The non-fungible token (NFT) market is set to significantly increase in volume over the next 12 months, according to deVere Group chief executive Nigel Green.
Green’s bullish prediction follows Visa’s announcement that it has bought a ‘CryptoPunk’ – one of thousands of NFT-based digital avatars – for nearly $150,000 in Ethereum.
An NFT is a unique digital asset designed to represent ownership of a virtual item, such as artwork, music, a video clip or tokenised tweet among others.
The market has soared recently, with $2.5 billion in sales so far this year, almost 20 times more than the $13.7 million spent in the first half of 2020, Green says.
“With soaring interest from major investors like payments giant Visa, who understand and value that the future of almost everything is geared towards digital, demand is set to explode.
“As the big hitters pile in, their capital, expertise and reputational pulling power will attract a growing number of other investors – both retail and institutional looking to get into the market.”
Green says demand will also be fuelled by a growing number of NFT marketplaces where individuals can make purchases, as well as an increase in artists, musicians, sports, fashion, entertainment, gaming and retail brands producing digital assets to engage with consumers and clients.
While NFTs may appear something of a novelty currently, Green believes the accelerating pace of digitalisation means digital assets will become increasingly valuable and demographics will have a key role to play in their growth.
According to Green, the digital lives of millennials and Gen Z will naturally lead to demand for representations of luxury brands, sport, music and art into these worlds.
Green adds: “This is a market which is just getting started. There’s been a surge of interest this year but I believe 2022 will be the breakout for NFTs. We expect there to be a massive increase in volume in the market over the next 12 months.
“With NFTs, we are experiencing the meeting of an internet of information with an internet of value, which is drawing in large investments coming from multinationals, funds, and VC firms, amongst others, into the market.
However, Green says investors need to err on the side of caution.
“The market remains young and highly speculative and caution should be exercised. It can be expected that some of the NFTs on the market now will have little value in a few years. But some will be worth a fortune. It’s a similar situation to websites in the early days of the internet.
“As with any kind of investment, the key is being able to pick the winners and avoid the losers in what is a volatile market driven by fast-changing trends and tastes.”