Top Shot. OpenSea, launched in 2017, hosts popular NFTs such as art, music, photography, trading cards, and virtual worlds. Rarible focuses on art, collectibles, and video games. NBA Top Shot is a marketplace that allows fans to buy great moments in basketball history.
There are shortfalls to NFTs. They need a genuine value that communities agree upon. The user experience of NFTs, application compatibility, and marketplaces need to be simple and seamless. Finally, there is concern about the volatility of cryptocurrency as the underlying currency supporting NFTs (Forbes.com 11/2/2021).
Even though there are concerns about this relatively new asset class, the future of NFTs is promising. Several industries are ripe for the disruption and adoption of NFTs. In her article, The History and Future of NFTs, Forbes contributor Nicole Silver wrote that in addition to gaming, Real Estate and The Metaverse offer an interesting collaboration. NFTs will be an essential part of The Metaverse and will serve as the building blocks for assets utilized across worlds. For example, a virtual home will have NFT art on the walls. Virtual Homeowners will host parties, listening to NFT music, or watching NFT indie films. In short, the world is about to get a lot more interesting – The Metaverse and NFTs will be vital parts of spicing things up.
NFTs are a new concept for most of us. If you would like to discuss ideas on how to purchase or sell NFTs, reach out to me. I would be happy to explore opportunities with you.
If you already have an investment advisor, congratulations. However, if you’d like to learn more about what investment advisors do for their clients, please feel free to contact me at empiriKalpartners.com for an individual assessment.
About the Author
Edward Vela is an Investment Advisor and Estate Planning Specialist at empiriKal partners, llc©, with 15 years of wealth management experience. He earned a Journalism Certification from the University of Massachusetts, a BA in Political Science, a Financial Planning Certification at UCLA, and an MBA from the UCLA Anderson School of Management. You can contact Edward at 925-300-8805 or email edward@empiriKalpartners.com.
