The Leading Annual Non-Fungible Token Event

Even so, non-fungible tokens could be an important technological development. In a new digital era that blurs the lines between the physical and virtual worlds, a new way to track digital asset ownership and distribution online will be increasingly important. These blockchain-based tokens could also disrupt financial intermediaries and lower the cost of buying and selling big-ticket items such as autos and real estate. That doesn't necessarily mean you should invest in highly speculative NFTs, but, at the very least, their development is worth keeping an eye on. Non-fungible tokens can digitally represent any asset, including online-only assets like digital artwork and real assets such as real estate.

With over 1.5 million daily active players, Axie Infinity grew at a blistering pace and generated over $300 million within 30 days. It has quickly become the bestselling NFT collection of all time. Instead of one person owning an artwork, 500 people could own it, each deriving some ownership utility.

The conversion of a physical asset into a digital one streamlines processes and removes intermediaries. NFTs representing digital or physical artwork on a blockchain remove the need for agents and allow artists to connect directly with their audiences. For example, an NFT for a wine bottle will make it easier for different actors in a supply chain to interact with it and help track its provenance, production, and sale through the entire process. Consulting firm Ernst & Young has already developed such a solution for one of its clients. An NFT solely represents a proof of ownership of a blockchain record, and does not necessarily imply that the owner possesses intellectual property rights to the digital asset the NFT purports to represent.

Depending on its characteristics, each piece of land is unique, priced differently, and represented with an NFT. Real estate trading, a complex and bureaucratic affair, can be simplified by incorporating relevant metadata into each unique NFT. Rug pulls have become an increasingly common hazard when buying NFTs, with the proceeds of some rug pulls being valued at hundreds of thousands or even millions of dollars. Rug pulls accounted for 37 percent of all crypto-related scam revenue in 2021, according to one analysis.

From art and music to tacos and toilet paper, these digital assets are selling like 17th-century exotic Dutch tulips—some for millions of dollars. NFTs can also democratize investing by fractionalizing physical assets like real estate. It is much easier to divide a digital real estate asset among multiple owners than a physical one. That tokenization ethic need not be constrained to real estate; it can extend to other assets, such as artwork. Its digital equivalent can have multiple owners, each responsible for a fraction of the painting. Perhaps, the most obvious benefit of NFTs is market efficiency.

But, for the average investor, NFTs represent a highly speculative class of investment that should probably be avoided. NFTs don't gain in value because of their utility but are based on the value of the media they represent (digital art, video, music, etc.). The listing also mentions vetting NFT projects, blockchain networks, third-party marketplaces and cloud providers, as well as providing legal guidance on digital currency and blockchain technology.